Product School

Digital Transformation in Product Development

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Carlos González De Villaumbrosia

October 04, 2023 - 9 min read

Updated: May 6, 2024 - 9 min read

Digital transformation in product development isn't just a trend; it's a fundamental shift in how we approach our work. You may have started with digital tools to automate certain tasks, but now it's time to think bigger. We're moving towards a completely digital and unified approach to creating products.

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Digital transformation means using technology to radically change your entire product development process. Instead of each department working in its own silo, imagine everyone accessing a single, digital source for all their information. This way, every part of your operation from idea generation to market launch is streamlined and integrated.

It's about making your development process as agile and effective as possible. So, consider this your guide to embracing digital transformation in your work.

What is digital transformation?

Essentially, is a holistic approach to product development that leverages interconnected systems to make smarter products. No more sifting through separate databases or cross-referencing multiple versions of a design.  Instead, all relevant information is stored in a single, virtual location—readily accessible but managed carefully for reasons like compliance and security.

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The beauty of digital transformation lies in its ability to streamline the entire product development cycle. Imagine engineering change orders automatically populating everyone's workflow, visible to all stakeholders.

Or, envision hitting a design milestone and triggering an automated prototyping process. This centralized, digital approach takes the grunt work out of the equation, allowing you to focus on what really matters: creating exceptional products.

Moreover, this new workflow eliminates the pitfalls commonly associated with manual processes. For instance, scheduling becomes a breeze as the digital workflow inherently accounts for time management, closing any gaps that typically arise from human error or oversight.

What's involved in product development’s digital transformation?

First of all, forget the idea of a "digital transformation kit" that you can just buy and implement. This is meant to be a tailored process designed to meet the unique challenges and opportunities within your organization.

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Digital transformation in product development encompasses a range of methodologies, including digital thread, digital twin, Model-Based Systems Engineering (MBSE), and simulation-driven design, among others.

Digital thread

The digital thread is a game-changer. Imagine an automated, two-way flow of product information that gets the right data to the right place at the right time. This flow improves efficiency, reduces errors, and enhances collaboration, ensuring that your product development team is always working with the most accurate and current data.

Model-Based Systems Engineering (MBSE)

Instead of relying on bulky, cumbersome documents, MBSE transforms your primary mode of information exchange into easily digestible domains.

These could range from behavioral analysis and system architecture to requirements traceability and performance analysis. The goal here is to create a unified understanding across all teams, leading to a more streamlined and efficient development process.

Simulation-driven design

Advanced simulation tools now enable your engineers to run tests at the earliest stages of design. This means that you can flag any issues before they become expensive problems, giving you the agility to make changes before things get too far down the line.

Digital Innovation vs. Digital Transformation

These two terms are often used interchangeably, muddling the conversation. Let's clear up the confusion so you can make informed decisions for your product team and align your strategies effectively.

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What is Digital Innovation?

Digital Innovation is like your company's creative lab. Here, you're inventing and implementing new digital technologies or business models to improve existing operations, services, or products. You could introduce AI-driven analytics to better understand user behavior, or develop a new feature that solves a problem for your customer base.

For instance, in your product team, it could mean implementing machine learning algorithms to recommend products to users based on their past behavior, thereby increasing sales and enhancing customer experience. Or perhaps, you decide to develop a mobile app that simplifies the user journey, making it easier for customers to make a purchase on the go.

Now, we already explained that digital transformation is actually the bigger picture, not just a tweak here and a new feature there; it's a complete overhaul of how your organization operates and delivers value. 

So, from a product perspective, digital transformation might imply a transition from a traditional Waterfall approach to an Agile methodology, affecting how the product is developed, tested, and released. It could also mean integrating a data-driven decision-making process into your product roadmap, ensuring each feature or improvement is based on real user needs and behavior.

So, are they the same?

Digital Innovation is more about 'doing things better,' while Digital Transformation is about 'doing better things.' One is focused on incremental improvements, and the other seeks to change the very way you operate.

Knowing the difference helps you set the right goals, allocate resources efficiently, and communicate more clearly with stakeholders. It will guide whether your next sprint should be about implementing new features or if it's time to rethink your entire product development strategy.

