DIGITAL STRATEGY AND TRANSFORMATION

Defining a Strategy

First, a company’s vision and mission must be clearly stated. A company’s

vision refers to defining its expectations; that is, how does the company see
itself in the future? Furthermore, a company’s mission is the reason it exists,
what drives it. It is also stated in a sentence. Every company defines its own
concepts, which will serve it as a guide.

For example:

Microsoft’s Mission Statement Microsoft’s Vision Statement

To empower every person and every organization To empower people with great software — any
on the planet to achieve more time, any place and on any device

Based on these statements, companies define guiding principles—or values—such as:

Microsoft’s Values

• Wide Customer Connection. Connecting with our customers, understanding their needs and
how they use technology, and offering value through information and support in order to help
them exploit their potential.

• Global and Inclusive Approach. Thinking and acting globally; having a multicultural workforce to
make innovative decisions in a diverse universe of customers and partners. Innovating to lower
the cost of technology; showing our leadership by supporting the communities where we live
and work.

• Excellence. In everything we do.

• Trustworthy Computing. Strengthen customer trust through the quality of our products and
services, our responsiveness and accountability, and our predictability in everything we do.

• Brilliant People with Great Values. To accomplish our mission, we need people who are bright,
creative and dynamic, and to share the following values:

o Integrity and honesty.

o Passion for customers, business partners and technology.

o Openness and respect with others and dedication to improving them.

o Willingness to take on big challenges and see them through to the end.

o Self-criticism and commitment to excellence and personal achievement.

o Responsibility for commitments, results and quality of customers, shareholders,

business partners and employees.

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DIGITAL STRATEGY AND TRANSFORMATION

• Leadership on a Responsible and Innovative Platform. Expanding the innovation, benefits, and
opportunities of our platform to our customers and partners; disposition talk about our future
direction; getting feedback; working with others to guarantee their products and our platforms
work well together.

• Allowing People to Do New Things. A wider variety of options for customers by identifying new
Business areas; developing new products; integrating new customer scenarios in existing
businesses; exploring key talent acquisition and experience; further integration with new and
existing partners.

Source: https://www.microsoft.com

As we may observe, Microsoft has defined a great number of general

values that will guide their interaction towards shareholders,
managers, and employees. These values are based on Microsoft’s
internal relationship but they are also considering their market,
customers, and, in general, every stakeholder of the organization.

So, companies define their vision and mission and, from them, they set specific goals and objectives. To
do so, companies develop a strategic plan that usually includes short-, medium-, and long-term
components.

The general strategy will be then divided by areas. So, we may say there is a financial strategy, an
organizational strategy, a marketing strategy and, of course, the digital transformation strategy.

Now, a business starts after a void in the market—an opportunity—is discovered and we think we have
the resources and the capacity to produce or design a product or service—better than those already in
the market—in a competitive way and

As has been previously mentioned, once a company has defined its mission, vision, and values, it should
devise its strategy and its general and specific objectives. It should also design coordinated plans that will
help the company deploy such strategy and meet said goals. Then, the organization and its management
teams start breaking down the plans into more specific actions, essential and supporting activities, all
kinds of resources needed to carry out those actions, and the way in which the process will offer and
receive feedback.

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DIGITAL STRATEGY AND TRANSFORMATION

Every business strategy must be based on, and consider the

competitive advantages that the company defines in its
competitiveness analysis. A company must always think about its
present and its future.

The strategy must incorporate a general vision of the organization

and the way in which it is internally and externally interconnected.
The strategy cannot be dissociated from the global trend analysis and its possible impact on present-day
and future industries, competitors, customers, and suppliers; that is, the strategy must always be
conceived in a way that it generates value for the organization’s stakeholders.

A great number of factors will be in framework of the company’s development analysis, both internal
and external; over some of them, the organization will have control. Over others, it will not, but it will
have the chance to influence them. There will be others, too, over which the organization will have no
control whatsoever, but it will have to understand and adapt to the strength and the impact they may
exert on it.

A company’s strategy must be flexible, it cannot be carved in stone, especially in a time when several
waves of technology coexist and when market characteristics—of all products and services—can change
radically, as business cycles have stopped following easily predictable patterns.

This grand business strategy will have to be completely clear. It will have to specify three larger concepts:
(1) the scale of the present or future operation, one which considers a relative way to assess (2)
the burden of the change that is necessary to accomplish this strategic plan. Moreover, it will have to
include (3) the scope of the type of business offered by the organization.

