Digital Transformation: How to Implement it Successfully

It's October 1, 2013, 08:54 am. I open the door to the Deutsche Telekom training center and from now on I am a dual computer science student. Two months ago, I successfully completed my training as an IT specialist and am now looking forward to the next step. Nevertheless, I'm excited because I'm not really sure what to expect.

At exactly 09:00 am, I am sitting on a chair. Around me, 23 other students who are having their first day with me. The training manager, Mrs. Bauer, welcomes us and for the next two and a half hours, we get a first overview of our studies, Telekom, and what is expected from us. During the break, I breath out deeply and think: IT and digitalization are much more than what I had learned so far. I still have a lot to learn.

Probably you had the same experience as an online marketer as I did. Twenty years ago, your calling didn't exist and five years ago it was quite different from what it is today. The speed at which IT or online marketing develops is enormous.

I asked myself ten years ago: when will we finally be done with digitalization?

The good news: A study by the Federal Ministry of Economics and Energy has found that German companies have become significantly more digital in 2021. So I have hope, because we are on the right track!

The bad newsis: We have a mass of tools and possibilities and need to choose the right ones. OMR Reviews, with its more than 1,300 tools compared, is a good starting point.

In this article, our guest author Kevin Welter from HumanITy takes a closer look at the topic of digital transformation and explains what you as marketers should know and how you can distinguish the right from the wrong.

What does digital transformation mean?

"Kevin, you mentioned digitalization above and now you are talking about digital transformation. What's the deal with these terms?" Digital Transformation is unfortunately often equated with digitalization. But there is a clear difference. In English, there is also the term digitization. The three are defined as follows:

Digitization

The conversion of analog data to digital data. For example, if you scan a letter to make a digital copy as a PDF.

Digitalization

Means the transformation of business processes driven by digital technologies. The switch of your communication with the customer from letter to e-mail would be a suitable example.

Digital Transformation

Digital transformation is the consequence of digitalization. As a result of digitizing individual processes and the continual development of further technologies, broader changes arise. These affect the company, its employees and customers, working methods, and even society.

Fifteen years ago, it was still normal that e-mails could only be processed on the PC. Today, you sit on the couch, turn on the next episode on Netflix, and answer your e-mail with your iPhone in between.

Digital transformation has effects in your companies on the culture, the working methods, the business processes, the technology, and the business models. Through new developments, society is also shaped and Generation Y has very different ideas and demands than Generation X or Generation Z, which is currently entering the job market.

New Work, agility, lean, change, transformation, and other buzzwords are symptoms of digital transformation.

Impact levels of digital transformation

The digital transformation can be divided into three levels of impact within your company.

Optimize

The optimization of existing things is an area where most companies are already doing very well. The impact mainly affects the operative business. For example, processes that are simplified by the introduction of a CRM system, like Salesforce CRM, can be an overview of the best CRM systems for SMEs which you can find here.

Expand

This is simply about expanding the existing offer and capabilities and offering new combinations of products and services. This can be, for example internally in companies, the introduction of a chatbot for communication with the customer. Here, the use of a chatbot software like among others moinAI is suitable. Externally to the company, an example would be the company Vorwerk with their Thermomix, which made a kitchen machine a star through a well-maintained community or the company Herrenknecht, world market leader for tunnel boring machines, which now not only sell tunnel boring machines but also offer services on site. This also means a shift from manufacturer to service provider, which is not trivial.

Online marketing is an extension of sales and recruiting. Companies that have so far only relied on traditional media for their marketing can reach new target groups through the expansion. It is clear that online marketing requires its own strategy. Therefore, it is not an improvement, but an extension of the existing approach.

Discover

This is the level of wild ideas, the so-called "moonshots". In the past, some companies have managed to transfer their offer to new areas with initially wild ideas. For example, Amazon created their own cloud service with the experience of data centers (Amazon Web Services) or the non-sticky glue from which the Post-its were created. This requires a corporate culture that allows the creativity of employees.

Discover is about experimenting. Trying out how new technologies or innovations can be applied to the existing. Of course, the activities must be targeted. Just setting up a big data project doesn't lead to the desired goal. A question for the Post-its could have been: "How can we use the bad glue?"

In online marketing, such a question could be: "How can I identify my target group faster and more accurately?" The solutions could be new technologies like machine learning algorithms or testing new methods like design thinking.

Discover doesn't always have to result in something completely new. Rather, it's about the application of something unusual that you perhaps haven't tried yet in your company.

What conditions must be in place for a digital transformation in the company?

The important question remains: What goal do I want to achieve through a transformation and when am I successful? You do the same when you plan a new online marketing strategy.

In order for employees to remain flexible and open to change, they need clarity. A common goal enables creative strategies to be found for its achievement.

