There is no escape from the need for digital transformation
By Salvator Vella, François Delvaux
Today there is no safe harbour to shield businesses from the competition of digitally-native companies or from players with pure digitally driven business models. The sheer size of a company is no longer enough of a factor to protect a company. Big market leaders such as GE, IBM, bpost, or BNP Paribas Fortis are having to adapt to the emerging force of digital and facing new challengers in their markets.
We recently hear or read in the news about historically big players that have fallen, be it for example 1) Sears, the largest retailer in the USA in the 80s, failing to adapt to the digital imperative, had to file for bankruptcy on October 15th, 2018 2) Blockbuster, the video-rental company that was at its peak in 2004 but failed to keep up with the new digital streaming services and also missed the opportunity to buy Netflix when it was still possible 3) Yahoo – who also has lost its leadership role it had held in the early 2000 and now much smaller player. Looking back Yahoo missed an opportunity to buy Google in 2002, and failed to acquire Facebook in 2006.
Contrary to the urban myth that the next market disruptor is easy to spot, the reality is that the digital disruption affects the core business at its edge in the early days and nibbles in a way that might seem insignificant in the beginning to a company. But when it does hit, a company can be sure that it will suffer and if it does no not react fast enough or accordingly, then can face rapid loss of its customers or even end up with bankruptcy at the end of this long process.
Today’s B2B customers are also become much more demanding and assertive – thanks to the availability of information, social media networks and connected communities.
Often referred to as the ‘modern buyers’ – B2B customers and prospects who expect from their traditional suppliers the same frictionless user experience as they get as consumers from the GAFA (Google, Amazon, Facebook, Apple) and this includes hassle-free convenience and instant gratification. If this does not happen, both B2B customers and consumers can easily influence their peers in what they post and complain publicly through social medias, harming potentially brands and company reputation.
Digital transformation is much more than an IT project
Digital transformation that is framed internally in a business just an IT project to improve the front office of your company is doomed to fail. As said your customers expect a different experience beyond just the product they buy and have as benchmark the instant gratification that the GAFA offers them. A transformation can’t be achieved just by a new mobile app and a chatbot built on top of an existing business process that was designed years ago. Accelerating a traditional business processes without ensuring it improves the customer experience does not drive the desired impact. This path is daunting because the impact goes far beyond the limits of the IT department.
Digital transformation means everything and nothing
Digital transformation should not be confused with concepts as Digitization or Digitalization:
- Digitization is the conversion of analog and physical information to digital format (for example user manual)
- Digitalization is the use of digital technologies to enable or improve current business models and processes.
It is quite clear that digitization and digitalization often predate digital transformation, but they are far from being sufficient.
Today companies use the term digital transformation too often and too broadly.
As said earlier it is not because a business implemented a new technology tool internally nor by naming a digital officer that the business can claim a digital transformation.
Digital transformation can go as far as completely changing the business model of a company. It can encompass all the aspects of the business: HR, sales, marketing, production, pricing, etc. and is therefore a strategic journey from the current situation to the future state – this can happen gradually or fast.
Keep in mind that to help reduce the complexity of such a journey it can help to i) divide what needs to be done into small digital initiatives that are well defined (ii) keep your plan dynamic as market and competition evolve and stay agile – focusing on what needs to be done (iii) you need to ensure get your personnel along with you as part of the journey as the digital transformation represents major changes in working methods; ensuring deploy relevant training and change management programs.
Customer centric digital transformation
At Minds&More we believe that digital transformation is far too broad. We think what is more relevant is a customer centric digital transformation for a business – Companies should start from the outside in (and not vice versa) and determine ways that digital can help to innovate, bring new offers, and evolve the purchasing/usage process and overall customer experience.
Companies can integrate digital over a period of time as part of applying a customer centric approach. If the digital investments does not positively enhance the customer interactions, customer experience or bring additional value then the company will not get the returns it is looking for. Customers need to be at the core of such a digital transformation or digital evolution. Ideally start by mapping the buyer journeys of a customer segment, seeing where there are customer paint points and using digital enablers to address these pain points. The approach can be gradual – addressing pain points one at a time and getting quick wins. We see this approach working today with our clients be it in the construction/build materials sector, insurance, travel payment and expense management.
A customer centric digital transformation means looking at the problem from a different lens – it is not just about the product or the brands. But looking at it from the view of the customer experience lens (every stage of interactions), the solution lens (beyond your product – what in place to solve the need), and the channel lens (where and how they buy). For each lens determining how digital can help and support more relevance for the segments and customers a business serves or can attract in the future.
Customer driven digital Transformation is a coordinated change effort at scale, diffused through all aspects of the business (incl. people, processes, digital platforms and technologies and metrics). It requires 4 essential conditions:
- Cultural change on how a business functions and whether it is internally or externally driven and being able to put an agile way of working. Starting with getting wins for customers and the business quickly and then optimizing/improving over time. Applying the 80/20 rule – what solution can create 80% of the impact. Ensure an organization is able to learn and adapt – because customer, markets and technologies are evolving increasingly faster over time
- Modern, state-of-the art solutions, for example, cloud-first approach, mobile-enabled technologies, social technologies. For the business functions of an on organizations, we are seeing a very large increase of digital platforms becoming available. For example, within the marketing and sales domain where Minds&More plays today – the marketing automation, CRM and Sales enablement platforms have all evolved considerably. However, organizations need to adapt their processes and organization (roles, capabilities, alignment etc.) to make the most of these digital platforms
- Edge-based innovation function, exploring new business opportunities at the edge or adjacent to the current product and service offering
- Transformation of the core business – going from a product driven to a customer driven strategy is a transformation. Using digital as the enabler of this transformation.
