Framework Primer

Digital Transformation Strategy

GROWTH DRIVERS OPERATIONAL IMPROVEMENT

Demand Generation Reach & Selection Customer Purchase Process Customer Experience Process Efficiency Asset Utilization New Business Models

1 2 3 4 5 6 7 8
Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Business Driver Levers Business Enabler Levers

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Contents

 Overview

 8 Levers to Digital Transformation

 Digital Transformation Strategy

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Digital Transformation is being adopted by companies across most
industries—resulting in operational and growth improvements
Executive Summary

Digital Transformation is being embraced by companies across most industries, as the

role of technology shifts from being a business enabler to a business driver. Digital
Transformation opportunities includes both Operational Improvement and Growth
Driver initiatives, where the latter is driven largely by improved Customer Experience.
Transformation is driven by 6 Technology Trends:
• Social Media • Cybersecurity
• Mobility • Big Data
• Internet of Things • Cloud
This document presents an overview to Digital Transformation Strategy. We also have
a more comprehensive framework guide available on Flevy here:
• https://flevy.com/browse/document/digital-transformation-strategy-2249

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As the role of technology is shifting from being a business enabler to a
business driver, opportunities for Digital Transformation emerge
Shift in Technology Role

The role of technology has shifted…

From purely a business enabler to also a business driver.

Technology In the Digital Age today,

enables the B B technology creates new
business opportunities and
T fundamentally transforms
businesses in all
aspects—operations,
business models,
strategies. It not only
Historically, business requirements collected
enables the business, but
from “business users” drove the technology that T also drives its growth and
then enabled the business to advance.
can be source of
Technology purely played a supporting role in
competitive advantage.
this model.

Likewise, technology is helping businesses achieve both Operational Improvement

and Revenue Growth.

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There are 6 core emerging technology trends that make Digital
Transformation possible
6 Technology Trends • Social media and collaboration technologies enable
new ways and drive expectations of interacting,
personalization, and building relationships within and
• Cybersecurity is the protection of information Social beyond the organization. It is a key drive to improving
systems from theft or damage to the hardware,
the software, and to the information on Media the Customer Experience.
them. The more we depend on • The possibility to virtualize and
the Internet and related consume infrastructure,
technologies, the more we Cyber- platforms, and applications as a
depend on their security. security Cloud
service (XaaS) enables new
As such, there can be no Digital levels of scalability, flexibility, and
Transformation without cyber- responsiveness. It also gives
security. Cybercrime, digital espionage, way to new business and service
and hacktivism (digital activism) have become Digital models.
serious risks to businesses and consumers. Transformation
• Analytical methods and access to
• The uninterrupted trend the right data enable the
towards using mobile devices generation of new insights and
Big Data
impacts all areas of business Mobility decision-rich information. Big
& Analytics Data approaches allow to make
and personal life by
transforming how people use of the rapidly increasing
interact, consume information amount of data from multiple
and services, collaborate, and Internet sources.
• Connected devices of all kinds and cheap sensors
work. It allows for consumers of Things integrated nearly everywhere constantly create large
to be reached wherever they
amounts of data that need to be managed effectively.
are and at all time of the day.
This also enables new ways of automated and
personal interaction.

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Contrary to some beliefs, Digital Transformation is highly relevant to most
organizations—let’s dispel some of these myths
Digital Transformation Myths
REALITY

Digital is fundamentally personal. This makes it easier to see digital's B2C

Digital applies only to B2C companies. opportunities. However, digital changes how organizations use information and
1 It matters less for B2B companies. communications to create value. This is how B2B companies, such as GE and
Caterpillar, among others, are executing digital strategies to create value.

Digital is transforming traditional sectors, like banking, energy, mining, and

Digital business is just for online manufacturing, by changing customer experiences, products, services, and
2 businesses. It's not for companies processes. Digital opportunity comes from how you leverage digital to create
selling physical products. new combinations of digital and physical resources to help drive growth and
outcomes.
This may be true when digital applies exclusively to marketing and sales
channels. A digital business strategy finds new connections between customer
3 The more digital we become, the less
value and company revenue that create pricing power and avoid
our customers are willing to pay for
commoditization. Digital customer experiences, digital supply chain
our products and services.
performance, and digital innovation will create a premium that combats the
tendency for commoditization.

