Digital transformation is the term that is being used to describe a trend in the tech industry where organizations will be making major changes and investments in order to become more innovative and profitable.
The term "digital transformation" has been around for some time now, and many companies are already taking steps to embrace this trend.
However, there are still a lot of questions and concerns about how to handle the digital transformation. In this blog post, we will go over five steps that can help you make the right decision when it comes to transforming your organization.
The innovation gap of digital transformation
The future of successful manufacturing lies in the leveraging of established technologies and more advanced, cutting-edge developments.
It's no surprise that nearly three-quarters of industrial decision-makers agree with the following statement:
We need to get digital technologies, so we can prosper.
Almost every entrepreneur recognizes the need to innovate, but there is a serious lag between talk and those who are actually walking the talk.
There is a large gap between those who have access to the latest technologies and those who are creating it. Many high-end solutions are localized and clustered, and information is hard to come by online.
I call this the innovation gap of digital transformation.
This gap mostly exists because of a lack of understanding of how to get started, what skills are needed, and the right technological investments.
These barriers can be overcome, as demonstrated by the rapid growth in metalworking companies who already use technology to massively increase their productivity and take control of the market.
Making these steps forward can seem daunting at first, but the rewards always seem to outweigh the risks. Simply because there is no future in the status quo for businesses.
What is Digital Transformation?
Digital Transformation is the process of transforming an industry by adopting digital technologies.
Digital Transformation is a buzzword that has become prevalent across all industries, but what does it really mean? The idea of it can be interpreted in many different ways, but some common themes are an increase in digitization and automation.
Digital transformation also refers to the way that one business must evolve its business processes, organization structure, and culture to meet changes in customer behavior and expectations.
According to Wikipedia results in the following description:
“Digital Transformation (DT) is not necessarily about digital technology, but about the fact that technology, which is digital, allows people to solve their traditional problems. And they prefer this digital solution to the old solution”
What we can learn from this is that it’s more than just “going paperless”.
In fact, it's more a strategy to enable new types of innovation and creativity in a particular domain, rather than simply enhance and support traditional methods. Knowing these key facts, let's move forward.
Five Steps to a Successful Digital Transformation
When it comes to digital transformation, there are numerous different ways that companies can approach the process. However, if you're looking to improve your processes faster, I'd like to share with you five steps that we use to increase the level of digital transformation in a metalworking business.
Step 1: Conduct a needs assessment
The first step of the transformation process is conducting a thorough needs assessment to determine what digital capabilities are required by the company. This will also give you an idea of the digital strategy that will be followed for this project.
A good digital transformation should support not only today's customers, but tomorrow's as well. What do you expect the market to look like in five years? Will some current services still be relevant? Or will the demands for these services change?
The manufacturing sector can be disrupted quickly, and it's predicted to be revolutionized very soon (the Fourth Industrial Revolution). To see this in action, all you have to do is look at the world of retail over the past decade for evidence of that.
You need to think long and hard about what would happen if there was no market for your product tomorrow. That can be scary, but it can also be tremendously liberating in helping you define your organization's digital transformation roadmap.
To conclude: what things make sense to automate and digitize and what new services should be created in order to make the business thrive?
Step 2: Identify stakeholders and assess their expectations
The second step is to identify stakeholders and understand their expectations about how they want this digital transformation project to go.
This will help in setting priorities and ensure that all stakeholders are on board with the goal of shifting to new technology.
It’s no surprise that a lot of digital transformation projects fail. This is not because of that business don’t want to innovate, they simply get stuck. For example, they get stuck with IT departments that don't want to let go of control, management that doesn't want to change its recently and costly audited processes, and vendors that don't understand the requirements.
Whenever a new system is introduced with new capabilities, it’s necessary to review the impact of this on the full spectrum of the business.
The customer does not notice small efficiency improvements, but rather the overall business effectiveness. In the 21st century, the customer will drive the success of any business more than ever before and should supersede the mentioned resistance.
Key takeaway: The number one stakeholder will be your customer, and the second will be senior management. Everybody should be on board for projects like these.
Step 3: Document initial insights and share them
The third step is documenting initial insights captured from various sources which can then be analysed for how it impacts your organization’s current position in the industry, customer base, future growth prospects, etc.
We are living in an incredibly exciting time for both organizations and employees, particularly for those who are embracing digital transformation.
The new world of technology-driven business depends on a whole new style of leadership. Leadership where discoveries, ideas and even failures should be openly shared.
If you want to go fast, let a single person or a silo move ahead, but if you want to get far together, you'll have to involve the entire team.
Key takeaway: Are you giving your employees the right example by staying open-minded, supportive, and eager to invest in this new world? Are you sharing the results and changes that are being made?
Step 4: Adjust plans according to new insights
The fourth step is to remain agile.
Agile digital transformation is a method of transforming by understanding the need for change and adopting the change, either in part or in full. It involves firmly holding on to what we know and letting go of what we don't.
The digital world is developing at such a great pace that sometimes this can mean that a better solution to a problem can be found during the improvement process.
In traditional means, a project scope cannot be altered or even abandoned when such an opportunity occurs. A vendor has already been promised a certain software contract, a new employee agreed on a role within the company or even a new service has been launched.
But we all know that requirement can change quickly, for example how supply chains were disrupted during the pandemic in 2020/2021.
Being agile gives the opportunity to come up with many ideas and rapidly prototype them to determine whether they hold value.
Step 5: Leverage existing knowledge and technologies
"Smart people make mistakes and learn from them. Wise people find people who made mistakes and learn from them before making them themselves."
This is absolutely true for new technical challenges. Finding partners with the experience in achieving results combined with the support and motivation to keep developing will be key in making the moves forward.
As a metalworking business, you're likely to have lots of colleagues in the market who go through similar challenges.
I’m sure you’re also thinking “isn’t there something out there that already figured it out?” and the answer is yes, there are businesses that already have figured it out, but how they work won’t necessarily work for you.
What works is to use the processes and experience from consultants like us, so you don't have to reinvent the wheel by yourself and end up with a custom solution tailored to your requirements.
Key takeaway: get a second opinion on your plans before you start building them. This is especially true in the software sales business, where there can be a lot of pitfalls. Hiring a project manager can significantly reduce the risks of digital transformation.
