Why Digital Transformation Is Important To Every Company

Why Digital Transformation Is Important To Every Company
Why Digital Transformation is Important to Every Company

Many customers were dissatisfied with Blockbuster’s inability to understand and meet their needs. Late fee policies were difficult for people’s busy schedules as they struggled to find time to watch a movie in a day’s time and return the movie by the early afternoon deadline. With late fees, on top of rising movie rental prices, Blockbuster never understood the customer's changing needs.

Netflix heard the needs of customers and their unhappiness around existing systems loud and clear. The company came up with a model that allows renters to watch and return movies at their leisure with no late fees, and only had to go as far as their mailbox to receive and return the DVDs. That’s all it took for many Blockbuster customers to change their loyalties.

Netflix didn’t stop there. It has continued to transform itself since its original DVD-by-mail beginnings. Now, many customers only subscribe to the rental company’s online streaming catalog. Recently, Netflix announced that it would be coming up with a new customer interface for some streaming devices to better meet the needs and interests of their customers. This is a company that isn’t growing complacent in its success. In the early stages, Netflix offered to buy out Blockbuster for $50 million but Blockbuster declined the offer. Today Netflix is worth $28 billion.

Blockbuster didn’t have the foresight to see where the Internet and technology were transforming. Many businesses ignore new entrants, deny the influence of transforming technologies, and more importantly, ignore the changing needs of their customers.

On the other hand, when Encyclopaedia Britannica announced in 2012 that the company would stop printing books, the world took notice. After 244 years, the iconic reference publisher was going all-digital. While the news came as a shock to many outsiders, insiders weren’t at all surprised. “It was just the final phase of a carefully planned strategic transition that had been 35 years in the making,” said Jorge Cauz, president of the company. Indeed, employees in Encyclopaedia Britannica’s Chicago offices celebrated their company’s transition to the digital age, toasting the dawn of a new era.

How does a centuries-old print publisher transform itself into a thriving technology company? By coming up with an entirely new way of doing business. Encyclopedia Britannica had to decide not only what its digital products would look like, but also how to care for a new kind of customer.

It’s culture changed from a company selling print books door-to-door and to schools and libraries, to becoming a technology company, not just using digital tools to sell their products, but actually creating digital products. Company leadership knows that despite early success as a technology company, their work is far from over. In an age where virtually unlimited free information is just a swipe and tap away, Ross sees value in having a trusted brand vet your information for you. “We’d love for everyone to be using Britannica again as the trusted source for information,” he said. “A ton of people still come to us based on trust — they know our information is credible.” In an age of near-unlimited access to information, you can’t put a price on having a source you can trust every time.

Digital technologies are transforming how we think about our competition, the lines with competitors are getting blurry. In certain areas, we compete and in others, we cooperate to provide great value to the customer. What customers value can change very quickly, so companies need to be dynamic and respond to the ever-changing needs of the customer to provide the value. Successful companies should not be complacent, instead they should constantly push the envelope to find the next source of customer value, find new markets and create new opportunities.

Most companies think a digital organization means simply a matter of being technologically savvy and many companies are embracing technology and learning fast about how it can transform their businesses, but the problem is they all are ad-hoc and uncoordinated. Digital organizations are about creating an agile organization that can detect what type of change is essential and respond quickly with the most competitive solution.

To become a digital organization the digital transformation need to focus on five areas that businesses need to create the right strategy in order to provide customer value and stay ahead of the game; customers, competition, analytics, value, and innovation.


The most important thing for a business is the customer, as a buyer of products or user of their services. In order to grow the business, traditionally, businesses use marketing to reach, influence, motivate and persuade people to buy their product or service. But in this digital age customers are not passive but they are interacting, sharing and connecting with each other by talking about the experiences and influencing each other about the brands. So now businesses need to build a strategy to engage the customers in their networks, deliver value to customers and communicating with them but also, need to listen, observe the customer's interactions with the brands and understand their emotions, responses, and their unmet needs. Businesses need to see customers networks and identify the brand champions, evangelists and nurture them and invite them to be co-creators and marketing partners to create value. Businesses need to customize and personalize offerings to customers needs.