The path to customer centric digital transformation moves through multiple stages
Generally digital transformation moves a company through gradual stages of digital maturity:
- Ad-hoc act of digital – deploying select digital tools internally, not connected to a customer agenda, and to gain some operational efficiencies. Initiative driven within a department or select individuals in a business. Another example is people using social media but not part of a coherent social media strategy of the organizations. Persons that are self-taught but no formal capability building in place. No formalized company ambassadors.
- Digitally Active companies starting used digital to improve specific processes – for example enhancing a transaction process or activities to increase revenue. Putting in place some digital marketing or sales platforms. Using basic level of analytics and making some operational improvements (as Agile development)
- Digitally Engaged companies developing digital marketing and sales solutions and processes throughout the organization. Formally connected to the customer strategy and delivering a customer centric experience. Digital operating models formally defined and more advanced analytics and process automation have been introduced. Digital marketing and sales platforms well embedded in the commercial organization as they prepare and interact with customers and prospects. Digital platforms used at every stage of the buyer journey. Digital enabled content used for relevant conversations to the customers/buyers and helping them progress. Formalized development of the organization’s capabilities on these marketing or sales platforms – formal training, standard way of working, aligned goals, clear roles and responsibilities. Companies have not just digital platforms but also effective people and processes support a customer centric strategy.
- Digitally Competitive companies have unique capabilities that other players lagging. Competitive companies being able to better anticipate, predict future needs of their customers. Being able to respond to identified customer gaps by making use of a fully digital operating model, predictive analytics and microservice architecture. They use rudimentary machine learning to improve decision-making.
- Digitally Mature companies have solid digital enablers and proven track record. Master well their core operating model as well as artificial intelligence solutions. They provide the market with unique experience. Able to embedded AI-solutions and offer a channel agnostic customer journey.
Who must lead customer driven digital transformation?
There is no one-size-fits-all answer to this question. What is clear is that the accountability for this transformation should be at the top leadership / C-level or at the the owner level if this is a small to medium sized enterprise (SME). Companies can’t expect that by creating a head of digital transformation at a level of N-3 or N-4 level to CEO that the change will happen – at this level the persons involved will not be able to get the focus needed nor mobilize the organization. This will end up as an initiative that creates minor or cosmetic changes but will not achieve structural and sustainable change.
What is the role of the CTO/CIO in a customer driven digital transformation? As said earlier this is not a IT driven initiative – but IT will need to be involved given the scope of the customer centric strategy – over time start with quick wins/low effort but for large scale initiatives touching infrastructure, existing ERP or other digital enablers IT will need to be involved.
The end responsible(s) (likely a team) of the customer digital transformation program should have a broad set of skills that include customer-facing experience, unwavering customer orientation and advanced digital capabilities. The leaders will need to master organizational design and change management, both digital and functional processes and digital architecture and tools. Ideally it should be a senior executive with both internal and external responsibilities.
Therefore, this leader can be the CMO if she or he possesses technical acumen or the CTO/CIO if she or he has a successful track record in customer-facing responsibilities.
Customer Driven Digital transformation requires a different way of working and develop new capabilities in the organization
Such transformation require both customer understanding and high-level technical consciousness with Agile development. We see new jobs appearing in this kind of organization:
- Agile coaches who act as change managers, consultants and trainers to move all the organization toward this new way of working
- Scrum Masters who manage the process for how information is exchanged and who possess deep technical knowledge
- Product owners who set vision, chart development, track progress and ensure value is created
- User experience designers (UX designers) who are responsible for charting experience for the personas and for mapping out all the interactions with the product
- Sales enablement owners who ensure organization implement effectively marketing or sales enabled digital platforms – but also ensure covers training, coaching, the digital platform, content (and link with marketing), and learning management
In general, in this new world, team leaders should master business disciplines, passion for customer experience, commercial excellence and possess technical acumen.
Strategic planning must be adapted to the speed of digital
Strategic planning and long-term growth plans are still valid in a digital world. However more frequent updates are necessary. Strategic planning in a digital world includes 4 new requirements:
- Work with customers to develop new plans on how digital technologies will enhance customer experience
This should be done at the customer’s premises in real conditions of use. Focus groups are also useful to share insights, get suggestions and identify and plan changes.
- Investigate new technologies that help solve customer problems or enhance what exists today. This can be done through task forces that investigate the limits of the possible and analyze the business impact of new technologies like sales enablement, AI, intelligent personal assistants, Virtual Reality, etc.
- Identify initiatives to be updated or new ones from the current strategic plan
- Refresh plans frequently based on customer response, business results obtained, and learnings
How we can help you get started?
Minds&More help companies in their diagnostic, development, pilot and expansion of customer driven digital initiatives to better sell and serve modern buyers to grow the business.
We can provide pragmatic and flexible services covering:
- Diagnostics of current situation
- Introduction to a customer centric strategy (keynote, info sessions, energize the organization on customer centricity)
- Mapping buyer journeys per segment and identify pain points and areas to focus on
- Align teams on common goals and roadmap to help a company evolve to a more customer centric approach
- Pilot readiness
- Execution support
- Deployment of sales enablement (processes, training, coaching, integrate digital, learning management)
We have extensive experience and via our advisory team and interim managers we co-create with our clients and help implement a customer centric digital roadmap to evolve the business, achieve positive customer impact and deliver business growth.
Join our upcoming events in 2019 – Mingle Monday events & networking, and webinars on this topic.