Digital transformation — it’s a common enough phrase in modern business parlance. But what does it mean, exactly? And more importantly, how do you do it properly?

Digital transformation is less about evolving information to digital technology, and much more about applying the power of digital to transform your business processes and focus on customer and employee experiences.

Done right, digital transformation can help organizations not only gain competitive advantage but dramatically disrupt economic sectors — that’s why the largest taxi company (Uber) owns few cars, and why the largest media company (Facebook) employs no journalists.

But how can companies harness the power of digital transformation to achieve competitive advantage — and prevent digitally savvy rivals from upending their businesses?

The components of transformation

Successful digital transformations requires action as well as alignment across four areas.

  1. Strategy and vision: Assess current challenges and opportunities, then develop a strategy that aligns with specific business outcomes for your customers and employees — and allocate resources to execute it.
  2. People and culture: Ensure buy-in from senior leadership — digital transformation is impossible without it.
  3. Process and governance: Focus on key business processes. Introduce frameworks governing not only innovation but ongoing change and associated risk. Bear in mind that digital transformation is a continuous improvement process.
  4. Technology: Prioritize and implement technology services in support of targeted business outcomes. Business leaders, technology teams and partners need to be in constant dialogue in order to take advantage of new, disruptive technologies.

Transformation is a journey — and it requires the right partner

Building out your capabilities across these four areas isn’t an instant process. Instead, it’s a full-spectrum change requiring foresight, patience and experience.

For businesses in the early stages of digital transformation, it may make the most sense to apply digital technology in ad hoc ways — for instance, they might choose to focus on short-term, triage interventions in order to avoid the costs and challenges associated with a systematic overhaul.

Many maturing companies, on the other hand, will want to focus on comprehensive business outcomes. That means partnering with business process service providers and applying capabilities such as digital automation and analytics. For these companies, it makes sense to develop cohesive transformation strategies and apply digital to improve processes such as data and document management and digital payment services — improvements that can reinvent front- and back-office processes and deliver solid bottom-line outcomes.

Human-centric digital transformation

For all companies — no matter their size or stage in the transformation journey — the goal is to apply technology and reinvent business processes in a human-centric way. That’s part of the reason why companies right now are so focused on transforming the customer experience and rethinking the employee experience.

When you encode innovation directly into your company culture and find yourself pulling away from the pack, you’ll know that you’re winning at digital transformation. The irony is that the process is never over. It’s a virtuous circle of change and excellence. A constant journey of self-discovery. Welcome to the digital-first world.