Defining digital transformation for small businesses
How Does Unravel Think of Digital Transformation?
This term, ‘Digital Transformation’ can mean a lot of things but it is Unravel’s perspective that we can break down and contextualize this phrase as unlocking the value when you combine the below three concepts:
- Become Service-oriented
- Automate the Flow of Insight and Decisioning Throughout your Organization
- Build a Trusted Brand
In practice, this could mean actioning on the social trends impacting your consumers, investing in technology to create a source of truth for information across your business, improving your culture and processes to cultivate this information and act on it as quickly as possible, all while using it to clarify your message and optimize your products.
Depending on the specific type of business, the emphasis may be stronger in one of the outcomes than others but each has their role in adapting your business.
Where Are We Along This Process?
Early adapters are doing most (at least two) of these three things well. Even the laggards are holding on by doing at least one of these three things well.
Additionally, The personal advertising channels we maintain through all of our devices and most-used platforms and websites, or in Google’s case the entire internet, have proved to be incredibly lucrative. This has caused an intensifying fight among tech giants vying for control of these channels (see Facebook and Apple).
The good news for you, the small business owner, is that there are still opportunities—many companies have not yet fully figured out the way to ride the wave. When you merge the goals of digital transformation with the avenues companies now have to reach consumers, you get where we are today: the early chaotic stage of attempting to understand how to effectively steer in this new environment.
Be warned, though, this stage is nearing maturity. The window to join the ranks of those who will succeed in the digital age is beginning to close.
1. Become Service-oriented
Of the top 75 business problems faced by small retailers, competition from large businesses and internet businesses are identified as their 4th and 9th biggest challenges, respectively, with 22.4% and 24.6% calling them critical problems (1). Much of this is due to the convenience and simplified experience these competing businesses provide for their customers.
Your products are what your customers buy, but consider WHY they buy them
There is a recent family party game, simply called the “Saran Wrap Ball Game,” where the object of the game is to get to the prize in the middle of the ball as fast as possible, within a given time at your turn, by peeling away layers of saran wrap. Along the way, there are small prizes between peels to help sweeten the overall goal as you attempt to get to the center.
A similar concept can be applied to customers—the product they want sits at the core and the layers around it represent the steps that they must go through to procure that product from your business specifically.
Let’s stop and consider that notion. Are you adding “goodies” to delight your customers as they move through your business experience? Are you making it simple for customers to quickly move through each layer to get what they want?
This is critically important—given that 74% of people say they are likely to buy based on the “buying experience” alone (2).
Emphasize interacting with your customers directly, understand them deeply
I’m sure everyone has noticed the rise of loyalty apps and programs. They may have even joined some email lists for some of their favorite companies. While there are many reasons for companies to employ some of these strategies, the biggest return on investment (ROI) is derived from learning from your customers at scale through your owned interaction channels.
Making the most of these investments requires creating a culture and capability to learn from your customers, experiment by enacting some change, be able to measure its impacts, and iterate on that feedback loop as you learn more and more about your customers with each experiment. As you do this, you’ll find the need to collect and manage an increasing amount of data which may require you to think about other needs in the technology space.
2. Automate the Flow of Insight and Decisioning Throughout Your Organization
The most common software used among small businesses is accounting software. In many cases, this may be the only one procured and used. Some of the benefits of this software are financial integrity, easier government compliance and reporting, simpler invoicing, a faster processing workflow, and safer storage of archived information.
While this base level technology is a staple for many, it’s not sufficient to stop there if you are looking to expand your business. You did the smart thing when you bought the accounting software. Now, you’ll need to apply the same level of thinking to many other aspects of your business.
Here are some suggestions on certain key steps you can take to streamline your processes, make better decisions and glom on to the opportunities for expanding your business.
Move major business workflows and processes to a software driven platform
As discussed above, you need to mirror what you have done with your accounting operations across other critical areas such as marketing, project management, sales, cost management, and financial operations.
Such a change in mindset could be challenging at first, especially because it may be difficult to calculate a clear ROI. However, look to the Affordable Care Act (ACA) of 2009 as an example of how technology enabled a humongous, complex set of system changes, adoption, and rollout.
Though its effectiveness can be a hot topic, one of the most successful things the ACA did was mandate and provide subsidies for health care systems to phase out paper and switch to electronic health record systems. At the time when the ACA came into being, only 12% of hospitals had adopted electronic records—today, over 96% of them do (3).
Switching to electronic records has allowed hospital systems to gather and analyze large volumes of data from patients, which then helps them provide better diagnoses and care. On the other side of the coin, health insurers are able to provide preventative and cost-saving solutions for their customers, and we as patients are able to readily access our health records and benefit from the innovations that arose.
While the government will not mandate that you move your entire company to a digital platform or penalize you for not doing so, you are in fact penalizing yourself by sitting on the sidelines. Such inertia will keep restricting your growth, setting you behind as digital adoption becomes even more commonplace.
Think about whether your new technologies integrate easily and minimize manual work that must be done without them
The concept of “technical debt” arises when you continue to rely on technology systems that do not “speak” to one another to fulfill your business needs, or when a manual work-around is required outside of the central system in order to accomplish a task.
The debt is paid when you spend additional money for a new system that does speak with others. With the “right,” smart system, you are guaranteed an incremental return on top of recouping the associated implementation costs.
Additionally, when manual workarounds occur, you stand to lose in both the short and long run. Your day-to-day decisions and actions are slowed down, which will end up costing you money. Over time, you risk losing important knowledge whenever a key employee leaves, especially if the knowledge transfer is inadequate. Overall, it slows your business operations by creating bottlenecks and increases the chance of system failures that can have a large impact.
