Digital transformation refers to fundamentally changing how a business operates through embedding technology.
Usually this means internal processes and user experiences are transformed from analogue to digital, enhanced and streamlined via digitization, or a company develops new digital revenue streams.
Often a digital transformation is a type of internal or product pivot: something is changed, from a physical or human process to an automated one.
Digital transformation used to primarily occur in businesses with many human led processes, or more mature businesses who needed to update their operating model to remain competitive in a changing landscape.
The driver behind such transformations is continued competitiveness and the imperative of shareholder value:
- High speed of disruption: The pace of innovation, especially from digital technologies is very high, and it introduces market disruption at increasing speed
- Rapidly evolving customer preferences: Customers expectations evolve, and they demand an experience that is digitally enhanced.
Digital transformations are also precipitated by macro-economic events, such as:
- Covid pandemic: where large numbers of the workforce moved from in person to remote working
- AI: we’re all currently learning how to integrate AI into our processes and products
Let’s illuminate this with two examples from Microsoft, a digital company:
- During Covid: CEO Satya Nadella said “We have seen two years’ worth of digital transformation in two months”
- AI: Microsoft rolled out Co-Pilot internally in 2023, with the Finance team becoming some of the heaviest adopters. An internal study showed significant time reductions, with one team reporting they had gone from 1-2 hrs time spent on revenue reconciliations per week to 10 minutes.
In short, any existing type of business might identify scope for digital transformation, depending on the environment.
However digital transformations are risky. Many businesses fail in execution, either due to strategy or to internal resistance or capabilities.
How digitally mature they are is key to their success, across a number of dimensions from leadership, culture, people and skills, technology and enablement. Assessing and building digital maturity is key to success.
In this article we’ll take you through:
- Types of digital transformation: real examples of how other companies are approaching automation, innovation, AI, ecosystem, education and data topics
- How to identify digital transformation opportunities: How to identify smaller and bigger opportunities for transformation, via a combination of using a digital maturity model to build capability, and identifying scope for efficiency or automation
- How to do a digital transformation: How to derisk a digital transformation and iterate towards success
We’ll also include a Digital Maturity Model and Digital Maturity Development Canvas to help you score your organization across a series of categories, competencies and behaviors to help you understand where you have capability gaps and improvement opportunities.
“The outside world can push you into [stagnation] if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind. These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace.” - Jeff Bezos, 2016 Shareholder letter
The Hustle Badger Digital Maturity Model
“Digital transformation is the fundamental rewiring of how an organization operates. The goal of a digital transformation… should be to build a competitive advantage by continuously deploying tech at scale to improve customer experience and lower costs.” - McKinsey
A digital transformation is when a company embraces and embeds digital technology for competitive or cost advantage.
If done well it’s profoundly additive to a business, allowing them to improve staff productivity or drastically improve customer experience.
Objectives of a digital transformation are either
- Aiming for improved efficiency / lower costs: automating manual tasks, speeding up processes, better use of data
- Competitive in nature: responding to external events, competitor pressures or strategically designing a leap forwards for customers
In both scenarios the aim is to increase shareholder value, by ensuring the business continues to compete and grow, while delivering a strong rate of return.
We see 4 specific types of digital transformation:
- Automating or Accelerating Tasks (Efficiency Gains): using technology to perform tasks that were previously manual or inefficient
- New customer experiences (Competitiveness): creating new digital products or services, or moving existing ones online
- AI specific digital transformations (Efficiency & Competitiveness): embedding AI in user experiences or internally to increase productivity
- Ecosystem and platform strategies (Efficiency & Competitiveness): leveraging existing business strengths in a new platform or ecosystem
These typically also have to be supported with
- Education initiatives: internal literacy and competency building, embedded into performance management
- Data and analytics as an enabler: embed digital tracking and data management and ensure data supports efficiency and innovation
1. Automating or Accelerating Tasks (Efficiency Gains)
Using technology to perform tasks that were previously manual or inefficient.
This includes robotic process automation (RPA) for routine admin work, software scripts to eliminate data re-entry, AI agents or operators, or robotics to automate physical tasks.
It also includes embedding new tools internally to improve employee productivity. Examples might include scheduling and payroll tooling, research tooling or Co-Pilots.
It’s a great place to start looking for digital transformation opportunities as nearly every business has tedious manual tasks. It’s easy to demonstrate digital transformation value in terms of cost savings and build buy-in.
Examples of implementation:
Task automation:
DMV | Department of Motor Vehicles implemented an “intelligent automation” program to automate data entry, with the outcome of saving time, reducing backlogs and re-investing in customer-facing tasks. They also launched new digital services for things like vehicle renewals and payment processing at the same time.
Lewisham and Greenwich NHS Trust [part of the UK public healthcare system] developed a bot called Steve to handle repetitive pharmacy invoicing tasks. Building and deploying the bot took c. 12 weeks, reduced invoicing process time from c.1 hr to ~2 minutes, and is estimated to save the trust the cost of 1 employee per year, at around ~40k.
Amazon deploys robots in its warehouses, including autonomous robots who can safely operate in the same space as people. It uses these to assist on tasks like heavy lifting, containerised storage and automated scanning. It acquired Kiva, a robotics company in 2012 to facilitate the development and deployment of robotics within its warehouses.
Employee effectiveness:
Target, a US homeware retail chain, has equipped its 350k+ field employees with myTime for Target, an in-house built scheduling app that allows employees to view their shifts, past and present, hours worked, set their availability, swap and volunteer for shifts. The platform now sees over 70 interactions per second.
“In this case, the team asked itself: How can we make scheduling more efficient for field leaders and more flexible, convenient, and empowering for field team members?...we wanted a tool that would provide our frontline team members with more options of working when they want as well as more adaptability and control in managing their own schedules.” - myTime for Target: Built for Target by Target
