Digital transformation…..where to start?Michael J. (MJ) Allen
Contact | LinkedIn
“Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000.” – Pierre Nanterme, CEO Accenture
In my line of work I’m fortunate to hear from a global audience from all walks of life. Through these connections I get the opportunity to soak up experiences and tap into their expertise and knowledge in an open and collaborative way. Whether its over a Skype call, email, LinkedIn, and if fortunate in-person over a one-on-one, the conversations surface the balancing act of business and marketing transformation from the physical (or traditional) to an online or connected path towards digital nirvana.
I’ve found a growing trend of people tasked with building a passage of digital transformation. It’s driven from either the business is forced as a result of new market disruptions, or catch-up to the evolving customer journey in how individuals connect, or new ways to enable the supply chain to drive efficiency and new scale.
It’s often never a one-size-fits-all reason, and every business has their story of what’s driving this transformation. But at the end of the day it all points back to building better value – which seems to be the new normal.
Embrace this new normal. By now you’ve probably seen leaders in various functions (marketing, sales, operations, finance, etc.) make best effort attempts to fast-track the necessary individual or team knowledge (and disciplines) to accelerate traditional ways of business to evolve a more digital way of operating. It often happen by a test-and-learn approach, a go-all-in approach, or a more strategic and methodical approach to buy the right mix of talent and experience.
I’ll reserve what works better, but those who shortcut the leap or disinvestment in people-first, the cliché is evidence that you get what you pay for, and pay for what you get. But before you even turn the key to start down the road of digital transformation, it needs to begin with a common understanding and alignment to what transformation means to the business, and especially your teams.
This understanding is foundational as there is often a large disparity of opinion how businesses define digital transformation, and how people interpret it as it relates to their team, and their specific job function. Without this understanding and alignment, tug-o-wars of direction and priorities across the business will result.
Some view digital transformation strictly as a marketing transformation, yet others a supply-chain, and still others a complete business model evolution from brick-and-mortar and up into the cloud driven from disruption. They’re all correct.
In all cases the concepts driving change is simple, and yet, often points to the name of business survival (aka customer + revenue and bottom line). Yet often people can lose sight of this and fall into consuming anything new and shiny in the spirit of behaving more digital. (how many times have you heard “we need an app. for that!, or “build the website and customers will come”?)
So what makes certain brands so successful that make this leap of transformation?
While every business will have their own secrete-success-sauce, at a 30,000 ft view it can boil down to a few core principles. But lets get on a the same page first with a common understanding of digital transformation.
What is digital transformation?
It often means different things to different people, depending on the line of business driving it. But holistically, a business venturing into digital transformation almost always should start at the center-point… the customer.
From this customer-centric view, digital transformation can be understood as the accelerated evolution in business activities, people skills, processes and the business model. It’s not just a marketing transformation (though it can start here if the CX (customer experience) is reinvented to shift the business, and which typically owned by the marketing function).
Digital transformation also covers new digital capabilities including a unified digital process, analytics capabilities, business and IT integration. All of this is weaved together and enabled through bridging technologies for a holistic data-driven view of the customer.
Embrace the opportunities this presents and quickly adapting to how your customers behave, and the technologies that enable catering to these behavioural changes to design rewarding customer experiences.
In short, all of this will impact the CX (customer experience) in a strategic and meaningful way – both as direct and indirect impact on the bottom line – the customer (and revenue will follow, not the other way around).
So where should I begin?
This is one of the most immediate and common questions I hear, and can be distilled into four key areas of most businesses.
- Customer experience:
- The de facto and the key element most digital transformations will begin that drives a mix of customer experience optimization, and process improvement (and cost savings)
- Product and service innovation
- Disruptive technologies and competitors influence this the most. Simply new ways to do business that satisfy the evolved CX to the level of expectations the customer now expects.
- Distribution, marketing and sales
- Distribution – can the product / service now be digitized? From a high-touch concierge service to a self-serve experience online? How marketing can now deliver personalized context at the right time in the individuals buyer journey, and how sales role has evolved , such as direct outbound to inbound (or balance of both)
- Digital fulfillment, risk optimization, etc.
- How digital can now plumb-the-pipes of the supply chain in a fully connected and automated way with little high-touch requirements of the business. For example, look at the distribution network behind Alibaba or Amazons business marketplace and why its so appealing to all businesses from start up entrepreneurs to SMB’s.
The above gives you ideas where to plant the seeds of digital transformation, but at the root (love my analogy’s yet?) of these areas to drive things forward is best influenced best by…
- Decision making: is the beauty behind data-driven science based on big data and advanced analytics.
- Connectivity: with your customers, employees, suppliers and even partners.
- Automation: of manual activity replacing labor with tech.
- Innovation: of services + products, business models and operating models
The speed and agility to advance in the latter areas is only gained from the available competencies of knowing what and how to strategically employ new technologies (meaning aligning them to deliver value against your strategic business goals and the CX), and how best to put expertise behind the driver seat to deliver on its value.
