What Startups Should Know About Digital Transformation

Digital Transformation for Startups

Are you excited about the idea of digital transformation for your business? Before you jump in and buy the newest technologies, you should know that more is involved. Let’s find out!

Digital transformation is a sexy word. It makes business owners sit up and take notice because it is an exciting idea. It brings up images of shiny new technologies and tools that can make them literal bosses in their industries. Think of Steve Jobs or Jeff Bezos, and the picture is clear.

However, true digital transformation is not easy, especially in sectors with established practices. There is resistance to change, and that often leads to a failure to launch.

Startups are particularly vulnerable because they often do not have the resources to survive a wrong turn. They need to have a full understanding of digital transformation before embarking on a potentially disastrous undertaking. Before anything else, let us put a few things straight.

Digital transformation vs. Digitalization

Many people use the term digital transformation interchangeably with digitalization, but that is an oversimplification. Digitalization is the move from non-digital to digital processes in doing business. 

One example would be adopting accounting technology in lieu of paper-based accounting to improve efficiency. That would affect how you do accounting and perhaps result in better financial management.

However, acquiring it would not necessarily change how your business works fundamentally. Digitalization is essential in the road to digital transformation, true. However, it is just one of the steps.

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What is Digital Transformation?

Digital transformation is the fundamental shift in the culture, mindset, and processes of an organization in technology use. The ultimate goal is to improve productivity and performance to remain competitive in a rapidly changing and increasingly digital market. 

The key phrase in the definition is “fundamental shift in the culture.” This presupposes a change in the way people interact with technology, which is necessary for transformation to occur.

In other words, digital transformation is not about technology, as a Harvard Business Review article argues. It goes further: “…if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.”

The success of digital transformation depends on people’s willingness to embrace disruption. Most associate disruption with chaos and digital transformation does require a certain amount of controlled destruction.

Processes will change, roles will shift, and basic tasks may become obsolete. This is a good thing because it will help make the business more efficient. On the other hand, it can also be a bad thing if the digital transformation strategy is not in line with business goals.

Think about it in terms of landscaping. You buy into the exciting idea of beautiful bluegrass for your lawn. You remove your perfectly healthy lawn grass as a result. However, you fail to consider if bluegrass will thrive in your climate or soil composition. You end up with a lawn full of hay and a hefty landscaping bill with nothing to show for it. 

The same thing goes for digital transformation. Investing in technology requires a significant outlay of resources in terms of money, time, and staff.  You want to make sure you will get good returns on your investment before you make your first purchase. To do that, you need to make a strategy.

Digital Transformation Strategy Tips

Startups have an advantage in this because, by definition, they are just getting started. They have no deeply ingrained habits yet, so there is not much disruption. On the other hand, startups often lack the industry experience to identify and address issues before they become problems. The best way for any company to form a viable digital transformation strategy is to follow these tips.

Focus on goals, not the technology

Digital transformation is not about making a change for the sake of making a change. It is about improving business outcomes. To do that, you need to focus on what you want to achieve and what the barriers are. Do you want more customers? Do you need better inventory management?

Are you looking to generate leads more efficiently? The technology or solution you buy into should help you achieve your goals in a meaningful way. Taking this approach will also make it easier for stakeholders to buy into the idea of change.

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Do your research

Let us address the elephant in the room. Artificial intelligence (AI) is the hottest buzzword in tech, and AI vendors can be very persuasive. However, most small businesses are not suitable for AI solutions. Before purchasing one, make sure you satisfy the conditions that will make its adoption a success.

Take risks

Most companies are playing catch-up when it comes to investing in new technology. Their competitors are doing it, so they should as well. Aside from missing the opportunity to be first, your needs or goals might be different from even direct competitors. Their strategy might not work for you at all.

You need to cultivate a proactive attitude towards digital transformation. Keep an eye on your competitors, but look beyond them. Explore the roads not taken and be ready to take some risks by going into uncharted territory.

Go big or go home

It might seem safer to dip a toe in the water rather than take the plunge with digital transformation. However, that might be a mistake. It signals a lack of commitment to stakeholders if they are even aware it is happening.

Provided you have aligned strategy to goals, you should implement major changes across all aspects of the company. This will ensure maximum ROI and pave the way for future transformations.

Get IT onboard

Many IT professionals have a territorial attitude when it comes to technology. If they did not come up with the idea for new software or hardware, they will be resistant. It is understandable as they are supposed to be on top of anything like that.

You need to emphasize that this is collaboration, not competition. Get IT as well as subject matter experts (SMEs, e.g. accountants) onboard with your planned purchase or integration. If you can do that, they will be your biggest fans and fiercest advocates. They will also lead the way in any shift you need to make in your corporate culture

Be flexible

While crossing all Ts and dotting all Is in making your strategy ideal, it is not realistic. You need to be flexible to adapt to changes happening all the time in technology and customer behavior. Your digital transformation strategy should allow regular adjustments to move parts as needed. This includes talent allocation and key performance indicators (KPIs).

Get feedback

It is always a good idea to involve everyone in the transformative process. Get feedback from stakeholders to find out if everything is going according to plan. It is the only way to know what is working and what is not.

Summary

Digital transformation means making a major change in the way you do business. The focus is not on technology, but on how people adapt to it. Approaching it as independent of the people and culture will ensure that it will fail.

You need to think of it as a seismic shift that moves people, processes, and policies rather than a tremor. It is a highly disruptive move in most instances. However, with the right strategy, it could be precisely what you need to move your business forward. 

Full Scale can help you with the digital transformation of your company. We have a diverse network of software engineers, developers, and other subject matter experts to help startups and SMEs achieve tech maturity.

When you work with us, you also work with notable entrepreneurs, Matt DeCoursey and MattWatson, who are our founders.  They have a history of mentoring and coaching fellow entrepreneurs. 

Contact us to get you started on your transformative journey!

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