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Digital transformation

Trade fairs, conferences, meetings – in the meantime, many things have gone digital. But not because business, politics or society put this digital transformation at the top of their list of resolutions on New Year's Eve 2019 – no. Rather, one of the effects of the pandemic is the increased penetration of digital technologies into private and, above all, professional everyday life. It was the catalyst for the digital transformation, so to speak. Home office was suddenly unavoidable – even if some companies still resist it today.

To put it bluntly, many companies had to develop strategies, revise processes and create digital infrastructure overnight, in order to prepare their own business models for the changes at hand with a degree of certainty. A mammoth task for any company really. One so large that potential possibilities and opportunities could not even be envisaged because of the scale of the change process. But the new digital world of work is here now. And she has come to stay – that much is certain.

That's why it's now time to roll up our sleeves and take the challenges by the scruff of the neck. This is because even though man, as an old creature of habit, keeps on thinking: Change doesn't have to be a bad thing per se, the next age doesn't have to be the apocalypse – even though mankind seems to be doing its best at times to make it happen, but that's another topic. The topic here and now is digital transformation for companies. We would be happy to tell you what this means for companies and how successful digital business models can arise from it. In a face-to-face (and most likely digital) conversation, given the times in which we currently live, we'll work out a common approach for your business or, if you're already here, feel free to dive into the following paragraphs.

And if you need one last suggestion for more digital in your company, we would like to refer you to the current study by Staufen AG**: "Digital trailblazers get through the Corona crisis better," is not only the hypothesised idea here, but also the result. Many companies have recently put important digital projects on hold, but the pioneers to a large extent have not.

What does digital transformation mean and how can it be successfully implemented?

Digital transformation is often mentioned in the same breath as the term digitisation – i.e. the increasing use of digital technologies in everyday life. The definition or meaning of digital transformation is relatively self-explanatory, if you take the synonymous digital transformation at hand. For companies, it simply means that elementary processes are changing – from analogue to digital. In the end, only those areas that cannot be digitised due to the laws of nature are excluded from this.

Or, to put it more simply: Even the digital revolution and transformation stop at some core areas of production. Digital order management, digital machine control or digital plant networking (keyword: Industry 4.0) are no issue, but rolling stainless steel, milling aluminium or assembling products will still have to happen physically in the distant future. There is no way around it. But the accompanying processes and procedures will become more digital.

And this is precisely one of the key success factors of digital transformation – as long as it is tackled: the proactive design of processes within the company. This is because even though the Internet has been with us for decades, we are still in the early stages of development when it comes to digital technologies. Those who take bold and thoughtful steps in this area in the near future will not only be able to dampen the possible effects of the omnipresent pandemic, but will also be able to set themselves apart from the competition at the same time.

The methods, strategies or services with which the companies approach the topic of digital transformation are, of course, left up to them and also to you. However, there are some points that are of key importance for companies – here is a brief overview.

What does digital transformation mean for companies?

We have already clarified what the term digital transformation means in general. For companies, in particular, digital transformation is the necessary change to not only survive but also to operate in ultra-dynamic markets. Initiative, innovation, data-based decisions and entirely new management tasks are elementary parts of this change.

It's quite understandable that most top-level executives are still looking for truly tangible solutions in the face of drastic change. At least that's what a spring 2019 survey* of more than a thousand international executives on the topic of "digital transformation" makes clear – the numbers certainly haven't become any more positive as a result of the change process accelerated by the pandemic.

  • 58% of executives don't know how to approach digital transformation at all.
  • 56% think their digitisation efforts to date have been a waste of time.
  • 87% of respondents admit to not deriving digital transformation priorities from internal processes.
  • 63% define KPIs without knowing what is really wrong in the company.
  • 33% of the same managers said they had spent more than €500,000 on digital transformation within the last year.

The Staufen study – which is even more recent – proves just that:

No digitisation without a digitisation strategy – this basic rule should be self-evident. Nevertheless, only just over one in ten companies (11%) has a successful digitisation strategy. Nevertheless, almost one in two companies (46%) is currently in the process of implementing one.**

If we're honest, that doesn't sound purposeful or particularly well-thought-out. As a basis for a successful digital transformation, this approach is probably not suitable, that's for sure at least. What companies should pay much more attention to is the basis of change itself. You'll see what that looks like in a moment. But we would like to start with something different – a change of perspective. That never hurts in a "digital business transformation". Neither do our 6 points for a successful digital transformation in your company.

Item 1: Digital business transformation puts customers front and centre.