In reality, the "we must do something now" mentality is shown. Thoughtless digitization causes frustration and rejection in the company. In many companies, a defensive attitude then develops. Typical comments on this are:

• "This won't work for us!"
• "We have never done it this way before!"
• "We have always done it this way!"
• "Old wine in new bottles."

How can digital transformation be successfully implemented?

Digital transformation begins at the strategic level. It's not about introducing tools or being technically up-to-date. But to achieve a common business goal.

If this goal, instead of more sales, more customers, or becoming more digital, describes the societal impact that the company wants to achieve, a good basis for success is created. At the same time, there are business processes that can be made more efficient through IT solutions and thus improve the customer experience. This increases the recommendation rate and leads to growth. The solution to a problem in the industry can also lead to new companies.

The N26 bank has identified a market gap in the banking world and allows its customers to conveniently control their finances via an app. A pioneer in the industry, it is now considered the standard and is also being adopted by large banks.

Digital transformation driven by competition or customers

There are several approaches to starting a transformation project.

Thought from competition

"They are doing it now, so we have to catch up." Transformations are often started with the thought that we must align with the competition.

The example of the N26 bank makes sense. Because they recognized the urgent wish of the customers that banking and finances should go simply, quickly, and conveniently per app.

It's always important to consider the situation the competition is in, what company culture they have, and what problem they want to solve. Your own company might be in a completely different situation. So, Facebook advertising may make sense in e-commerce, but local SEO is likely in a joinery. More about Local SEO you can learn in this article.

The company must be considered individually. With all bottlenecks. As a joinery, the fulfillment of the service is the bottleneck. If the order books in the joinery are full, it doesn't need new customers. However, Facebook advertising for new employees could be interesting again.

Thought from the customer

Thinking from the customers' wishes and problems has the advantage that a product can quickly be verified. Good customer interaction is important to be approachable and to get to know the customers better. Generation Z is significantly more digital than Generation X. And this must be included in decisions.

Offering your own services in a digitally available and easy-to-consume way can be a success strategy. A challenge here is to find out if the customers can even name the problems they have.

Henry Ford is reputed to have once said

"If I had asked people what they wanted, they would have said: faster horses."

Use your own creativity: Remember back to the presentation of the first iPhones. At that time, users did not know that they "needed" an iPhone. Using the own creativity of employees can be the strongest engine for entrepreneurial growth.

This raises the question of what specific challenges there are and how they can best be solved. Digitalization and online marketing can offer massive advantages in optimizing internal processes. Sales and recruiting are at the forefront. Before introducing a solution, the question is what the problem is that needs to be solved, because from this we can then deduce whether the company transformation was successful.

What opportunities and challenges lie in digital transformation?

Opportunities of digital transformation

Think in customer benefit

The customer experience plays a central role in the context of digital transformation. New digital possibilities make it easy for the customer to compare offers efficiently and switch between providers.

In order to bind customers in the long term and to tap additional profit potentials, companies should take new paths in customer orientation and improve the specific customer experience. For a stronger customer focus, web analytics software such as Google Analytics, is suitable.

Creation of new possibilities

Many potentials have already been lifted through new organizational structures and the change of "mindset". And this can just continue like this. The potentials here vary from industry to industry. For example, the use of drones in the construction industry has made a more productive and safer work design possible.

Sidenote: Probably no one complained about this change. There is a clear problem and the drone is a simple and ingenious solution.

Through home office and mobile work, the working conditions in some professions can be individually designed. This raises the quality of life and I speak from my own experience. How do you see it?

Challenges of digital transformation

The biggest challenge is to get started. But aside from the will (and acceptance), it usually still lacks the right resources, the appropriate skills of the employees, or the knowledge about the current market and provider situation and possible funding opportunities.

When did you last take the time to explore future paths? Unfortunately, this happens far too rarely. Having an innovator in every team who influences the team as a multiplier is worth its weight in gold. The multiplier basically advertises new digital tools, current research, or has ideas for improvements on a regular basis and on his own.

In my view, however, the transformation should not be seen as a project. Every employee, every executive, and above all the managing director is responsible for the success of the digital transformation.

The digital transformation in online marketing

If you are reading this here on OMR Reviews, you are probably an online marketer and have to deal with tools like these on a daily basis:

1. SEO tools
2. Email marketing tools
3. CRM systems
4. E-commerce platforms and shop systems
5. ERP systems

I believe talking to you about the transformation of your company would be nonsense. That's like asking me when I have internet problems: "Did you already restart your router?"

Do not let yourself be unsettled when digital experts throw buzzwords around, but ask yourself the question: "Does that solve a problem that I or one of my customers have?" If not, then tick it off and move on.

Let's rather use your time and talk about how you can deal with the transformation of your customers. Every change (even if it's just the introduction of an e-mail newsletter with rapidmail,) has the potential to meet with rejection.

How do I handle changes?

