Where do you start with Digital Transformation?

inspirational-einstein-quotesNowadays, almost every client conversation starts with Digital in some form or the other. The competitive advantages that once gave companies a great leverage —their product lineup, scale, or legacy position—are no longer as secure as they were. Many startups are already disrupting big companies, if not already. Given this digital era with rapid innovation coming from all corners, all businesses must transform, meaning a comprehensive change in strategy, operating model, organization, people, and processes. Transformation is an imperative.

There is so much happening in digital space that every company wants to get onto bandwagon, but are quite not sure where to start.

Let’s align on some definitions first – Companies often confuse “digitization” with “transformation“. Digitization deals with taking existing business/platforms to digital. Transformation is change in existing business model to create new business model.

Digital Transformation is the use of digital technology to radically transform customer experiences, operational process and business models to create value at new frontiers of business world in a strategic way”

Digital Transformation in general is consumer facing, generates top-line growth, enhances brand value for the company. But note that Digital Transformation moves at pace of innovation, market, competition and ever-evolving customers expectations.

Why is this important?

27% of senior executives rate digital transformation as now being “a matter of survival”.

The majority (87%) of companies think that digital transformation is a competitive opportunity.

51% of senior executives believe it critical to implement digital transformation in the next 12 months.

So, what are companies doing to drive digital transformation?

Digital is not about tools, it’s about mind-set, organization culture and education. Companies needs to embrace “digital culture” and obsessively focus on delivering great customer experiences.

Digital Culture means customer-centricity, transparency, research/data driven, co-creation of products/services with customer, collaborate across cross functional units, agile, empowered to take risks, innovation driven, etc.

Transformation will take time but many companies are taking certain steps to put them on right track for exploiting digital down the road. Few noted below –

  1. Appointing Chief Digital Officers, Chief Innovation Officers to understand customers expectations, analyzing data, coming up with creative ways to simplify solutions, etc
  2. Increase in Digital Marketing technology spend in areas of content management/commerce platforms, social media and analytics tracking , creative frameworks and tools, CRM, Personalization, Responsive Web Design (RWD) — all of greatly enhance customer experiences
  3. Investments in disruptive technologies like Internet of Things (IoT), Mobile payments, Artificial Intelligence (AI), wearable devices, home automation, cloud computing, data and analytics, 3D printing, bots, robotics, etc
  4. Moving away from traditional waterfall approaches with year-long release cycles to agile, iterative faster release cycles as short as few weeks
  5. Shift in mind-set from “risk-averse” to “risk-taking” with investments in digital skills
  6. Focus on mobile and cloud (Just so you know, Microsoft, after Satya Nadella, CEO, took over changed their strategy to “mobile first, could first“)
  7. Integrating digital and physical strategy. Read mBank case study here – integration of digital and physical banking at it’s best
  8. Establishing presence on social media platforms to engage with customers – Facebook pages, Twitter account, Instagram, Snapchat, weChat, LinkedIn, YouTube, etc. See how Starbucks excels at social media.

Key challenges for big companies

Digital Transformation is not easy, especially for big established companies. Let’s look at some of the key challenges that many companies are facing now:

  1. Fragmented business process: Every big company has numerous business process operating under old model. No insights to analytics or customer feedback to determine where to improve. Most business process are functionality driven and not customer-centric.
  2. Legacy Technology: Hundreds, if not thousands of systems; most legacy systems driving core business functions, which are hard to decouple and experiment. Couple this with aging infrastructure, information overload and lack of measurement of KPIs to determine effectiveness and efficiency.
  3. Culture: Digital is moving fast but there is still resistance to culture change. “Risk-taking”, “fail-fast”, “innovate”, “collaboration”  – these are not being embraced fast enough
  4. Lack of unified Marketing and fragmented channels. Adhoc strategies to run campaigns, social media strategies, etc – some of which is reactive in nature too.

So, where you do start?

The answer truly depends on where the companies are on digital maturity scale and also on industry. Leaders must first understand where will digital have most profound impact, then define vision and road map. Many companies have begun to successfully transform their products and operations by taking a structured approach to digital. The key thing is not just strategize endlessly, rather taking action now by launching small-scale initiatives and then building up their digital capabilities through experience. Some ideas –

1. Build delightful customer experiences

  1. Build/Redesign website with simple, yet outstanding customer experience: Before we use or purchase any product/service, we normally visit company’s website. Website is the gateway to company’s service offerings – an avenue to immediately attract potential customers with great content, videos, effective landing pages providing contextual, relevant, personalized content. Equally important, is to have a responsive version of site i.e. site that is optimized to work effectively on tablets, mobile devices. Few key questions you need to consider –
    • How well do you know your customers? Segments?
    • Do you understand customer journeys?
    • How to best service an omni-channel consumer? Some inspirations of great UX sites.
    • Do you have a comprehensive content strategy?
  2. Build a Mobile App: Dedicated app to showcase things that are relevant to customer. Don’t just dump everything from the site onto app, rather include top few customer oriented features.  E.g. if I am in a retail store, retail app should provide relevant information like coupons, new product information, complementary products to what i have already purchased before, discounts, promotions, price comparison, trending items, etc. All of this should be based off customer preferences, past history and behavior.
  3. Build 360 view of customer leveraging CRM, analytics, customer service/operations, website data and such
  4. Define Social Media Strategy: Determine what is the most effective social media platform to serve customers and engage with the customers on daily basis.

2. Streamline operational processes and technology

  1. Automate Business processes: Revisiting existing processes and eliminating unnecessary steps, providing self-service capabilities, automated response to most common customer queries (think bots)
  2. Decouple legacy systems with consumer facing application: IT needs to build out a separate system that can provide flexible, scalable, nimble customer-facing capabilities. Also, consider  –
    • how you can apply new technologies to legacy systems
    • how can I update consumer facing technology systems fast?
    • how to best integrate data across social, content, commerce, customer service, media, etc., to deliver integrated and seamless customer experience

3. Re-define organization culture and thinking

  • Drive Agile Thinking: Enhance digital skills by training people in Agile methodologies, Design Thinking, SPRINT, etc.
  • Co-locate teams: Big companies are notorious in creating walls between business units. Ensure that employees from marketing, business, customer service, product development, analytics, research, strategy, digital channels, and IT are working together in small, multidisciplinary, co-located teams – think open, adhoc spaces (some inspirations here). Empower teams to think out of the box, design, develop, and adapt customer processes and propositions to deliver great product that customers want.
  • Establish Digital Center of Excellence (DCoE): A forum for anyone to discuss ideas, challenge assumptions, and take risks
    • Build DCoE at or close to company headquarters to provide strategic advise, guidance and learnings.

Key Takeaways

Digital transformation requires great leadership and executive sponsorship to drive change. Instead of boiling the ocean, companies need to focus and identify which business units of company are ripe for transformation, and transform them first. Getting an early win will make the road map easier.

Great companies are constantly identifying new ways to redefine the way they work in the new digital era. How is your company driving transformation? How has that improved customer experiences and what changes have you seen in your organization? Please let me know with your comments.

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