Business digital transformation concept Future and innovation, internet and network concept technology background

By Mostafa Sayyadi and Michael J. Provitera  

In the digital economy, companies must implement a digital transformation strategy to increase their financial performance. This implementation requires using solutions we will indicate in this article.  

Why Digital Transformation Matters for Financial Performance?  

There are several logical reasons behind the significant relationship between the financial performance and digital transformation strategy implementation. The first reason is that with digital transformation strategy implementation, organizations can achieve a level of complexity that will cause the competitors to be unable to imitate them. [1] [2] [3] [4] This acts as an important strategic flank for organizations to achieve a high level of competitive advantage. [5] [6] [7] [8] [9] Second, digital transformation strategy implementation acts as a suggested attempt to reduce costs which, if announced, offers a bounce up on the stock price temporarily. [10] [11] [12] Organizations that implement this strategy with extensive investment have a higher potential to reduce costs compared to other organizations. For example, our experience says that many successful organizations in East Asia, especially in countries such as South Korea and China, use the digital transformation strategy as an important weapon in the competition with American, Australian, and European organizations. They drastically reduce costs and increase the profit of their organizations. Also, Korean and Chinese organizations have brought digital transformation strategy implementation to a level of optimal performance that can minimize the time between the product development life cycle and the management of the relationships with customers and the supply chain of goods and services. This eventually adds to the flow of cash more quickly in their organizations.  

The Solutions for Better Implementing Digital Transformation Strategy 

We suggest several solutions for digital transformation strategy implementation. First, senior managers design and implement an integrated information technology system that allows the organization’s departments and employees to communicate with each other all over the world. At the same time, this integrated and extensive system, which has led to the growth of complexity and competitive advantage of the organization, has also reduced the chances of competitors imitating them. [13] [14] In addition, this organizational design also provides an important role for the growth of innovation by sharing ideas and communication. [15] A successful example of this integrated information technology system can be seen in Alibaba, which compared to many of its international competitors such as Amazon, has reached an amazing level of cost reduction and innovative growth. 

The second suggestion is to use new project management techniques and design an organizational culture that is suitable for this digital transformation of organizations—a Level Three Leadership. Jim Clawson coins the phrase that level three leadership focuses on vision, purpose, values, stories, music, and symbols. Training and development of human resources should also become an inseparable part of the strategic management of organizations. Working together Strategic Human Resource Management can bridge the digital divide. In fact, this proposal is too maximum the role of digital technologies in the supply chain and communication with customers so that costs can be reduced as much as possible. Organizations such as Walmart, Target, and Kmart Australia have mastered the supply chain relationship and will only work with vendors that can meet their expectations. The next suggestion is to train active human resource professionals in the information technology sector with management and business methods so that the maximum possible result can be achieved in this combination of information technology with the supply chain and communication with customers. We recommend Jim Clawson’s book titled Level Three Leadership for senior managers. 

In Conclusion 

The solutions of digital transformation strategy implementation are no longer secret. Companies can make their digital transformation implementation more effective with these exposed secrets. Now, companies and all managers and employees at the top, middle and operational levels can more effectively take their responsibilities to effectively implement their strategy and thrive in their changing business environment.

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About The Authors 

Mostafa SayydiMostafa Sayyadi works with senior business leaders to effectively develop innovation in companies, and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders.  

Michael ProviteraMichael J. Provitera is an Associate Professor at Barry University. He is an author of Level Up Leadership published by Business Expert Press. 

  

References  

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