The Secret Ingredients of Success: What Makes Innovative Companies Tick?
Digital transformation is often touted as the key to long-term success for businesses. Here’s a look at the secret ingredients that help businesses meet their DX goals.
Digital transformation is often touted as the key to long-term success for businesses. In fact, organizations that fail to transform key processes could struggle to recover from financial, geopolitical, and technological headwinds. But what are the key ingredients that help successful companies transform effectively? Here’s a deep dive.
Let me start by stating that this isn’t going to be another article explaining the importance of digital transformation. Nearly three years after the pandemic surfaced, we are well past that. If you haven’t digitally transformed your business operations to some degree, you are probably out of business.
The question isn’t whether businesses should transform but how they should go about it
If your business is still looking for reasons to accelerate your digital transformation efforts further, consider this. Failure to transform means failure to compete. That’s where we are today. But don’t take my word for it. A study by Forrester Consulting, commissioned by Bounteous, a technology innovator to some of the most prestigious brands in the world, evaluated the state of digital transformation maturity and the benefits that companies at varying maturity levels have realized.
The study took place in September of 2022, so the findings are as relevant as they are revealing. The study results in a clear conclusion. It’s no longer an issue of whether to transform your business digitally. It’s how far down the rabbit hole you want to go and how fast you can do it. Continuous innovation is the new goal.
The Forrester Study surveyed 415 global decision-makers responsible for their company’s customer engagement and digital transformation strategies. The study examined the underlying reasons and objectives that drove the digital transformation efforts of their organizations. It then set out to compare the contrasting performance levels of organizations based on their transformation experience. Those in the early phases of their transformation efforts were labeled beginners, while those companies at a far later maturity stage were categorized as advanced. Contrasting the achievements of both groups was much like comparing professional athletes to amateur players.
In summary, the study showed that advanced companies operate with greater agility and speed, allowing them to focus on customer satisfaction and employee empowerment. Not surprisingly, the study showed that advanced companies have significantly happier customers and employees and are twice as likely to experience double-digit year-over-year growth compared to their less mature peers. Simply put, a continuous commitment to greater innovation brings a significant payoff.
See More: The Key to Successful Digital Transformation: Company Culture
Why do companies prioritize digital transformation?
So, what are the key drivers of this continued commitment to greater innovation for those companies that are actively digitally transforming themselves? Here are the top five objectives that drive it.
- 66% – Improve existing IT capabilities to promote agility and innovation
- 60% – Improve the customer experience
- 57% – Improve customer retention
- 54% – Improve employee experience
- 50% – Become more innovative
Digital transformation isn’t just about transforming the business. It’s about changing the customer experience. While we often recognize the accelerated pace of business, today’s most successful companies ensure that they can move at the velocity of their customers through a closer engagement process, allowing them to understand their customers’ anticipated needs.
There is certainly no doubt that customers’ expectations have changed much in recent years and that the type of experience they were willing to accept five years ago is often not tolerated today. The need to keep pace with customer expectations has only accelerated in the past few years, requiring companies to continue their digital transformation efforts. Companies that fail to build systems that yield insights and ways of working to understand and address customer needs continuously will fall behind.
It’s not just about the benefits, however. Forrester asked participants what they saw as the top consequences of not transforming the customer experience. The results were as follows.
- 51% – Slower revenue growth
- 49% – Lower ROI for marketing efforts
- 48% – Increased costs
- 47% – Operational inefficiency
- 47% – Inability to differentiate competitively
By matching the increasing digital expectations of their customers, digitally mature companies earn more than their peers, as 42% experienced double-digit growth in the past twelve months compared to only 22% of beginner companies. When asked to estimate their company’s year-over-year revenue growth rate in the recently completed fiscal year, 17% of those representing advanced companies estimated a growth rate of 20% or more compared to zero percent for those in the beginning stages of their transformation.
See More: Does Your Digital Transformation Need a Tune-up? Don’t Leave Operational Tasks Behind
The realized benefits of digital transformation efforts
There are some real monetary benefits to furthering the digital transformation process, but what are the incremental benefits being realized that lead to double-digit growth? Below are the top five benefits cited by study participants.
- Better use of customer insights to improve our results
- Improved customer satisfaction
- Improved agility in launching new capabilities
- Improved employee experience (EX)
- The ability to launch new business models
The study then compared the degree to which both beginner and advanced organizations realized these benefits. For all the benefits listed above, the disparity between the two was at least 10%. For instance, while 56% of beginners cited improved customer satisfaction, 72% of advanced companies quantified it. For advanced companies, implementing innovative technologies such as AI and ML are real priorities, not just an afterthought. The study went on to find out what types of technologies digitally transformed companies are currently investing in to improve their digital customer experiences. These are as below:
- Digital asset management
- Personalization
- Artificial intelligence/machine learning
- Customer data platform (CDP)
- Customer and experience analytics
Once again, the participation rate of advanced companies exceeded that of their less mature peers for every technology. This undoubtedly stems from the culture of continuous innovation that these companies have maintained throughout all levels of their organization.
Conclusion
There’s a reason why digital transformation has been touted in countless articles over the past several years. It works. It’s also not a one-time commitment. Digital transformation is a long-term commitment, and companies that dedicate themselves to perpetual incremental innovation are achieving results that are far beyond incremental. The benefits are real. The choice is to innovate or wither and die.
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