Digital Innovation vs. Digital Transformation: Main differences

It's easy to think of Digital Innovation and Digital Transformation as two sides of the same coin, isn't it?  Let's dive into what sets them apart, so you can plan your product strategy with laser-like precision.

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1. The scale of impact

Digital Innovation is your sprinter. It zooms in on specific aspects of your business — say, the UX of your product dashboard or the machine learning algorithms that fuel your recommendation engine. The aim? To fine-tune existing processes or add new, game-changing features to your product portfolio.

For example,  you are considering adding a chatbot to your customer service platform. It's a specific change that optimizes a particular customer touchpoint but doesn't necessarily alter the foundation of how your business operates.

Digital Transformation, on the other hand, is your marathon runner, targeting the very core of your business. It touches everything from the technology stack you use, to how your product teams are structured, to your go-to-market strategy. The idea? To reimagine your entire business in the context of the digital age.

For instance, you are thinking of a move from on-premise solutions to a cloud-based SaaS model for your entire product line. That's not just an upgrade; it's a seismic shift requiring changes in your development cycle, pricing strategy, and even customer support.

2. Disruption quotient

When it comes to the disruption they cause, Digital Innovation is often incremental. You’re adding layers to an existing cake—improving the frosting, adding some sprinkles—without changing the recipe.

Digital Transformation is disruptive, often requiring foundational changes that might lead to initial resistance from employees and stakeholders. However, it also paves the way for unprecedented growth opportunities.

3. Investment and effort

Both endeavors are key for staying competitive but differ significantly in the investment of time, money, and human resources. Digital Innovation can often be managed with your existing teams and budgets, while Digital Transformation may require dedicated teams, new skill sets, and a shift in your resource allocation.

Innovation or Transformation?

Both add value but in different ways. Digital Innovation polishes your existing gems, while Digital Transformation redefines what you should be hunting. As you ponder which route to take, consider your long-term business objectives, the competitive landscape, and where you want your product to stand in that scenario.

The value of Digital Transformation for your Product Team

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1. A single source of truth

Your entire organization and supply chain can share access to the same real-time data. This is where the concept of the "digital thread" and its visual counterpart, the "digital twin," come into play. These are your new North Star, a single source of truth that consolidates as-designed requirements, as-built data, and even as-maintained records.

For product terms, it means no more sifting through outdated CAD files or conflicting spreadsheets. Your digital twin is a living, breathing virtual representation of your product. It evolves in real-time, giving stakeholders from engineering to customer support a unified view. 

2. Streamlining communication

Think about your last product rollout. Remember the chaotic email trails and the ensuing confusion? Digital transformation solves this problem by centralizing all communications within the project's ecosystem.

For instance, say your QA team finds a last-minute bug. Instead of an email blast that might be missed, the issue is logged directly into the digital thread. Your developers see it instantly apply a fix, and everyone from product managers to UX designers knows it's been resolved. That's not just efficient; it's revolutionary.

3. Simplifying complexity

Digital transformation allows you to reset your entire product development philosophy.

For product teams, this holistic approach means that tasks like prototyping or customer validation are not isolated events but integrated steps in a cohesive, automated process. Your team moves in lockstep, empowered by a single, repeatable, and consistent digital workflow.

Actionable steps to adopt Digital Transformation

  1. Audit your current product development process to identify bottlenecks and inefficiencies.

  2. Assemble a cross-functional team to outline a digital transformation strategy.

  3. Begin by implementing one element—say, a digital twin for your flagship product—and measure the results.

  4. Use the insights to refine your approach and scale the transformation across different departments and product lines.

There's never been a better time to leverage digital transformation to your advantage!

Learn More with Product School

To learn about how to drive digital transformation in your organization, don’t miss out on our custom team training.  Our tailored team training, led by Silicon Valley experts, offers a deep dive into the strategies that can propel your business forward. Our training will equip your team with the latest tools to stay ahead of the game.

Schedule a call now to find out more about how our training sessions can give your organization a competitive edge.

Updated: May 6, 2024

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