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Digital Transformation 101: Understanding Digital Strategy

As we navigate the digital landscape and the ever-increasing use of digital platforms, one thing becomes clear: the trajectory of success is paved with a well-crafted digital strategy. The journey from analogue to digital isn't just a technological shift; it's a profound transformation that requires foresight, adaptability, and a commitment to understanding the heartbeat of your business—your customers.


Small local businesses that have a strong customer base and rely on traditional marketing strategies may be hesitant to embrace digital strategies. However, even businesses that do not primarily operate online can still reap the rewards of a digital strategy. By utilising digital platforms for marketing, customer engagement, and operational efficiency, they can unlock new opportunities and enhance their overall performance.


The Importance of Digital Strategy

Digital strategy encompasses the set of actions and plans that organisations undertake to leverage digital technologies and platforms to achieve their business goals. It goes beyond technology adoption and involves a comprehensive understanding of customer needs, market dynamics, and organisational capabilities.


In today's business landscape, digital planning plays a crucial role due to the ever-changing preferences of customers. Businesses are increasingly witnessing a rise in customer interactions through digital platforms. By carefully strategizing their digital approach, companies can effectively engage with customers in their preferred digital spaces, providing personalised experiences and fostering enduring relationships. Companies strive for increased sales, satisfied customers, and enhanced brand loyalty. Digital technologies can be utilised by businesses to automate tasks, optimise supply lines, and foster collaboration. This has the potential to significantly reduce costs, enhance productivity, and expedite time-to-market for their products.


Business leaders need a firm grasp of digital strategy to successfully steer their organisations through digital transformations. But that also requires commitment from the entire leadership and entails putting technology at the core of the company's strategic outlook.


Preparing for setting goals and vision for digital strategy

Key Components of a Successful Digital Strategy

An effective digital strategy helps businesses increase operational efficiency, respond quickly to market changes, exceed consumer expectations, and position themselves for long-term success in the digital age. The essential elements of a digital strategy are outlined below.


1. Clear Vision and Goals

It requires articulating what the organisation intends to achieve through its digital activities, such as growing market share or enhancing the customer experience, enabling new distribution channels, cutting supply chain processes, or opening up to new payment methods.


Transitioning from strategic intent to implementation was the beginning of Unilever's path towards digital transformation. The company's recognition that customers are increasingly being digitised means that they are shifting their attention, presence, and communication into new channels.


In order to accomplish what they wanted, their objective was to invest in website optimisation, personalised marketing campaigns, new ways of communicating and collaborating with clients, and hassle-free online purchasing experiences.

As consumer expectations of our products and brands continue to evolve, we’re working to meet their demands against a backdrop of supply chain disruption, cost inflation and the impact of an escalating climate crisis.

2. Customer-Centric Approach

The needs of the customer should be front and centre when any digital strategy is developed. Leaders in every industry must be well-versed in the needs, wants, and habits of their target demographic.


Market research, data analytics, and consumer engagement (Design Thinking) are all critical steps towards this end, since they will yield insights that will direct the digital strategy. In cases that the primary goal of a digital transformation is to streamline internal processes rather than improve customer service, we must not forget about the people—our internal customers—who use those processes to get their jobs done and apply the same principles as while designing the solution for external clients.


Starbucks is an experience. And it’s centered around that customer connection in the store, the human connection, one person, one cup, one neighborhood at a time.

Take, for instance, the case of Starbucks, which, over the course of the past several years, has been collecting and analysing the enormous quantity of data. It is now putting the customer at the heart of the service design, incorporating predictive data analytics into their marketing and sales efforts as well as supply chain management. Its "Digital Flywheel," focused on four pillars: rewards, personalisation, payment, and order, serves as a great example of a customer-first strategy.


I think that mission is so critical to how technology has to show up for us. Tech has to amplify that human connection, not get in the way of it. It is not about building cool, shiny tech. Gerri Martin-Flickinger, Starbucks CTO

Employees at Starbucks preparing personalised beverage for clients
Starbucks is centered around that customer connection in the store, the human connection.

3. Technology Integration

It should go without saying that a seamless integration of technology throughout the company is necessary for a successful digital transformation. Therefore, business leaders and technology leaders need to collaborate to find and make use of the appropriate technologies in order to accomplish their business and digital goals. This entails implementing new technologies such as #artificialintelligence, #machinelearning, and #blockchain, on top of ensuring that current systems can communicate with one another effectively.


What may appear simple from the perspective of the consumer and the company may not be so straightforward from a technological standpoint. An example of this would be ING DiBa, which pioneered the use of video authenticity checks by allowing clients to have their identities confirmed by recording a short video. Customers must simultaneously present their faces to the screen while also holding their identification paper in front of them.


A woman holding her ID to compare with her face
Facial recognition tech streamlining customer onboarding

For businesses, this implies that the amount of time spent verifying the identification of new customers is cut in half, the number of days spent waiting for new accounts to be opened is cut in half, and a considerable amount of manual work is reduced.


For technology integration, this entailed integrating video KYC with preexisting systems and customer onboarding workflows, ensuring compatibility with the CRM, and applying machine learning algorithms and facial recognition to enhance the accuracy of the verification process. All of this had to be accomplished without causing disruptions or delays for customers and with full compliance with the legislation regulating data privacy. At the same time, ensure proper encryption and security measures for data storage and transit.