4 My customer demographic is more Baby boomers and older consumers are among the most avid digital users.
established. It’s only Generation X They regularly use financial and health services online and on their phones, and
and millennials who care about having they shop extensively online, including comparison shopping. Digital
digital experiences. opportunities exist across customer demographics.

Many emerging markets are digitally sophisticated; some are creating mobile
5 banking and advertising business models and platforms that are now being
Digital is relevant only in developed
implemented in advanced economies. IDC predicts that by 2020, 62% of the
markets.
digital universe (a measure of all the digital data created, replicated, and
consumed in a single year) will be attributable to emerging markets.
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In fact, companies across a wide array of industries are beginning to
undertake Digital Transformation initiatives
Digital Transformation Industry Examples

Telco, Media, Energy &

Financial Services Retail and CPG Life Sciences
Technology Chemicals

• Telcos partner with • Chemicals companies • Retail banks offer • Office supply • Pharma companies
retailers (for a fee) to provide online portal for additional services, like companies sell its use analytics to
push offer to shoppers partners to manage mobile payment or products through their customize products
who opt-in orders for a fee advanced wealth e-commerce platforms • Public health services
• Media companies • Energy companies management for • Big box retailers reduce process costs
digitize their operational apply analytical normal customers (e.g. optimize inventories by digitization of
value chain, resulting in methods to improve Chase Private Client) due to analytical driven administration
time improvement and asset maintenance, • Retail banks optimize demand forecast and processes and
reduced costs (e.g. resulting in reduced their processes and supplier integration in customer self service
Warner Bros. Studio) number of unplanned leverage customers value chain (e.g. options
• Telcos extend their downtimes self-service Walmart) • Life sciences
business model by • Chemicals companies opportunities (E.g. • Individually customized companies extend
integration mobile extend their portfolios BBVA AI-supported self products, instead of business into lifestyle
payment solutions (e.g. with solutions service) mass production (e.g. nutrition supplies,
African mobile payment combining traditional • Crowdfunding-based sneaker customization based on individual
trend) products with value- loan options, allowing via web portal) analytical results
added services (e.g. retail banks to reduce
BASF) their risk exposure (e.g.
Kickstarter)

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Digital Transformation leverages technology to both drive growth and
improve operations—we’ve identified 8 levers to Digital Transformation
8 Levers to Digital Transformation

DIGITAL TRANSFORMATION

GROWTH DRIVERS OPERATIONAL IMPROVEMENT

Demand Generation Reach & Selection Customer Purchase Process Customer Experience Process Efficiency Asset Utilization New Business Models

1 2 3 4 5 6 7 8
Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Business Driver Levers Business Enabler Levers

Only after we understand the levers to Digital Transformation, can we properly

formulate our Digital Transformation Strategy.

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Contents

 Overview

 8 Levers to Digital Transformation

 Digital Transformation Strategy

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Pervasive examples exist across all Digital Transformation levers
Levers to Digital Transformation – Examples
1 2 3 4 5 6 7 8
Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

• Brand • Being where • Improved • Clear, • Digitized and • Optimized • Utilize remote • Analytics-
awareness customers understanding seamless, automated production/inv access and based
and brand can easily find of customer and secure processes entory collaboration commercializa-
interest us expectations ways to • Improved planning and mobility tion
through social • Location via ongoing purchase process based on tools for (marketing,
media engagement demand employees commissions,
based • Mobile governance
marketing with customer and efficiency forecasting • Integration trade
services payments
• Social through real- • Data-based promotions) to
• Big data • Access to • Big data with partners
listening time insights preventive in digital target
analytics to customers analytics to
across all asset ecosystem to investments
discover new across better
digital media maintenance optimize and track
customer multiple/all understand
channels service returns
segments devices purchasing • Task
• Big data to automation delivery • Customer self-
behavior
improve optimization • Virtual service
customer through digital organizations • XaaS
experience technology enabled by opportunities to
such as mobility and digitize the
sensors seamless technology and
cooperation infrastructure
assets