If you look at your life, or everyday routine in its individual components, you immediately notice that there are always specific tasks and processes that you are doing. It starts with getting up, goes over brushing your teeth, to your jobs, and ends with going to bed. So there are a multitude of "jobs" that you do every day, and for most jobs, we buy ourselves some support.

Each of these jobs can be divided into sub-steps and we have a solution for each of these steps. Washing is still easy. Here we usually use a washing machine. To win a new customer, there are different approaches that are more or less successful.

• I can call a list
• I can run TV commercials
• I can follow an SEO
• I can run Facebook advertising
• And many more

We are always looking for a suitable solution that solves our problem easily and quickly. In the end, the customer must assess whether to switch to a different solution or stay with the old one.

However, old habits and fear of the new solution lead to uncertainty. "Can this really work? Is the change worthwhile? We've never done it like this before." If you, as a marketer, show your customers a new way to win customers, then the forces of habit and fear will always work against you.

In digitalization, it's exactly the same game. A new tool or the optimization of a process is always a change. But how do you best deal with it?

People need a "Why" and sometimes also proof to get moving.

The reason

In 1978, an experiment was published that shows how strong a justification works, even if the justification is actually no reason. The researchers used a copier in a copy shop for their experiment. They wanted to test three possibilities for not having to wait and to be let go.

The questions for the runs were:

1. "Excuse me, could I use the copier?"
2. "Excuse me, could I use the copier, because I'm in a hurry?"
3. "Excuse me, could I use the copier, because I need to make copies?"

The results were

1. 60% let the researcher cut in line
2. 94% let the researcher cut in line
3. 93% let the researcher cut in line

Even a trivial reason can already cause people to change something. If you deliver a logical reason for the change, it will simplify the change process.

The proof

The second step is to provide proof and show that it works. In software development, we call this a "Proof of Concept" (PoC). In Agile software development, it works "hypothesis-driven". An assumption is made like: "If we make the button red, then more users will click on it."

Then there is an implementation and it's tried out in an A/B test. For carrying out an A/B test, you can also use tools like Kameleoon, for example. If the hypothesis is proven, then the changes are rolled out for all users.

For larger hypotheses, a prototype is often even built first, which does not yet have all functions. This way, the working hypothesis can be confirmed or refuted with little effort. As a book, I recommend "Lean Startup" by Eric Ries for this.

Also in marketing, the customer with a small budget can already test different strategies and experience how effective the new strategy works. This persuades even the biggest skeptics and convinces them of your approach.

What success factors can check the digital transformation?

If you have defined a clear goal, then you also need a success criterion to be able to determine when you are successful. The measured values ​​are individual in each company and must be based on the goal. I'll give you three examples for inspiration:

Customer loyalty

The stronger customer loyalty, the better. Amazon is one of the best examples of this. Personally, I no longer have to think about whether I buy something on Amazon. I trust the company and I know that if something doesn't fit, a solution will be found. This even results in me sometimes preferring to spend a little more money than buying it at another shop.

Customer expectations are correspondingly high for you too. But if you fulfill these, then you can look forward to regular customers.

Customer loyalty can be measured by the Customer Lifetime Value. Using this as a metric is recommended for every type of company and can be analyzed with a good CRM system.

Operational Excellence

Companies that sensibly link processes and modern software benefit from smooth and fast operational processes. A measure that can be used here is the lead time in a process. If a process previously took 4 hours and the lead time has improved to 1 hour, 3 hours have become free for new activities or for scaling.

For example, let's assume that setting up and managing ads in the Facebook ad manager are regular tasks that cost an employee 4 hours a day. By using a tool like AdRoll, for example, you can simplify the repetitive creation of ads and save 3 hours.

It's always exciting to write down what you spend your day with. Where is there potential, for example, to automate something or outsource something?

Speed

Speed ​​is one of the most important indicators in today's agile and fast-paced world. In software development, the "Time to Market" is often used as a KPI. This is how long a new product or a new function takes from idea to delivery to the customer.

High speed with consistent or even better quality is a brilliant focus. Because, on the one hand, customers are happy that requirements are implemented quickly, which of course increases the value of the product.

On the other hand, new customers are also attracted by innovations, leading to more sales.

However, it requires lean processes, suitable tools, and strong teams that trust each other and work towards a common goal.

Conclusion on digital transformation

Technology is never the problem. Everything we can imagine entrepreneurially is solvable. This is a blessing and a curse at the same time. Because of the large selection of tools, the digital transformation may seem complicated.

One of the factors for success are the right questions. This brings your focus on you and your company, and you can turn the right screws. Every transformation is a change and we humans are initially skeptical at the beginning of a change process.

With the right approach, you will be able to drive the right change in the company in order to get the best out of you and your customers. And of course, it doesn't always have to be the newest, most innovative, and digital business model. Optimizing existing business processes also brings progress and can have a major impact.