Here, for instance, one must think that, given the digital transformation that the world is experiencing,
it is very likely that a company’s source of income can stay unaltered for long. Vertical integration (having
control of all the process, from supplies to end product) and horizontal integration (by becoming part of
other companies) will be defined in even more disruptive ways than those occurring in the last few years.
For example, a company might prefer to get rid of all its tangible assets by establishing partnerships with
others which find said assets more attractive. Or it can even incorporate concepts like the co-creation of
products and services with its customers and, why not, with its competitors.

A company’s strategic statements could read like this (we may think these guidelines resulted from the
interaction between the company’s board, the CEO, and his/her managerial team):

• Transform the current business model and adapt it to the digital era.

• Divide (integrate) the company’s global operations in terms of its capacity and availability to
connect with customers and suppliers, regardless of their geographical location.

• Design a new organizational structure, breaking the company down to new business units that
can be more flexible and agile in their decision-making processes.

Objectives are defined with these strategic statements and they should meet a series of requirements.
Objectives are not ‘good wishes’, but very precise, achievable, measurable definitions with a deadline.

General objectives are usually set with a long-term approach and they must guide all concrete actions
and elements.

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DIGITAL STRATEGY AND TRANSFORMATION

We might think general objectives come from a company’s CED and

its board of directors:

These are examples of an organization’s general objectives:

1. Transform the traditional fixed-asset-based traditional

business model into an independent, intangible-asset
based competency business model in a period no longer
than 5 years.

2. Assess and incorporate technology innovation strategies

into productive processes to reduce customer delivery
times from 24 to 18 hours in average.

3. Expand our products and services to export markets so that they represent 30% of total sales in
the next two years.

4. Evaluate current managerial processes and define a digital transformation plan to increase digital
interaction with customers by 90% and reduce physical interaction with customers to only 10%.

These guiding objectives will subsequently need to be broken down into specific ones. Objectives that
are very practical, measurable, achievable, and executable, as has been mentioned before. From these
specific objectives arise detailed activities for the different areas involved.

For the third general objective above, for instance, these specific objectives can be set:

General Objective: Expand our products and services to export markets so that they represent 30% of
total sales in the next two years.

Specific Objectives:

1. Map out, in a two-month period, all current processes, their decision makers, and the way they
interact with one another. Deliverable: Current process and interaction map.

2. Establish interaction level indicators of each product and customer for every type of platform:
physical and virtual. Deliverable: Interaction map.

3. Measure the profitability of each type of customer-platform type interaction.

Deliverable: Platform profitability report - expense/revenue generated by customer.

4. Identify the value that each type of interaction gives to each type of customer. Prioritize and
establish a timeline of the processes to be redesigned.
Deliverable: A 6-12-month timeline with directions and processes to be redesigned.

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DIGITAL STRATEGY AND TRANSFORMATION

For each of those objectives there are elements that need to be defined:

Thus, for example, if we take the first specific objective, something like this could be defined:

• Accountable: Planning director

• Areas involved: manufacturing, supply, engineering, logistics, marketing, customer service, and
finance.

• Resources: Eight hours per week with at least one team member of each department. Budget
for the process visualization software.

• Deadline: Define according to areas and processes involved.

So, every company that is going through a digital transformation process will have to clearly understand
all the elements of a strategy and perfectly define not only the general and specific objectives, but also
the plans, specific activities, accountable leaders, and indicators. Furthermore, people in the organization
should always remember that all transformation processes must be part of the organization’s value
creation and not just a technological transformation itself. A more detailed explanation will be presented
in our next section.

References

Porter, M. (2008). Ventaja Competitiva: Creación y sostenimiento de un desempeño superior. Grupo

Editorial Patria.

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DIGITAL STRATEGY AND TRANSFORMATION

To learn more about Strategy

To find out more about strategy, please consult

the following resources. They will help you
complement the knowledge you have acquired
so far.

This resource includes a short list of books and

articles, both old and new. The topic of strategy
is quite broad, which is why new articles and
books are being constantly published.

The following link takes us to an article that

centers around three best practices to a better
talent-management strategy:

• Winning with your talent-management

strategy:
https://www.mckinsey.com/business-
functions/organization/our-
insights/winning-with-your-talent-
management-strategy/es-cl

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Digital Transformation
Introduction

Digital transformation in companies has got success stories;

nevertheless, in other scenarios it has demonstrated to be
difficult to implement and reach objectives. In order to
understand the reasons for both its success and its failure, it is
important to analyze what this transformational change in
companies really means. In this section we will define the
concept of digital transformation and we will explain the
actions that have helped companies to achieve success with
the transformation. Technology is a fundamental enabler
which has accelerated, in some cases, successful transformation in companies; nevertheless, most of the
organizations are only focusing on the technological component in order to achieve their transformation
objectives. You will see that digital transformation is much more than considering a technology to be
implemented in your company.

