In 2023, expect to see several transformation trends emerge to shape the way organizations deal with their changing worlds. As the world rapidly changes and evolves, so too businesses must adapt to stay competitive and relevant, let alone successful in the face of shifting market dynamics, customer demands, and technological advancements.

1. Digital Transformation

This ongoing trend will continue through 2023. The ever-increasing importance of digital technologies in every aspect of operations pushes businesses and governments to embrace digital transformation. Whether now optimizing existing digital technologies and processes to improve efficiency, agility, and customer experience or now finally joining the wave, the transformation is deepening.

Within the broad category of digital transformation are five specifically hot areas of innovation and improvement.

i. Cybersecurity

The breadth of awareness and impact related to cyberbreaches is now sufficient to (a) alter acceptable loss equations for many businesses and (b) give pause to even casual internet users. It’s been the elephant in the connected room for years, but now with near 2/3 of digital businesses experiencing major service failure due to security breaches and an expected 33-Billion account breaches in 2023, something will be done now.

ii Artificial Intelligence

Students writing term papers with ChatGPT and Bing going… “human”—read: erratic, are signs that AI is blooming and becoming broadly valuable. The genie is out of the bottle. What has been the private domain of customer service bots, etc. is being demanded for wider use. 2023 is, for all practical purposes, the year that AI hits the mainstream. That means democratization and a likely “arms-war” of AI advance and counter-AI retreat.

iii Automation

By the World Economic Forum’s reconning, 80% of CEOs will accelerate work process digitization and are implementing new technologies for “mundane” automations excluding those that are AI-based. Gartner agrees, referring to it as hyper-automation. Just as computing changed from room-size to pocket-size, robotic and other non-mechanized automations will permeate industries that couldn’t be further automated, such as retail.

iv. Data Analytics

Advanced automation and AI are lame without robust analysis of data. But robust data analytics aren’t the reserve of these advanced digital technologies. All manner of stakeholder has plenty of opportunity and room to apply sophisticated, persistent data analsis to their strategic, investment, and action choices. In this era of sensitivity to the efficiency of investment, in 2023 data-centricity will become yet more critical.

v. Regulation

It’s hard to believe there hasn’t been more digital-specific regulation already. Around the world societies are now looking hard at the responsibilities of and constraints on participants and the technologies dominating how the world works. This is including and beyond privacy (of data) laws and will encompass cybersecurity provisions, the responsibility of platforms (e.g., Facebook, Twitter) for slander and libel, and so forth.

2. Customer Experience Transformation

Customer experience is about optimizing the customer journey for satisfaction and loyalty. Expect to see increased focus on customer experience transformation as distrust of government and peak cost/prices force governments to treat citizens different and businesses to differentiate based on quality of customer experience. This includes leveraging data and analytics for deeper insight into customer behavior and preferences, as well as optimizing digital channels and touchpoints for seamless and personalized customer experience.

3. Ecosystem Transformation

Ecosystem transformation is creating partnerships and collaborations with other stakeholders to create new value. In 2023, expect to see increased focus on ecosystem transformation as businesses seek to leverage the strengths and capabilities of other organizations to achieve their own transformation goals. This includes new business models, sharing data and resources, and co-creating products and services with partners. Global instability’s impact on supply chains is forcing major ecosystem transformation in the form of nearshoring.

4. Culture Transformation

Culture transformation involves creating a culture that is aligned with the organization’s transformation goals and values. In 2023, expect to see increased focus on culture transformation as businesses recognize the critical role culture plays in driving all other transformation success. Examples would include promoting a culture of experimentation and risk-taking, developing leadership capabilities aligned with transformation goals, and fostering an inclusive and diverse workplace culture to support innovation and creativity.

5. ESG, particularly “sustainability” Transformation

ESG, particularly sustainability, is THE critical issue for businesses as customers, investors, and regulators increasingly demand more environmentally-friendly and socially responsible practices. In 2023, expect to see more businesses embracing sustainability transformation to align their operations with these expectations be those environmental or otherwise. For example: developing environmentally-friendly and socially responsible products/services, as well as optimizing existing processes and practices to reduce waste and carbon emissions.

6. Employee and Employment Transformation

Employee transformation involves altering skills, capabilities, and mindsets among employees. Employment transformation is altering the relationship between labour and capital. Ongoing tension between Work from Home (WFH) and Return to Office (RTO) forces will propel an increased focus here in 2023. The workforce is critical to driving transformation, so organizations will adjust to new implicit “contracts,” invest in “where you are” employee collaboration and experimentation culture, and continue to systematize knowledge sharing.

7. Agile Transformation

Agile transformation involves adopting agile, iterative methodologies to drive innovation, speed, and flexibility. In 2023, there will be continued pressure for agility as businesses seek to improve their ability to respond quickly to rapidly changing market conditions and customer needs. This includes adopting agile practices such as iterative development, continuous delivery, and cross-functional teams, as well as promoting a culture of experimentation and risk-taking.

This year, organizations will continue to transform themselves to stay with—and ideally ahead of—the curve. These seven (twelve) are far from the only transformations happening and individual organizations are at different points in their journey. Naturally, they will focus on what’s right for them. Mileage may vary…

Remember: transformation is not a one-time event but a continuous process that requires ongoing investment, experimentation, and adaptation. Those that embrace change and continually transform themselves are the ones that thrive.