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Demand Generation is all about building brand
GROWTH DRIVERS OPERATIONAL IMPROVEMENT

awareness and interest

Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Growth Drivers – Demand Generation

Emerging technologies, particularly social media (and social media marketing), are facilitating
Demand Generation by building awareness and brand interest.
With an increasing number of customer touch points and ability to collect and unify customer data
across these various touch points, we are better able to understand our customers and their
interests—leading towards customer “micro-segmentation.”
Micro-segmentation is an advanced form of segmentation, which groups small numbers of customers
into extremely precise segments, based on various factors, including behavioral predictions. This
allows for more relevant and more up-selling and cross-selling opportunities.
Likewise, advertising platforms (as they, too, are collecting more and more customer data) also allow
for more targeted ads. You can reach consumers by demographics, behavior, location, and so forth.

The key to Demand Generation is not scale, but rather personalization and improving
the customer interaction—this involves a cohesive and optimized channel mix.

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Search & Selection is about being where customers
GROWTH DRIVERS OPERATIONAL IMPROVEMENT

can easily find you

Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Growth Drivers – Search & Selection

SOCIAL DEVICE
We can now be where customers can
easily find us—and likewise, can easily
find customers wherever they may be.
This has been largely made possible
through Mobile and Internet
technologies.
This includes across channels (online
and offline), across devices (e.g. PC,
mobile), and across platforms (e.g.
website, search, email, social).
Search… Go
GPS and location-based services allow
us to find customers based on where
they are and where they have been.

WEBSITES SEARCH
We can "follow" our customer online from website to website through re-marketing
and re-targeting technologies.

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Customer Experience is realizing customers’
GROWTH DRIVERS OPERATIONAL IMPROVEMENT

expectations through ongoing engagement

Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Growth Drivers – Customer Experience

Prior to the Internet era, customers had limited interactions with a company—e.g., retail salesman,
telephone customer service. With emerging technologies—namely, Social Media, Mobility, Internet of
Things—the number of customer touch points has increased dramatically. This is both an increase in
number of ways for the customer to reach company and an increase to the number of people within a
company to reach the customer. Companies now have the ability to constantly engage with the
customer.
Thus, Customer Experience has grown in an increasing importance. In fact, growth tends to come
through Customer Experiences and relationships that adapt to their dynamics and demands.
Information is at the center of the transformed “digital” business model. Information is usually the
basis for differentiating Customer Experiences. Personalization is critical to an improved experience
for the customer.

Customer Experience is at the core of growth driven by Digital Transformation.

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Growth Drivers is about creating clear, seamless,
GROWTH DRIVERS OPERATIONAL IMPROVEMENT

and secure ways to purchase or acquire

Customer New
Demand Reach & Customer Process Asset
Purchase Agility Business
Generation Selection Experience Efficiency Utilization
Process Models

Growth Drivers – Customer Purchase Process

As Customer Experience has evolved through an increase in touch points and personalization,
naturally, so has the Customer Purchase Process. Customers can be reach now with:
• New and optimized products and services
• New and optimized channels
• New pricing models
Likewise, existing channels, services, and products can also be improved and better leveraged.
For instance, there is growing trend of XaaS (Everything-as-a-Service), with the most common being
Software-as-a-Service. XaaS has been associated and used with many core components of Cloud
Computing, e.g. communication, infrastructure, data, and platforms.
As we can better target customers and tailor our offerings, customer profitability (or revenue per
customer) is a metric that should see considerable improvement. Technology also shortens product
development cycles and reduces the time to market for offerings.

For more and more offerings, customer are able to purchase from anywhere (online,
offline), on any device (phone, tablet, PC), and at anytime.