Engaging the employees is as important to the digital transformation as is engaging with customers externally. Helping employees to access their work more easily, engaging with them with the right content, resources to help with their job, connecting them with right tools, sharing knowledge, using right communications tools and providing collaborating tools. So companies need to think about proving good intranet platforms is very critical to the success of digital transformation.


Traditionally businesses used to compete with rival businesses that looked very much like themselves; they cooperated with businesses that would help them with their distribution or sell their services. Today the boundaries of businesses are getting blurry and you see competition coming from a business that is outside of the industry and does not look like the business or provide competing value to the customers. Sometimes the long-term business partners may be competitors if they are directly serving the business’ customers. At the same time, businesses are partnering and cooperating with direct competitors due to interdependent business models or mutual challenges from outside the industry. So businesses need to rethink how they compete and how they cooperate with businesses. Businesses need to think about building platforms and not just products as in this digital age the relationship between businesses are mix of competition and cooperation. Digital Platforms are main factor in driving strategic cooperation between rival businesses. Platform business model is a shift from linear model of traditional business to network business model. Here the players in the network would add value to overall success of each player in the platform. Examples of Platforms like Google, Apple, Microsoft, etc compete in various areas but work together in other areas to provide the best value to the customer.

Data Analytics

Traditionally data played a good role in the business and mainly focused on measuring, managing and optimizing business processes, forecasting, and for planning. Data was expensive to produce as it was done via surveys, research, measurements and so on. Today in the digital era, generating the data is easy and can be gathered continuously and is inexpensive. The most important thing that the companies need to change is the way they think about and use data as a strategic asset that provides great value to the business. Businesses need to gather diverse types of data; business process data like HR management, billing, accounting, operations, etc, in order to reduce risks, optimize business operations, and for compliance purposes, product service data like in Internet of Things (IoT) the data from sensors can help optimize, control, monitor in real time, and customer data like purchases, behaviours, interactions, demographics, etc, to understand the customer and provide more relevant, valuable, and personalized information.

Data should be used as predictive layer in decision making across the business internal and external users. (Dominos).

Deliver Value Proposition

Traditionally businesses value proposition has been constant and designed to be for a long haul. Business found a competitive advantage or differentiator and taken advantage of that to position themselves in the market place. They tried to optimize that as long as they could. In the digital era businesses must learn how to continuously adapt their value proposition and learn to focus beyond their current business model and must keep changing the value proposition to the ever changing needs of the customer. Businesses need to start thinking how a new technology would create a new value and new business model, and not just how it would impact the current business model. Using digital tools and dynamic business models businesses can grow by reaching to new customer base or create new value to existing customer base or can do both. As digitization has made it easy for any business to enter into the market with a good value proposition. So existing businesses cannot wait till the last minute to think about what new value propositions are need to stay relevant to the customers, they need to adapt and extend their value proposition and provide new relevance to customers at all times. We have seen earlier how Blockbuster failed as it ignored the changing needs of the customer.


Traditionally innovation is focused on the end product. The process of ideas for innovation was mostly started with combination of leadership of the project, analysis, intuition of needs of customer. Since testing and feedback was difficult and expensive, so until the product hits the market there is not substantial feedback and by that time it is too late. This process made smaller business shy away from innovating. Today in the digital age with the digital tools company can innovate with rapid experimentation and continuous learning. New methodologies like design thinking and lean startup helps business to develop minimum viable products (MVP) quickly and get validation from customers in short amount of time and make decisions based on feedback and iterations after launch. These methods are helping companies to learn fast, fail faster, respond to changing needs of customers faster by shortening the time to successful innovation. Today’s innovations are focused on solving the right problems and companies should focus on problems and not on get attached with their solutions.

To get started on the your digital transformation process, you need to assess what your company's strategies in each of these five areas and then see where you are lacking and what you need to act on.

Memphis Partners

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