Digital transformation is essential for any company looking to remain competitive and profitable, both now and in the future. However, for many organizations and especially SMEs, the process of digital transformation can be difficult to begin. What are the costs of digitization, what is the first step, and what will the results be? These are just some of the questions that need answers during the planning phase. In this article, we will look at three examples of successful digital transformations.
What Is Digital Transformation, and Why Is It a Key Process for Any Business?
Digital transformation is the complex process of using technology to create new or improved business processes, products, and services. According to a report by Meticulous Research, the global digital transformation market will reach $3,294 billion by 2025—with the global adoption of IoT being the key growth factor.
The integration of new digital technologies is not at all an easy process, but it is essential for companies looking to stay ahead of the competition. Businesses must take their first steps toward digital transformation in a way that is tailored to their specific characteristics and needs. The four main areas of digital transformation are: business processes, business models, domain transformation, and cultural/organizational transformation.
Examples of Successful Digital Transformations
Digital transformation paves the way for performance in any company. This is demonstrated by the decisions of well-known companies around the world. Faced with stagnation or even bankruptcy, leading companies resorted to digital transformation and became successful examples of this crucial process. Here are some of the most successful digital transformation stories.
A turning point for Nike
Digital transformation helped Nike make a strong comeback in the market after the pandemic. In 2017, Nike was on a downward trend. The company couldn’t keep up with the market. When former Nike CEO Mark Parker announced that the brand would be reducing its list of distribution partners from over 30,000 to just 40, a turning point was established. With this vision for their brand, Nike’s leaders not only reduced the number of retailers and partner stores, but implemented a digital transformation strategy that linked e-commerce with in-store experiences. Nike was focused on improving customer experiences in-store. And in the case of a Nike store in Los Angeles, this customer-focused approach turned customers into Nike Plus members six times faster than in any other store in the network.
Why is this important? The answer is simple: Nike+. It is an activity tracker that measures and records the distance and pace of a walk or run. By analyzing this data, Nike provided users with products that suited their needs. At the same time, the staff’s belief in the new concept convinced customers to spend 30% more on their online purchases compared to those who did not visit the store. This proves the importance of human capital in digital transformation.
Microsoft’s bet on the cloud
Fierce competition and falling stock prices forced even Microsoft to rethink their strategy and to identify new business development levers. Since 2014, the company has been focused on cloud services for both institutional and personal use.
In its heyday, Microsoft tended to avoid partnerships. However, in 2014, Satya Nadella became Microsoft’s CEO. This change paved the way for developing partnerships with other software and technology companies. And today, Microsoft is the market leader in cloud services—and one of the most valuable companies in the world.
Lego’s transformation into one of the biggest global companies
In 2003, Lego was sliding toward bankruptcy. At the end of 2004, the Danish company had outstanding debts that exceeded its annual sales, and recorded a significant net loss. In 2020, Lego’s sales increased by 21%, thanks to an expanded product portfolio, investments in online commerce, and positive results in the Chinese market. The company also announced the expansion of its retail chain.
According to the report “Transforming the Lego Group for the Digital Economy” by the Center for Information Systems Research, their turnaround started around 2000. At that time, the Lego Group set up an initiative called “Lego Light” to implement a business-wide ERP platform. Lego’s main objective was to consistently and securely gain global insights by initially standardizing sales and financial processes. Since 2004, Lego has focused on getting the most out of implementing the ERP platform and training staff to use it.
In 2009, the company started implementing a global production management platform called Combi 2. In 2021, Lego’s annual revenue jumped 27%, reaching $8.06 billion. By continuously developing and expanding the Lego Enterprise Platform, the Danish company has fundamentally transformed itself to become one of the world’s leading companies today.
Conclusion
It’s easy to draw conclusions from these examples. First, digital transformation is not just about implementing new software. Transformation must start from within the organization and address all aspects of the company. Second, the main driver of successful digital transformation is the people within an organization. Most often, bold decisions have positive results precisely because they are coupled with the commitment of management and staff. Another lesson is that the entire process can span decades.
