A New Framework for Successful Digital Transformation

Digital transformation is a fundamental reality of business today, as noted Warren Buffet. However, according to McKinsey, 70% of digital transformation projects fail, indicating that there is a need to reset expectations and redefine success in the transition to a more digitally-enabled global economy.

A comprehensive study conducted PYMNTS and involving over 15,000 consumers in 11 countries, along with monthly studies of nearly 4,000 consumers in the U.S. and numerous CFOs, highlights the significant shift to digital that has occurred since March 2020. The world abruptly shifted to digital methods, and this transformation has impacted various aspects of life.

Based on this data, it is clear that a new data-driven framework is necessary to achieve successful digital transformation for businesses and their customers. This framework begins with an understanding of the five distinct ways in which digital transformation is changing every business.

Firstly, digital transformation is not just a separate channel or project but a way of doing business. It is crucial to view digital as an integral part of business operations rather than a separate entity. This shift in mindset has implications for traditional industries and physical retail, which need to adapt to the digital age to succeed.

Secondly, industries are now defined what customers do, not simply what companies produce. The rise of software platforms and marketplaces has transformed once-discrete activities into integrated digital experiences. For example, the activity of eating drives how consumers buy their food, and platforms connect various options for consumers to purchase food. Traditional industry classifications are becoming less relevant as competition extends to players focused on satisfying customer desires rather than fitting into a specific industry category.

Lastly, companies are breaking away from conventional industry norms and practices. With the opportunity to digitally transform how businesses interact with each other, new business models are emerging. Brands are utilizing technology, data, and embedded payments to explore B2B2C models, building direct relationships with end-customers without undercutting existing intermediaries. The shift towards digital allows for the exploration of new revenue streams and challenges long-standing industry practices.

In conclusion, a successful digital transformation necessitates a shift in mindset, a focus on customer activities rather than company outputs, and the willingness to break away from conventional industry norms. Embracing digital as a core aspect of business operations is key to thriving in the digitally-enabled global economy.

Sources:

– McKinsey: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-digital-imperative
– PYMNTS research: (source article)