How to win at digital transformation

The same economic and technological changes which expose weaknesses in existing business models also pose huge opportunities for those willing to embrace change and respond to evolving market demands. Joseph Schumpeter, a famous American economist, referred to this process as “creative destruction”. But being on the winning side of this process is rarely a simple matter.

The  disruption that the proliferation of online technologies is having on business activities such as marketing, communications and customer interaction and a wide range of business models is a prime example of the forces of creative destruction at work. Many businesses have moved quickly to become ‘digital leaders’ and are already benefitting from this process. Others are still coming to terms with what this change means for their business.

But the time for wondering if digital transformation is right for your organisation is now over. In July this year online retail giant Amazon.com turns 20 years old. The significance of this milestone is that e-commerce, and the digital space in general, is now firmly entrenched in the global economy. It is no longer a question “if” your business becomes digital but “how”. Digital transformation is now a matter of survival.

This is obviously true for industry sectors such as retail, where the move to the online space is plain for all to see. But it equally true for other sectors. We are relentlessly heading to a world where everything that can be digitised, will be digitised. The development and adoption of technologies such as 3D printing and further advancement in mobile technology will further increase the pace of change.

So let’s look at what is needed to become a leading digital enterprise. 

Develop a healthy obsession with your customer

Today’s customers are more informed and more empowered now than any other time in history. The rapid uptake of online social media, has done much more than just give people new tools for communicating. It has become the catalyst for rising customer expectations. This is pushing business to make improvement across all their channels to market as their customers are now expecting a seamless brand experience across all touch-points.

Spending time designing you customer experience, all the way from generating awareness through to the actual service and post-service stages, is a critical first step. It is easy to say “we want a unique customer experience” but operationalising that takes real effort and leadership support. Thinking through the challenges of securing and respecting your customer’s data is vital as trust can be eroded very quickly if customer data is misused. In this regard it is important to continually look at the information that your interactions with customers is giving you, and use it to refine the customer journey. 

A paper called “The seven habits of highly effective digital enterprises”, published by McKinsey&Company in May this year, highlighted Zappos as a market leading example of this customer focused obsession. The paper said that “[t]his mind-set is what enables companies to go beyond what’s normal and into the extraordinary. If online retailer Zappos is out of stock on a product, it will help you find the item from a competitor. Little wonder that 75 percent of its orders come from repeat customers.”

Be unreasonably demanding

Big aspirations and a clear vision of what you wish to achieve is essential precursor to developing a digital strategy that will compete and win in today’s landscape. Leadership teams need to become comfortable with new team structures and think differently about how their business needs to operate. Setting unreasonable targets and being overly aspirational is a way of “shocking” your organisation out of complacency. As the McKinsey report noted it “…is a way to jar an organisation into seeing digital as a business that creates value, not as a channel that drives activities… if your targets aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough.”

The McKinsey report goes on to highlight case studies: “Netflix was another brand with an unreasonably aspirational vision. It had built a successful online DVD rental business, but leadership saw that the future of the industry would be in video streaming, not physical media. The management team saw how quickly broadband technology was evolving and made a strategic bet that placed it at the forefront of a surge in real-time entertainment. As the video-streaming market took off, Netflix quickly captured nearly a third of downstream video traffic. By the end of 2013, Netflix had more than 40 million streaming subscribers.”

Start small and move quickly

When it comes to digital transformation, strategy and planning are important, but just so is experimentation and simply “getting on with it”. The digital space moves very quickly so trying things out and allowing teams to feel comfortable with “failing fast” can be a highly efficient way transforming your business. Adopting methods such as agile development allows digital teams to respond to changing environments and unpredictable situations quickly. 

When digitising processes, such as rolling out a marketing automation programme, choosing the toolset is important but simply getting started with it is the best way of creating success. Start with small projects and build on successes quickly along a path toward your vision. Your higher activity level the more data will be generated, data that will enable your organisation to make better decisions. 

The McKinsey report highlighted P&G as a leader in this space: “P&G, for example, created a single analytics portal, called the Decision Cockpit, which provides up-to-date sales data across brands, products, and regions to more than 50,000 employees globally.” This focus on making data visible allows the organisation to make decisions, and define projects more quickly.

The three guidelines discussed above all point to a common theme. Winning at digital transformation is not simply about the technology adopted, but rather how leaderships teams communicate and execute the transformation. And this leadership is the most critical element in determining if a digital transformation project is going to be a success.

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