The state of today’s economic climate is pushing businesses of all sizes and industries to plan proactively, react promptly and above all, adopt an innovative mindset. But business transformation isn’t just about thinking of good ideas and transforming. There’s also the issue of value-based management.
In this blog post, we’ll discuss why value creation and management play such vital roles in digital business transformation. We’ll break it down into two key groups of stakeholders:
Employees and managers
Digital transformation can add value to your business in various ways, such as ensuring you keep pace with competitors and helping your business become more agile in the face of disruption. But does the rest of your team know and understand that?
Let’s take it back a step. Do your employees, managers and other internal stakeholders know what digital transformation is? Can they see beyond the buzzword reputation the term currently holds?
Digital transformation will impact all areas of your business and it’s a complex project. So, you’ll need all hands on deck to achieve success. You need your team to buy into this vision and want to be part of the process, which is why you must help them understand the value of transformation.
The value of digital transformation for employees and stakeholders
- Improved productivity and more time back to spend on more critical tasks - for example, automation and machine learning can handle repetitive, manual tasks. This reduces the chance of human errors and frees up your employees’ time which they can now spend on work that requires humans
- Improved efficiency - technology like AI insights and IoT-enabled devices can help your teams quickly identify and analyse the data that really matters
- Stabilised supply chain - modern ERP systems, for example, can integrate with your other business systems and processes (e.g. CRM system, data feeds etc). This improves visibility, giving you better odds of spotting market disruptions and time to prepare for impact. The addition of technology like predictive analytics can even model the impact of your decisions so you can make well-informed choices
- Ability to keep up with market demands - customer demands are increasing and the competition is mounting. Technology is the best way to futureproof your business and help you stay ahead of all these changes to the market
- Potential for more flexible working habits - automated processes and IoT can allow your employees to monitor systems, analyse data, collaborate with their colleagues and more - even when not on-site
Digitally transforming your business affects your customers as much as it will affect your internal teams. Customers may be preoccupied with concerns, such as:
- Will it affect the quality of the service and experience I’m currently receiving?
- Will I need to learn new processes and systems?
However, it’s important to communicate the value of digital transformation to your customers:
- More convenient - e.g. A digitally transformed business might have integrated their ERP to their commerce platform (providing they rely on commerce, of course). This gives the customer more autonomy over checking inventory levels, order statuses, tracking, price quotes etc. More benefits of a CRM-ERP integration here
- Greater transparency and visibility - leading on from the above benefit, your customers gain more visibility and your business can be more transparent about what’s going on. For example, where an order is up to, the status of a project etc…
- Potential for improved customer service and experience - and both of the above points can lead to better customer service and experience! For example, more autonomy for the customer means there’s less of a need for them to contact your customer service team. Then there’s a CRM-ERP integration which means customer service reps can find answers to customer queries faster…
Extend the value of your digital business transformation
When you get all of your business’ stakeholders onboard with your digital transformation plan, you’re setting yourself up for success. Think about it. The value of your business is determined by its profits. Value is realised when the outcome of your transformation activities delivers revenue benefits that outweigh the implementation costs.
Value-based management takes this further by helping you use that value to make strategic business decisions, whether they’re major or everyday tweaks. McKinsey have a great explanation of value-based management – you can read it here.
A well-thought-out value-based management strategy can be a key driver in the success of your digital transformation project.
The reverse is also true. Digital transformation can create more value for your business. For example:
- Facilitate cross-team collaboration and communication - keep your teams connected within departments and across them. For example, integrated systems allow you to edit documents in real-time (no need to share multiple versions), reach out to subject-matter experts from different teams and more
- Allow you to make more informed business decisions - when critical data is stored on a single business system, you gain more visibility across the board and it’s much easier to make informed decisions even on-the-spot
- Empower your team - train your teams to take advantage of any new digital technology you invest in. This will empower them with innovation and encourage a digital-first culture
- Encourage you to adopt a risk-taking mindset - embracing digital transformation is the first step towards adopting a risk-taking mindset. And while it’s normal to fear failure, taking risks is what will push you ahead of the competition
Digital transformation + value-based management = A strategic partnership
Can you now see why value-based management and digital transformation depend so much on each other? It’s not enough to simply innovate your business alone. You need to get your stakeholders’ input and approval. That hinges on value creation and management.
And then there’s the flip side – digital transformation will create even more value but only if you navigate the initial hurdle of gaining buy-in.
Want to find out more about value creation and management, and how you can successfully pull it off for your transformation project? Read our step-by-step guide to business value creation by clicking on the link below.