4. Agile and Adaptive Culture

A digital strategy is not just a roadmap of technology implementation and integration to achieve business goals. For organisations to successfully adopt the strategic guiderails, they need to cultivate a culture that is both flexible and adaptable. Business and technology leaders are all tasked with the responsibility of fostering an innovative culture within their respective teams. Empowering employees, tearing down walls across departments, and welcoming change are all necessary steps to take in order to facilitate quick iterations and modifications in response to shifting market conditions.


One of the first initiatives the leadership team at Spark, a New Zealand-based digital services and telecom company, took as part of their digital transformation was to go all-in on Agile (self-organising and cross-functional teams) across the board.


Spark realised from the start that the transformation needed to be a "hearts and minds" revolution in order to successfully enable significant transformations in organisation, procedures, and technology.


The Sounding Board's first objective was to identify the behavioural changes that teams would need to succeed in the new agile operating paradigm. Members defined these adjustments based on their own experiences, inspirations from other organisations, and Spark's work on culture and talent. Finally, to make it more than just words on paper, Spark made culture a work stream of the agile transformation, sponsored by a board member and addressed regularly in transformation meetings. Through continuous and disciplined action, they brought culture to life.


A group of people in front of the board with Agile planning

5. Data-Driven Decision Making

Today, data is an extremely precious asset. It is necessary that those in charge of technology and data set up reliable data governance frameworks and develop data-driven decision-making procedures. The digital strategy should define the organisation's direction towards data governance, including how data is collected, structured, protected, and used. Nobody doubts the importance of data collection and interpretation for decision making, but leaders must also discuss and decide how to collect and use data ethically to remain aligned with company values.


Take Unilever, for instance; they set out to create a software platform and data analytics infrastructure so they could have useful discussions with their customers. The corporation accumulated 900 million consumer records in 2019, up from 200 million the year before, in order to achieve this goal. The company then used machine learning to create customer segments based on those choices and then used data-driven, programmatic marketing to reach those segments via digital channels with personalised messages. Streamlining production and getting to know consumers may help bring goods to market much faster. In 2018, Unilever introduced ten data-driven brand new products each in as little as six months, which is 40–50% faster than the traditional launch process.


It's about digitising all of the aspects of Unilever's business so that we can leverage the world of data and increase our digital capability in everything we do. Alan Jope, CEO, Unilever

A screen with tones of data to support data driven decision making

6. Scalable Infrastructure

A successful digital strategy requires to plan development and investment in scalable infrastructure that can support growth and accommodate evolving technology requirements. The IT infrastructure should be able to process growing data quantities, manage data processing, handle new software deployments, provide cybersecurity, enable innovation and experimentation, and handle higher data volumes.


Let's look at the example of Manulife’s, the Toronto-based insurance and financial services company, which global infrastructure was managed by different on-premises datacenter providers. This multivendor approach led to inconsistency and posed challenges for new development projects because of lengthy process and acquisition times. To position for greater innovation, the company determined that it needed a single cloud platform.


We want to focus on making decisions easier and lives better for our customers, not on managing infrastructure. Aaron Minkovich, CTO at Manulife

Manulife has successfully transitioned to Azure Kubernetes Service (AKS) with a strategy to be cloud native by the end of the year, making them a pioneer in the industry. The company has deployed a load-balanced, multi-region AKS environment with over 250 clusters and 3,000 applications and microservices accessible through APIs. Manulife is also leveraging the Azure platform's 75 different products and services. The transition to AKS enables faster, more secure developments and empowers development teams, allowing resources to be allocated towards innovation. The solution also provides autonomy while ensuring security and compliance, which is crucial for driving innovation in 14 countries with different regulations, which was extremely hard to achieve with on-premise data centres.



In this digital era, a company's digital strategy is not just a roadmap; it's a declaration of intent, a commitment to growth, and a vision for a digitally empowered future. As organisations embrace the interconnected elements of technology, culture, and data, let us remember that the true measure of success lies not just in the implementation but in the lasting impact on customers, teams, and the world we shape through digital endeavours.


References

1. Design Thinking - Wikipedia. (2018, September 23). Design thinking - Wikipedia. https://en.wikipedia.org/wiki/Design_thinking


2. What Is Agile Methodology? (a Beginner’s Guide) [2023] Asana. https://asana.com/resources/agile-methodology

3. Unilever is using Google Cloud to help it create 1 billion one-to-one relationships with its consumers, DigiNomica, https://diginomica.com/unilever-is-using-google-cloud-to-help-it-create-1-billion-one-to-one-relationships-with-its-consumers

4. How AI and digital help us innovate faster and smarter, Unilever, https://www.unilever.com/news/news-search/2023/how-ai-and-digital-help-us-innovate-faster-and-smarter/

5. A Q&A with Starbucks CTO Gerri Martin-Flickinger, Microsoft Transform, https://news.microsoft.com/transform/qa-starbucks-cto-gerri-martin-flickinger/

6. Starbucks: A Masterclass in Digital Transformation. How Starbucks Perfected the Art of the Cross-Channel, Intelligent Automation Network, https://www.intelligentautomation.network/transformation/articles/starbucks-digital-transformation

7. Starbucks’ Digital Flyweel Strategy Continues to Pay Off, Gigirupt.io, https://digirupt.io/starbucks-digital-flyweel-strategy-continues-to-pay-off/

8. Manulife supercharges development and reduces costs by 50 percent with Microsoft Azure, https://customers.microsoft.com/en-ca/story/1629943996414131596-manulife-insurance-azure-kubernetes-service

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