Frankly, an initial set of hiccups may occur when moving your operations to a digital platform, but it should not deter investment. The scale and ability of getting even 60% of the way there far outweighs any attempt to analyze and learn quickly from mounds of paperwork and/or rely solely on the knowledge buried deep within your most senior employees.
The next step, now that you’re beginning to better understand your customers and your business operations are growing nimbler by the month, is for your company to come to life in a way that aligns with the customer centric purpose that we spoke so much about in Part One.
3. Build a Trusted Brand
We talked briefly about branding as a subset of marketing when we discussed the first goal of digital transformation—namely, improving your customer’s experience and learning from them.
Branding deserves its own section because of the access to information the modern consumer has. “Word of mouth” has transcended its original definition in the age of social media. Whether you are consciously thinking about your brand or not, rest assured that your customer absolutely is.
If gaining insight into your customers helps drive decisions about when to act, and your automated operational systems provide specific answers about how you can go about taking the necessary actions, think of branding as being the image you project to the world in terms of what you say and how you say it.
You have plenty of avenues to engage with customers via your website, app(s), social media channels, email lists, etc., but do your messages or visuals exemplify your purpose and truly express how you want customers to think of you?
Associate yourself with people who exemplify your brand
Ever notice how Nike sponsors the top athletes in the world, Red Bull owns teams and events across some of the most action-packed activities, and McDonald’s has started creating celebrity menus? This deliberate branding did not happen overnight but rather through corporate self-reflection—a constant questioning of who they are and who they want to be, then taking the steps to align with the people who share that same goal.
These companies’ products and brands have increasingly become inseparable from the brands of the humans they associate themselves with. This act of cementing images in the consumer’s mind becomes an important factor in the “irrational loyalty” to the brand. In many cases, people look to the brands they buy and use to create [or define] their own personal [or unique] identity. Giving your brand a strong identity will attract people who either do, or want to, see themselves in that way.
Take the opportunity to exemplify your brand at every touch point
Some questions to ask yourself might be: What are the customer service standards and guidelines for your employees? What do you do to “wow” your customer when they unbox your product from in-store or mail purchases, or download something online? How are you improving the relationships with your partners and suppliers?
Your focus on these items may have outcomes you didn’t intend. While not a perfect brand, think of Chick-fil-A. Their focus on kind, personalized customer service became viral with memes making hyperbole of their nice employees. Whether intended or not, they surely receive value from this free publicity.
This is not to say that your only goal should be to build your brand strategy around going viral, but you should be fully aware of the impact of social media. Each of your efforts and/or initiatives, or lack thereof, could bring considerable attention. The point here is that if and when you ever get attention, make sure it’s for a great reason.
Another example is Costco, whose brand loyalty drives a 90%+ membership renewal rate. People have come to love Costco for the way it treats its employees, often paying them far above similar retailers, and the value their private label brand, Kirkland, brings to families. Their code of ethics mentions taking care of their members and employees, obeying the law, and respecting suppliers. Each of these actions exemplifies the point above.
Deliberate efforts in this space provide you an indispensable edge over companies who may have more efficient operations, or even better products, but inadequately focused brand value. The good news is that there are plenty of data-led and technology-oriented opportunities to measure the effectiveness of your brand.
Creating and propagating a human brand thus aligns with the other components of your necessary digital transformation.
Again, Small Businesses Can Gain Competitive Advantage through the Three Outcomes
The bottom line here is that while your small business may seem frail when facing your competitors—especially the large corporations—adhering to the basic framework of realigning your business around the three transformational goals we mention will give you a leg up on most, if not almost all of them. It’s all about streamlining your future initiatives and investments.
If you’re investing in business platforms for the first time, you have an opportunity to work with Unravel to get it right from the beginning. From our experience, we understand the drawback that large organizations face if they decide to transform. Large corporations find it hard to be nimble, given the massively expensive tangled webs they typically have to undo as a result of “organic” in-house technology growth over the years.
For large corporations, consulting spending has exploded. With too many chiefs, many of them require help to move the needle even a little bit. These monolithic companies are massive and unwieldy boats to steer. Meanwhile, your newly digital company has the opportunity to leverage smart technology in a way that lets you beat them to insights, ride trends in the market, and capture thought and eyeball share.
We cannot overemphasize the fact that behind the pretty marketing and branding your typical large company may deploy, many of their technology platforms still remain incredibly tangled systems that are often impossible to adequately adjust so that they work like the system owners want them to.
Exploit Your Authenticity Edge, Be Bold and Stay on Message
We spoke previously about the authenticity edge a small business has over a large corporation. Never underestimate this factor. It directly impacts your ability to create a strong brand, cheaply yet effectively.
As a small business owner, understand that you have access to all of the same channels a large corporation does, provided you go after them systematically and smartly. Focused and strategic thinking around this area can turn your customer’s attention away from the robotic branding spewed out by large corporations as they come to fully appreciate the value you provide and the message you are trying to deliver.
Continue to our articles on Operations, Marketing, and Branding to get detailed recommendations in each area than what the overview that we provided here.
As we said before….
The time to start is now!
- Holly Wade. Andrew Heritage. 2020. assets.nfib.com. Accesses 10/13/2021. <https://assets.nfib.com/nfibcom/NFIB-Problems-and-Priorities-2020.pdf>.
- (Beat the eCommerce compeition with a Progressive Web App (PWA)). nd. Accessed 1/14/2022. <https://www.pushon.co.uk/articles/beat-the-ecommerce-competition-with-a-progressive-web-app/>.
- Office of the National Coordinator for Health Information Technology. ‘Non-federal Acute Care Hospital Electronic Health Record Adoption,’ Health IT Quick-Stat #47. <https://www.healthit.gov/data/quickstats/non-federal-acute-care-hospital-electronic-health-record-adoption>. September 2017.