Actually, the customer has always been king and queen in one. Over the decades, however, other issues have become the focus of attention for many companies: such as profit maximisation, profit maximisation and...wait for it...profit maximisation. In the lean jungle, you might not even be able to recognise your customers because of all the agile meetings – not to mention your own employees. Although without paying customers, no profit maximisation is possible.

That's why you should use the digital transformation to develop digital business models that will propel you forward in the long-term. By analysing the needs of potential customers in detail. But, of course, that is not the end of the story. The data generated from this – if used correctly – will help you with an elementary challenge: becoming more relevant for customers. With the right digital tools that take the customer experience to a new level. One thing that is very important here: Customer centricity in itself is not a tool, it is the business model.

Our tip: Develop digital tools that support your customers at every point in the process chain. These can be tools that increase transparency before the purchase decision is made, or articles that are self-explanatory from a digital perspective and which thus make instruction manuals – with an exhausting table of contents – obsolete. No matter what it is – the main thing is that it benefits your customers.

Item 2: Benefit orientation in the focus of digital transformation.

This brings us to the second (and perhaps most important) point: If you want to orient yourself to the customer, you inevitably orient yourself to the customer’s benefit – and that's a good thing. When formulated drastically, you could even say: “Is this useful or can it be dispensed with?”, or something like that. If you develop digital business models that no one needs, you will suffer the same fate as our managers from the survey, who have squandered hundreds of thousands of euros on achieving digital nirvana. Digital added value is the magic phrase in digital transformation. Meet your customers, listen carefully and shape solutions that have real customer value. We have already been able to implement precisely this in many industries and projects – yesteryear was analogue, while for decades it has been increasingly digital. The good part: Any organisation can do just that.

Our tip: Don't transform for the sake of transforming. It's not always about a new coat of paint for the website. Always be guided by the needs and requirements of your customer base when implementing digital transformation. Make life easier for the people who use your products, items and services – with digital technology. So, your first thought should always be: "What do my customers need?"

Item 3: Digital transformation rewards courage and creativity.

To answer this very question, two essential things are needed: Courage and creativity – in the best case throughout the organisation. After all, the successful implementation of digital transformation often requires new ways of thinking – in the approach taken and the subsequent implementation phase. This is true, as I said, at all levels. If everyone – from the manager to the person on the shop floor – gets involved and, above all, thinks along the same lines as you, you can take advantage of the opportunities offered by the digital transformation for your company. This is because: The development of solution-oriented ideas is essential in the digital transformation.

And – at the risk of repeating ourselves – the most important thing is to ask the right questions with your customers in mind: Does the target group want a car or just to get from A to B? Do the users want hotels that look like apartments, or rather apartments that can be used like hotels? Does the potential customer base need a web shop or rather a platform on which they can learn more about a specific topic? Is it time for different television shows, or a different television outright, per se? Questions like this arise in every industry. The real art here is to ask the right ones. In addition to creativity and an understanding of one's own business, this also requires a certain vision for the future of the economy and society as a whole. We have developed methods that help you not only to generate ideas and data, but also to implement them in a targeted manner.

Our tip: Added value instead of features. Say goodbye to "selling" and discover "satisfying". Because satisfied customers always buy again. Even the digital transformation does not change this.

Item 4: Digital transformation needs to be networked.

We have already mentioned it at a few points in this text: Data is important, even essential, to the future of any business. But if you don't know how to use it, then it will remain worthless. That's why every "digital business transformation" needs networking. That means for you: Collect information and connect the individual points to the most important part of everyday life in your company – attention: drum roll please...customer value. The networking mentioned here does not stop at the data, of course.

Combine your experience, your know-how with that of your partners, with digital technologies and tools, with new methods and thought-provoking ideas from outside the industry, with new markets. There are no limits to your imagination when it comes to digital transformation – it just has to make sense and follow one goal: the success of your company. Especially when companies develop digital business models, they should not adopt a silo mentality. At best, take all departments along for the ride. Each business unit can certainly contribute valuable input to make the digital transformation or digitisation in your companies a success. And something even more positive for your business in the process: you can practice networking right in your own home.

Our tip: To generate new sales, you should think outside the box. Keep the reality of your customers' lives in mind.

Item 5: Digital transformation needs service.

This view of the customers that I just mentioned is enormously important – especially when the focus is turned around: Outside view instead of inside view. What you and your colleagues think of your products and services is not important. What matters is the opinion out there. What does that mean to you? Listening. And to the right people. Meaning us or, even better, your potential customer base, and right away. Dive into the world of your fans (if you have any). Only then will you really understand which digital solutions have the potential to become digital success factors. It is becoming increasingly difficult to find these at a pure product level.