Throughout these topics we will introduce the most important elements to be taken into account when
creating a digital transformation map. This map will allow you to identify the key components to be
incorporated to your transformational plans.

What is digital transformation?

In the next section you will learn what digital transformation is and the factors involved to carry it out.

A recent study, carried out with general directors and executives, shows that the #1 concern in a digital
transformation is risk of failure, and rightfully so, as it has been considered that over 70% of digital
transformations do not reach their objectives. (Tabrizi, Lam, Girard & Irvin, 2019).

So, is your company prepared for a digital transformation? This question should make us reflect about
what digital transformation really is, and how it relates to the business objectives that we must define.

Digital transformation, as shown in this phrase, must consider a transformation, hence a change, (what
will you change?, what will be new?). The digital component makes us think about technology (which
kind of technology?). Practically, digital transformation is the usage of digital technologies in order to
improve the experiences of our customers, make the operations of our company efficient, and create
new business opportunities.

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DIGITAL STRATEGY AND TRANSFORMATION

In order to achieve a digital transformation, we must be clear that it is not only about including or
choosing one or several mature, advanced, or disruptive technologies.

Digital transformation implies the interrelation between technology, data, processes and cultural change
in the organization. The latter is utterly relevant as it is the human factor, and the business culture which
primarily determine success in any transformation, not only digitally. Strategic prioritization of the
actions for a digital transformation must include training, and the preparation of staff and collaborators
in general.

Even though digital technologies usually offer the possibility of improving efficiency and productivity,
while accomplishing new experiences and proximity with customers; but if the people (employees and
customers) do not have the correct mindset to change and correct business practices, the risk of not
accomplishing the expected objectives increases.

Some of the recommendations to be taken into account before starting a digital transformation
challenge are hereby listed:

• Have a clear and well-communicated strategy

• Orchestrate the changes with a team of collaborators

who understand the day to day of the business in
conjunction with experts in these processes.

• Generate actions and solutions based on the customer

(design the experiences with the input of consumers).

• Face and manage the fear generated by a digital transformation inside the company.

• Design a start-up model (uncertainty, agility, prototyping, multi-disciplinary, focused on the

consumer, horizontal structure).

• Keep a learning mentality oriented towards the improvement of skills and digital knowledge.

In a very simplified way, as we have seen, a digital transformation requires actions to be taken, based on
the consumer as the core element, consider a change of mentality and reduction to resistance, and finally
understand which benefits are brought by each digital technology, that would make it possible to achieve
the strategic goals of the organization.

Bibliographic references

Tabrizi B., Lam E., Girard K., Irvin V. (2019) “Digital Transformation is Not About Technology”. Harvard
Business Review (www.hbr.org) Change Management Section. Recovered
from:https://hbr.org/2019/03/digital-transformation-is-not-about-technology

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

To learn more…

In order to learn more about the contents of the topic of digital transformation, I recommend you to go
through the following resources which will help you to go deeper, expand, and/or strengthen your
understanding.

• Web page of the consultancy firm Bain & Company which works as showcase in order to
address several angles around digital transformation

Bain, Co. (2020). Digital Transformation. https://www.bain.com. Recovered from:

https://www.bain.com/insights/topics/digital-transformation/

• Description of why digital transformation is not related to technology through lessons

learned in order to achieve the success of these initiatives.

Tabrizi, B; Lam, E.; Girard, K.; Irvin, V (2019). Digital Transformation is Not About
Technology. Harvard Business Review: Change Management. Recovered from:
https://hbr.org/2019/03/digital-transformation-is-not-about-technology

• Compendium of statistical data around digital transformation.

FinancesOnline (2020) Vital Digital Transformation Statistics: 2020 Spending, Adoption,

Analysis & Data. https://www.financeonline.com. Recovered
from: https://financesonline.com/digital-transformation-statistics/

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DIGITAL STRATEGY AND TRANSFORMATION

Digital Transformation Map in Companies:

Infographic

Artificial intelligence is relevant in all types

of digital transformation and disruptive
technologies in business processes, such as
the supply chain, they are present in all the
priorities of companies.

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DIGITAL STRATEGY AND TRANSFORMATION

Digital Readiness of your Company:

Introduction

The degree of technological adoption in companies is a way

of understanding why some organizations have not been
able to accelerate the digital transformation and capture all
its benefits. Companies, now more than ever, are exposed to
an integrated world, with accessible technology, and work
methods that make innovation easier, both of their business
models and value proposal. Nevertheless, not all of them
achieve their strategic goals in the face of digital
transformation.

Companies must be prepared to enter and adopt the digital

environment, therefore it is of the utmost importance to identify the elements that promote or hinder
an adequate digital transformation. As has been previously explained, the creation of a business strategy
is fundamental to face the necessary action in a transformation process. In this topic, we will delve into
the elements that help on the creation of digital strategies.

