February 2, 2022
Why companies need to transform?
ICG
Home » Blog » Why companies need to transform?

Imad-Eddine HATIMI, SVP Chief Strategy and Advisory Officer at Innovation Consulting Group

Why Digital transformation is needed for companies?

Nowadays, companies are facing unpredictable economies, disruptive technologies, and globalization as well as a fierce competition and a scarcity of resources. Industries are converging, businesses interact more than ever before, and clients are becoming more demanding since they know more about their needs and enjoy various possibilities. The average age of firms is decreasing because of they fail to deal with a more and more complex environment. To succeed in such uncertain contexts, companies constantly need to develop their ability to adapt with new realities, to innovate and to design new practices and also to successfully manage change projects. To do so, companies need to align their strategies and to renew their practices and processes. In other terms, they need to transform their business models and operations.

In this perspective, Digital Transformation is a key process by bringing the company to its maximum performance and not only improving existing processes and customers’ experience. It allows organizations to 

1) Seize new business opportunities by meeting emerging needs from customers and entering new markets; 

2) Improve customers’ experience and ensure their satisfaction and retention;

3) Generate new efficiencies by reducing their operations’ costs;

4) Increase their performance by strengthening their processes and HR effectiveness; 

5) Build a new business model and a unique value proposition to ensure their competitive advantage.

How to successfully achieve Digital transformation?

Digital transformation is a holistic journey that concerns all the company activities and stakeholders. It may request aligning the company’s strategy to deal with market changes, renewing the offerings in terms of products and services to meet emerging needs, redesigning the governance and management systems to reinforce the organizational agility, reengineering the processes to increase the operations’ productivity, up-skilling and/or re-skilling their human resources to strengthen the HR performance, automating the company’s activities for a better efficiency and customer experience, etc.

Digital Innovation is a key factor for a successful transformation. It helps clients to discover new growth opportunities, to deal with uncertain contexts, build distinctive competencies and a strong competitive advantage, rethink their capabilities and adapt them to new realities, and set a sustainable model that adapts to emerging situations. In fact, according to Abode report (2019), digital-first companies are 64% more likely to achieve their business goals than their peers.

However, digital innovation is generally characterized by a risk and an uncertainty, since achieving the outcome is not always guaranteed and information about the future state of the company and its environment is not always available. Digital innovation also involves high budgets, a long-term agenda, and a strong interaction between the different stakeholders. 

By consequence, successful digital innovation requires building a culture of change within the company, thanks to effective management practices. First, an effective change management approach is really needed to leverage all stakeholders, build an overall acceptance, and ensure their ability to adopt new processes, practices and behaviors. Secondly, agile project management methods should be adopted to ensure a successful achievement of their digital innovation initiatives. Finally, risk management appears as a key determinant given their complexity and the investments that digitalization projects require.

Can you describe the 3 most important dimensions of a transformation process?

3 questions are to be tackled in a transformation process, namely: Where to Invest, What Change to proceed and how to Grow in a sustainable way.

The first question aims at helping companies to identify key opportunities they should invest in. To do so, this step relies on setting a business strategy with clear goals, well-articulated action plans, and a strong business model. It also allows building a valuable portfolio of products and services with a distinctive value proposition. Thus, companies position themselves and allocate their resources in the most profitable way. 

Once the company’s strategy and its offerings are defined, transformational needs are defined according to the gaps between the desired state and the current one. Consequently, the second question requires from companies to ensure the needed internal alignment to meet the transformational goals. To do so, this step identifies aspects to change and the process to successfully reach the desired situation. It tackles activities like redesigning the company’s organization, about reengineering processes, enabling people and building a culture of change, and adopting new technologies. 

Finally, by answering the previous questions, companies will be eventually able to generate more sales by building a strong reputation and engaging with more customers and existing ones. On the other hand, financial sustainability could be obtained through a profitable investment plan and effective risk management practices. Thus, the third question aims at enabling companies to capture the value of all the transformational change that was achieved.

You may also like

Building a Digital-Ready Workforce

Building a Digital-Ready Workforce

Digital transformation is no longer an option. Companies around the world now see the need to evolve or risk falling behind, and are making a concerted effort to embrace digital ways of working. Some businesses are in the process of questioning what digital means to...

read more

Ready to talk?

Request your free Consultation to learn more about
ICG’s Digital Transformation Capabilities