In the age of Industry 4.0, it's not just the digital transformation that's moving at a crazy pace, but also the competition. Innovations are being caught up with at an ever-increasing pace, offers are becoming more and more similar and only a few products still have real unique selling points – this is also (and especially) true for the B2B sector. On the other hand, there is one segment in which digital technologies offer near-endless opportunities for the development of new business models: service.

All the workflows underpinning the customer journey, every single part in the digital process, offers you the chance to stand out. For example, optimise the response email to the contact form, fine-tune your social media presence or take care of a website that offers your customer base a perfect overview of your organisation. This allows you to keep focusing on maximum customer satisfaction by ensuring that every part of your company's service journey is focused on absolute customer value.

Our tip: Don't think of service as a business model, think of it as a tool to increase customer satisfaction. Digital transformation can help you do that. After all, it opens the gates to endless opportunities in this field.

Item 6: Digital transformation demands added value.

The first five items speak for themselves: The added value for customers is the most important factor for companies in the digital transformation. First and foremost, it's not about becoming more digital by any stretch of the imagination. It's not about tablets on the shop floor or more social media. Digital transformation revolves solely around the question of customer value. What is your customer base looking for? What do people need, in order to find your business better – in both senses of the word? How can you make life easier for your customers with the help of digital tools or even your website? We will support you in these matters with all our experience and expertise. Together, we analyse existing processes and potential success factors in your organisation, with the clear goal of making digital transformation your strength.

Our tip: Don't be afraid of digitisation and digital transformation. Approach the matter with an open mind. The process, when done correctly, can't hurt you. Rather, it can help you further strengthen your market position. Finally, in most cases of technological innovation in the past, we have often noted that the so-called first movers and market leaders usually outperform those who are slower out of the blocks in terms of revenue growth.

Why is digital transformation so important?

Digitisation remains the number one source of hope.**

The use of digital technologies has long since been an everyday standard occurrence. Many processes and procedures in companies are now completely digitised. This can no longer be reversed. That is why it is crucial to accept the demands of digital transformation and, to put it bluntly, to become a "part" of it. A website alone is no longer enough. Rather, it is about integrating virtual and physical operations into the organisation.

The current focus on home office or remote working is a fitting example: Digital and analogue processes function smoothly alongside and with each other – in an ideal world, of course. This only works because the digital transformation means that up-to-date information and data are permanently available. Now you "only" have to make sure that your organisation provides this information and data in the right quality and quantity. This is exactly the time when you and your website will be found most quickly and easily by potential customers.

Today, almost every purchase decision, whether B2C or B2B, begins with a search for relevant information on the Internet – and now also increasingly on mobile devices in the B2B sector. Mobile searches using the word "best" have increased by 80 per cent in the last two years. The first results often show solutions from the immediate environment. So, on the part of your customer base, you can no longer speak of digitisation or digital transformation at all: They are already digitised to a high degree. It's high time to update your sales force's awareness of this point.

The digital transformation of sales does not have to be (as is often described) an "all-changing digital revolution". It is more like a process that takes time. Although your direct contacts will not disappear overnight, the shift is already underway: ever-more decision-makers are digital natives who attach greater importance to their own search for information than to maintaining personal contact with your sales department.

So how can you drive digital transformation?

As an agency, we have already supported numerous customers from a wide range of industries and companies in transformative projects, or even initiated the digital transformation ourselves – from websites to apps, technologies and social media, to complete digital strategies. Based on this experience, we have determined three basic rules for successful digitisation.

  1. Small and clearly structured projects bring with them some initial experience in digital communication. These initial results form the basis for pushing ahead with digitisation.
  2. A quantified objective is necessary, in order to get meaningful results and real transparency – even for digital transformation projects that are clear at first glance.
  3. Many marketing departments struggle to define goals for digital transformation because the sales department can't or won't name any. It is, nevertheless, always possible to independently quantify goals that help achieve corporate goals. If marketing begins to name goals, sales will follow suit very quickly. This basic rule also (and especially) applies to digital transformation or digitisation.

* Survey of 1,002 C-level executives and 1,009 business analysts from companies with >500 employees in Germany, the UK, the Netherlands, and the US, commissioned by software company Celonis in January 2019. Source: Miriam Schröder, "Most companies stumble haphazardly into digitisation.", Handelsblatt, 22.03.2019, web.

**"Digitisation 2020", a study by Staufen AG and Staufen Digital Neonex GmbH


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David Bumiller