Digital readiness of your industry

Digital readiness is fundamental to understand the degree of adoption of digital transformation in

companies. Briefly, we can point out that it is the degree in which companies are prepared to adopt or
start the adoption of digital technologies throughout their organization.

This means to have the structure, culture, and the mindset to face a digital transformation. There are
elements which enable to understand the degree of preparation for the necessary technological
adoption in all digital transformation. In this regard, there are three levels of digital readiness, and all of
them are related to each other:

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DIGITAL STRATEGY AND TRANSFORMATION

Based on what has been said, we can sense that Opposite to an individual who:
a person will be more successful in any digital
• Does not have a good attitude towards
transformation project if the individual:
innovative technology.
• Has a favorable attitude towards
• Does not want to be updated in new
technology.
innovation trends.
• Has learned how a specific technology
• Works for a company that does not
works.
invest on R + D
• Is working in a company that invests on
• Does not generate intellectual property
research and development.
assets.
• Has a culture of patents, with evidence
• Has obsolete technologies.
of implementation of mature
technologies in all its operations. • Is in a country with basic infrastructure,
with problems to do business,and which
• Is in a country where the degree of
does not have basic satisfactors.
investment of the government and of
the private sector are high.

• Is in a favorable atmosphere in order to

do business, and has the adequate
infrastructure.

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Creation of digital transformation maps

Let’s keep in mind that a digital transformation map is the way in which we can identify the main
components that help us to know the “territory” that we are going to cover. As we have said before, it is
made up of the following elements:

Now, how are these elements integrated? The way in which each of them plays a role in the digital
transformation differs from company to company, and they will always be aligned to the strategic goals
of the business.

Next, you will find two examples that show us how companies were able to build on the elements of the
digital transformation map:

Example 1. Harley-Davidson (NY, USA)

Harley-Davidson is an American motorcycle manufacturer founded in

1903 in Milwaukee, Wisconsin. They were one of the two main
manufacturers of American motorcycles who survived the Great
Depression, along with the Indian Motorcycle company.

Vision and leadership: The owner of the New York franchise, in the
United States of America, knew that it was necessary to improve the
experience and the relationship with the current customer, and with the
potential customer. Thus, this was the main drive to do the necessary
actions to reach the goals that were formulated. They managed to exorbitantly increase the sales
opportunities (2.930%), and selling twice as many motorcycles as they had sold in previous periods

Customer experience: This element was essential for all the actions to align around the goals that had
been established. This was the basis and the guiding axis to accomplish the results.

Individuals and processes: The employees of the Branch office had to learn about social networks and
what artificial intelligence is. In order to strengthen that knowledge, they hired experts in those topics.
One of the main changes derived in the creation of new roles to manage the social networks, and to
obtain and analyze the information generated by artificial intelligence algorithms which enable to
understand better the behaviour and the wishes of customers and prospect customers. As a result, the
business processes also adjusted to these new practices.

Business model and technologies: It was decided to use technology, such as artificial intelligence, in
order to understand customers better, and to generate much more personalized relationships. The
business model was adapted to meet the needs of the customers, and to make quotations through online
tools and through social networks.

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DIGITAL STRATEGY AND TRANSFORMATION

Example 2: Digital Agriculture Services (Australia)

Digital company based in Melbourne, Australia, whose

mission is to give smart rural solutions. The company
applies machine learning (artificial intelligence) in order to
develop solutions based on the massive analysis of data
which transform the way in which agricultural assets are
evaluated and monitored.

Vision and leadership: A group of farmers in Australia understood that without technology they would
not be able to thrive and grow according to the existing opportunities in the seed market in the world.
Due to the way in which they were organized , and to the combined leadership of several farmers, they
took control of the great step they took by creating this completely digital company applied to the
countryside.

Customer experience: They never set aside the way in which the farmers operated, they even
understood them really well. They knew about the challenges and the opportunities, and with them they
created all the digital proposals that were making up their offer.

Individuals and processes: This company grew as they were advancing in the maturity of their
technological and digital proposal applied to the countryside, therefore, the roles and activities of the
staff were shaped naturally as they were advancing. The processes were created from the beginning in
order to satisfy the offer created for their customers.

Business model and technologies: In this case, technology was of the utmost importance as the value
proposal and the business model were created around the capacities that the analysis of massive data
with artificial intelligence allowed back then. The choice of machine learning was the most appropriate
to satisfy the main business goals from their origin.

In this way we can see in a simplified way how companies lean on the digital transformation map.

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School

DIGITAL STRATEGY AND TRANSFORMATION

Created By: Patrick Dennis Courtesy: EGADE Business School