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Technology has always been a source of
GROWTH DRIVERS OPERATIONAL IMPROVEMENT

operational improvement—now, even more so

Customer New
Demand Reach & Customer Process Asset responsiven
Purchase Business
Generation Selection Experience Efficiency Utilization ess
Process Models

Operational Improvement

Operational improvement can be achieved through new combinations of information, processes,

channels, and workforce abilities that leverage new, high-performance business and operating
models. Here are several such examples:

Process Efficiency Asset Utilization Agility New Business Models

• Process optimization • Reduced production costs • Adoption of Lean and Agile • Shift to self service
• Reduction of manual effort • Reduced inventory costs methodologies • Automated lead nurturing
through automation • Faster, better, and more • Rise of XaaS cloud
informed businesses computing with marginal
decisions driven by Big customer acquisition costs
Data
• Use of predictive analytics
It is important to realize that we may not be able to realize digital ambitions if we are shackled by the
cost, complexity, and limited capacity of legacy systems. Companies are increasingly reducing costs
to further invest in a unified digital infrastructure. A digital business platform supports a diverse set
of customer and operational requirements with a single set of resources.

Information is the fuel for more efficient operations that deliver better customer
experiences.

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Contents

 Overview

 8 Levers to Digital Transformation

 Digital Transformation Strategy

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Conventional strategy is no longer the best fit—a Digital Strategy mindset
provides a guide for future growth
Shift in Strategy Thinking

Conventional strategy thinking is no longer the best fit for

meeting the demands of digital growth. Given the rapid rate and
large magnitude of digital change, traditional annual strategic
planning cycles are challenged when required to assess the new
needs and appropriately redeploy resources.

An effective digital business strategy uses new approaches to

increasing strategic agility by generating early experience and
reincorporating such experience into learning through the
strategy process.

Each member of management must change his or her thinking

appropriately. With the availability of more and better data,
business leaders should demand capabilities that are much
more responsive to shifting marketing conditions.

Growth in a digital world is a strategic choice, with implications throughout the Value
Chain.

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To formulate a Digital Transformation Strategy, we must understand the
impact of the 8 levers to Digital Transformation on our organization
Digital Transformation Strategy Formulation

The 8 levers to Digital

DIGITAL TRANSFORMATION Transformation are mobilized by
emerging technologies.

GROWTH DRIVERS Formulating a Digital

Transformation Strategy begins
Demand Generation Reach & Selection Customer Purchase Process Customer Experience

Business
Driver 1 2 3 4 with a firm understanding of
Levers Customer
Demand Reach & Customer what and how technology
Purchase
Generation Selection Experience impacts these levers in our
Process
organization.

OPERATIONAL IMPROVEMENT Prioritize those initiatives that

Process Efficiency Asset Utilization New Business Models

Business impact the most levers—both

Enabler 5 6 7 8 Growth and Operational
Levers New
Process Asset Improvement—and result in
Agility Business
Efficiency Utilization
Models improved Customer Experience.

Determine how and what information can be shared across the organization—across
multiple levers—to maximize both growth and efficiency gains.

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This primer was extracted from the complete Digital Transformation Strategy
framework published by LearnPPT

The Digital Transformation Strategy is a

comprehensive guide to understanding Digital
Transformation, developing your Digital
Transformation Strategy, and then ultimately executing
that strategy to realize the transformation.
Topics covered include Customer Purchase Process,
Customer Experience Matrix, McKinsey's Customer
Decision Journey, Accenture's Nonstop Customer
Experience Model, Digital Maturity Model, 6 Layers of
Successful Execution, Service Delivery, Social Media
Strategy, among others.
You can find this document here:
https://flevy.com/browse/business-document/digital-
transformation-strategy-2249

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 This presentation was created by LearnPPT. We are a team of
management consultants trained by top tier global consulting firms
with a collective experience of several decades. Our documents
consist of business templates, business frameworks & methodologies,
and PowerPoint templates.

View our available presentations on Flevy here:

https://flevy.com/author/LearnPPT

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