Three Pillars of Digital Transformation for Mittelstand

What are the most important pillars for Digital Transformation? In this blog post, I would like to deep dive into the main pillars of digital transformation and my understanding of them. If you are more of a visual person, you can watch the video below from The Digital Mittelstand podcast.

3 Pillars of Digital Transformation for Mittelstand

As per my understanding, digital transformation is a shift in the company mindset, starts with questioning the status quo, and changes the way business operates.

However, before we start with the pillars and eventually with a digital transformation project, there are prerequisites to be fulfilled. First and foremost, we need to define “Digital Purpose”. But hey, what is digital purpose? Digital purpose defines the goals of our digitalization efforts. It’s our “why”, it’s the north star of the company and it functions as a GPS. Defining the digital purpose is followed by the strategy and the action plan to execute. By the way, if you want to learn more about the Digital Purpose concept, here is a great episode where we talked about it with Lukas Zechel, Co-Founder @BITROAD GmbH. The second prerequisite is the value proposition. We should clearly define the value proposition before starting with our digital transformation projects. However, this could change over time, for example by digital business models. In both cases, defining the value proposition before the digital transformation project will give us a basis to analyze and measure improvements with the new digital business model. Once we are done with the prerequisites we can move to our three main pillars for digital transformation.

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Here is the summary of each pillar, before we deep dive into them. Please don’t forget, it’s not about the answers we have, it’s about the questions we ask to enlarge our perspective for the better. Therefore in each pillar, I will start with a question.

  • People: How can I make my customer’s and employee’s life better?
  • Processes: How can I create more value by optimizing and automating my processes?
  • Technology: Which technology will help me to achieve my goals for our people and processes?

1. People:

How can I make my customer’s and employee’s life better?

People is a very wide term that includes, customers, employees, suppliers, partners, actually all relevant stakeholders. It also includes company culture and the company’s mindset. Digital transformation is a change process, therefore mindset and culture play a crucial role. Therefore, we advise including all the stakeholders as early as possible in the digitalization projects. Depending on the project size and goal, the inclusion of shop-floor workers or people who make the production can be as important as executive (C-Level) involvement.There are methodologies like Customer Journey Mapping available to use as a framework. If that sounds complicated, you might find further information here.In the light of the question, how can I make my stakeholders’ life better, we want to understand their pain points. Only once we understood that in the guidance of our digital purpose, we can move on to pillar #2.

2. Processes:

How can I create more value by optimizing and automating my processes?

Now, as we have decided to include enthusiastic people on our team and decide to run a process discovery, assuming that the processes are already digitally modeled. First things first, what we look for is which process steps are necessary, then potential improvements are defined by asking the questions below;

  • Which steps could be eliminated?
  • Which steps can be optimized?
  • What’s changed over the course of years, since we have reviewed this process?
  • What are the bottlenecks of the process?
  • Which steps are blocking the process most?

There are many questions we can ask here, but starting with the ones above, the optimization potential is extremely high. Our customers are quite surprised when they see the results. Of course, there is technology available on the market like Business Process Management (BPM), Process Mining, Robotic Process Automation (RPA), but in this step, it’s too early to think about the technology. Unless we make our process efficient, it doesn’t make sense to choose technology. As I always say; First optimize, then automize!”. If you think that’s a good idea to run a process discovery, to find out your optimization potential, you can get more information here. Now as we know how to make our processes more efficient, it’s time to move on to pillar #3.

3. Technology:

Which technology will help me to achieve my goals for our people and processes?

Technology comes latest! I hear and experience this often with our clients as well, that the CEO or the CTO of the company hears about one new technology, let’s say RPA (Robotic Process Automation) and he/she is inspired by the benefits. Moreover, almost convinced about applying the technology. That’s great. However, technology only magnifies your processes’ efficiency. So if you have a great process, and it will be greater when you automate it. When you have an inefficient process, it will fail quickly due to its ineffectiveness. Here is a short video where I talk about Bill Gates’ quote on this topic.On the other hand, technology is the easiest of three pillars. As the purpose, strategy, and value propositions are clear, plus processes are adjusted accordingly now it’s a matter of company & software match. Choosing the software as per the needs, technical requirements and budget is easy!What shouldn’t be overlooked, however, is the implementation of the tool (or toolset) that has been chosen. We highly recommend getting experts in or dedicating your CTO & CDO to the project implementation to see the best results in the shortest time possible.

But it doesn’t stop there!

Digital Transformation never ends. It’s a constant change pushing the business forward. We should be always testing new business models, monitoring our progress, constantly receiving customer and employee feedback, and keep optimizing our processes and value proposition accordingly. This is the exact reason that I choose the rounded arrows in the 360 Digital Transformation logo. Because digital transformation is an endless, continuous change.

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Can Adiguzel is the founder of 360 Digital Transformation and host of The Digital Mittelstand podcast. He is in Digital Transformation projects for more than 8 years. He is passionate about Digital Transformation for Mittelstand and helps Mittelstand to overcome their Digital Transformation challenges by optimizing, digitalizing, and automating processes.