Is Your Destination Ready for The Digital Transformation ?

Note: This is a sample chapter from my book available here on Amazon!

THE RISE IN DIGITAL TOURISM

Consumers are looking for pieces of information well before they book their trips, they compare and read opinions of other travelers, and then they book tickets, hotels, and even tickets for shows and museums. During the journey, from online check-in to searching information about places and leisure activities. After traveling, they don’t hesitate to add their review to the information that other travelers will consult. All of this is done on a smartphone in more than 50% of cases.

With this in mind, all digital strategies in this sector are increasingly based on online presence, differentiation, and reputation in order to be competitive.

But there are two ways of adapting to this digital transformation: either you can be reactive, which implies, to incorporate technologies and processes that respond to consumer needs; or being proactive, by offering new unanticipated possibilities that put customer’s digital experience to a new level.

“The biggest challenge I believe we are facing for marketers is the continued fragmentation of a variety of marketing channels and the challenges which go with it. The shift away from television and towards mobile by millennials, and frankly other generations is picking up speed. The introduction of streaming audio and video, social media and more creates a challenge for marketers on where to put their hard earned marketing dollars without losing their message in a sea of voices. This is why I continue to encourage my clients to refine and execute campaigns based on their brand message, along with investing in the tools to better understand where their customers are spending their time.

“The biggest challenge I believe we are facing for marketers is the continued fragmentation of a variety of marketing channels and the challenges which go with it.”  –@TamaraMcCleary

WHAT IS “DIGITAL TRANSFORMATION”?

There are many different ways in which to describe digital transformation, though most would agree that a decent and encompassing description could be the following:

“Digital transformation is the process of investing in technological tools and processes, while at the same time changing the business model and strategy of a firm in order to adapt it and grow in a digitally oriented society”

In short, digital transformation means changing all aspects of a business in order to adapt it and prepare it for the world where disruptive technologies and online presence in all relevant platforms has reshaped the way society works and interacts with itself and the outside world. It is important at this point of defining the digital transformation that it is an exercise relevant for all firms in all industries, and not only those that in some way can be said to be “digital companies” or are active in “tech industries”. Independent of the size of a firm, the nature of its business model or structure – digital transformation is or will be a matter to explore if the business is to survive and grow.

Digital transformation is not only about technological investments, it is essentially a transformation of a whole organization and line of thought. Failed digital transformation projects are in large due to a limited set of activities focusing on the technological aspect. Just as important is the change in business model and adaptation to agile methodologies instead of the traditional waterfall like processes.

Digital transformation requires a paradigm shift, as it moves a business away from well-known practices to new albeit possibly well-proven ones in ways that is best fitted to its profile. Digital transformation then is not only about updating the IT-fleet of software and hardware, nor about having an online presence. Digital transformation is the holistic approach of understanding what “online” means, what digital tools can be used for, how an organization needs to be changed to dynamically adapt to the current and future paradigm shifts, creating new roles such as Chief Digital Officer, adapting the business model and strategies to accommodate new customer behaviors brought about by the changes in the use of platforms such as mobile phones, tablets, and VR-machines.

Digital transformation entails thinking and working innovatively and in new ways. As in introducing VR into the set of marketing tools ?

Other consultancy firms have researched and found their way of describing digital transformation. The consultancy firm Capgemini in cooperation with MIT have described digital transformation in a report in the line of being a matter of “digital maturity”. “Digital maturity” is achieved as described in their report by pursuing technology-enabled initiatives described as “digital intensity” and leadership initiatives described as “transformation management intensity”.

The consultancy firm McKinsey describes digital transformation by focusing on two main factors; cost savings and the customer experience are presented as the main factors impacting the bottom-line. Hotels and airlines are described as being particularly exposed by digital disruptions, and the report counts on digital sales increasing by 50% for these sectors of the travel industry. Other industries said to be highly affected by digital are mobile communications and retail banking as these offer virtual services rather than physical products. McKinsey emphasizes that size of the resources and the extent of digital transformation should be in line with what a company needs and can expect to carry out – there is no need to overinvest or invest in a project that cannot be carried out due to resource constraints.

The figure above visualizes the main concept in the McKinsey report, the one of how digital transformation can affect a modern company. The steps taken to embark on a digital transformation project are described as a cycle, with the following points encompassing the key factors decision making, connectivity, automation, and innovation:

  • Customer experience; multichannel communication and connectivity with the customers 24-hours.
  • Product and service innovation; new digital products and services.
  • Distribution, marketing, and sales; digital marketing and distribution.
  • Digital fulfillment; service and administration done digitally.
  • Risk optimization; automated risk control and improved customer targeting.
  • Enhanced corporate control; real time management.

Finally, what a successful digital transformation journey is and how long it takes to execute depends on the company being transformed and which industry it is active in. There is no one-size fits all recipe that works for all types of organizations, but there are key elements to follow when digitally transforming a company that is good to keep in mind. We will delve deeper into how a business can be digitally transformed in the next chapter.

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