But it’s not always about technology. Adapting daily behaviour to be more agile, CX-oriented, innovative, and super important – how to align all of this and as one connective tissue cross-functionally as the business shifts. For example, breaking down the silo’s between product, marketing, sales, CSR’s and finance and how these areas can work together where value is best realized.
All of this is not something that can be learned in a day, or over a webinar. The transformation to digital savings comes from the experiences derived on the journey, and from those who can knowledge-share from real-world experience (not from reading a few blogs and becoming a self-proclaimed guru). Only time is a friend and enemy in this transformation – so embrace it, jump aboard ride and fail and learn fast.
And for my marketing folks reading this, digital transformation is not just for marketing even if CX is the driving force.
Going digital in context of business activities can cover a gamete of areas; from optimization of business processes and automation, to pivoting business models, to how the business functions and its GTM approach.
Wherever your business starts in this transformation journey, all of it should thread across the customer experience.
OK, I’m ready to get started. What are next steps?
This depends on the LOB driving transformation in your business, but I’ll guide you from a marketer and product lens.
Assuming you’ve done Discovery work on customer understandings (sentiment, behaviours, user-needs, qualitative and data-driven segmentation, etc.) starting with white boarding a CX matrix across the whole business is a great place to start; from the front-lines support, through the operations unseen by the customer, to sales and marketing. At any internal or external area where there is a tangible or intangible customer touch-point should be captured.
Build out a CX matrix to identify areas where digital play a role to optimize the business or enhance the customer experience. All combined, the sum of its whole will drive bottom line change…and revenue.
Be cautious to not to fall in the rap of looking at the CX as linear. Similar to how the customer attribution effect is non-linear, taking a step back to look outside the business you’ll likely find an eco-system that plays an important role for the business – the network of partners, stakeholders, regulators, vendors and other factors that affect the business.
While you can start in a number of areas, a good CX blueprint canvas to map the business or service interaction with the customer can typically cover the following. Just ensure you have proper representation to explore each area.
1. Customer Experience
- What are the customer understandings?
- What are the customer touch points, and the physical evidence where an experience is to be had?
- What are the customers actions?
Next, what is the direct user interaction with the business…
2. Front-end Experience
- Interactions with your services, departments, employees
- Interactions online vs. offline
What is the line of visibility or backstage that will intersect with the customer….
3. Backstage actions
- Actions by marketing, CSRs, and other people or areas that will directly, or indirectly ,hit the customer.
Lastly, what are the internal interactions or insights that support the above….
4. The support processes that may enable or help activate the front-end interaction
- The interactions that the customer would not typically see, but necessary to deliver the interaction or experience.
The combination of everything within a service blueprint will evolve the CX. It will redefine operational processes, reshape the business model, and can build new business assets such as unveiling new IP within data, and customer information.
Does it work?
One such evidence of this from the Dollar Shave club. Here’s a 4-year young business that sold to Unilever for $1B. The intellectual property was not just from the brand it built (3 secret sauce ingredients to brand strategy and engagement) or is revenue (that operated at a loss), but the underlying IP and assets it built on data and its understanding of its target audience – men….and then how to enable this data.
This point should not be taken lightly. The IP on what they did with data to understand its audience was significant…and then acting on this to enable the usage of this data. Any business that has not tapped into this concept yet will lose the battle against any competitor who exploits it first.
The Dollar Shave Club disrupted and upended the industry’s traditional business model. The net result is a brand acquired at a premium for 4 times its revenue.
When you take a holistic view of digital transformation, you’ll find it addresses numerous aspects of the customer experience, technological evolution and innovation defined with a clear purpose….all which should alignment to the business direction.
And if you find it is disruptions influencing the transformation (or a result of transformation), it will likely come from a number of factors; new competitors with greater speed, agility and expertise, technology-induced innovations, shift in customer behaviour and demands, and even eco-system induced.
I find the latter influencer of eco-system induced disruption that drives digital transformation is one of the bigger challenges, and an opportunities.
It’s an exciting area because it’s a force that organizations must face to succeed or die in a rapidly changing environment.
This can range from technology advancement and innovation, customer demands, challenging the status quo of common business models (disruptive) and the speed to deal with the changing environment across the value and supply chain.
Eco-system induced transformation is where everything is all connected or inter-linked from the customer perspective, and again impacts the CX or supply chain in a major way.
It’s the inter-dependencies and interconnections of everything; from business processes and the business model, to each single activity across the organization. Thus you can see why its among the most challenging influencer that drives digital transformation in some businesses.
So again, what is digital transformation?
It’s not a one-size-fits-all answer, and more simply an accelerated business change.
It ignites change that accelerates fast, and can have exponential growth – and consequence.
My prediction for those of you who get to experience first-hand a businesses digital transformation, that soon there will be no distinction between digital vs. physical, or offline vs. online. Digital transformation will be refined as simply a renewal or rebirth of business.
I make this bold prediction because the customer doesn’t think this way, so why should a business?
Evolve, or die.