I have recently completed a Slideshare ‘Digital Transformation and the Customer Experience: Overcoming Barriers and a Framework for Success’. Presentation and full transcript below.
We live in an increasingly complex world. Information flow is growing at exponential rates and technology is bringing about fundamental and rapid changes to our society.
Within this environment, smart organizations are realizing that adaptability is paramount and that there is a need to rethink the entire corporate structure. This, more often than not, is being led by Digital Transformation.
A lot of organizations are making solid headway in adapting to the influence of digital. However a huge number of organizations continue to struggle to bring about change. This article is designed to help provide a framework for these businesses, and foster debate between executives, business strategists and agencies.
A revolution is happening. Technology, society & business models are evolving at an unprecedented pace, however organizations continue to use yesterday’s thinking to approach the problems of tomorrow.
“We cannot solve our problems with the same thinking we used when we created them.” — Albert Einstein
We are entering the era of the emergence of disruptive technology and ‘born digital’. These forces are driving a fundamental evolution in consumer behavior.
This has brought about a ‘new consumerism’ — shifting values, complex decision making, and new more real-time engagement expectations. Customers are in control, hence the phrase “the customer is king”.
In essence, these shifts are bringing about Digital Darwinism.
“Digital Darwinism is the evolution of consumer behavior when society and technology evolve faster than your ability to adapt.” — Brian Solis
In this new environment, understanding the digital customer experience is critical to success.
What is required to meet these challenges? Digital Transformation.
Digital Transformation is more than just an investment in technology. Organizations must truly change, from the inside out, to become more responsive. Our goal is to improve the ways the organization sees their customers, creating new value throughout the customer lifecycle.
How Do We Embrace Change?
A quick recap: the history of the world (of organizations).
Josiah Wedgewood (1730 — 1795) fathers modern marketing. Think direct mail, money-back guarantees, traveling salesmen, self-service, free delivery, buy one get one free, illustrated catalogues, price diffusion. Not a lot changed for a very long time, and a lot of these techniques still hold sway.
In a similar timeframe, the Industrial Revolution (1760 — 1840). Small stores shift to mass production in factories.
Next revolutions: Employees, standardized quality control, innovative design for utilitarian products, investment, insurance, product development, branding and advertising.
This caused development of the Mass Production Theory — efficient factories could make average things for average people and triumph.
Mass Marketing Theory:
- Mass produce what you want at large scale
- Buy heaps and heaps of ad space
- This convinces Retailers give you some of their scarce shelf space
- This generates you sales
- This lets you buy more ads (& repeat)
Advertising was about convincing the client to spend more and more money. It pushed the idealized version of the product, irrespective of reality. Think interruption, gross rating points, spreadsheets, mass reach.
Communications platforms were limited.
Customer experience was fairly linear and predictable.
Then, disruption happened. The Internet. Search engines. Ubiquitous technology. Social media.
Technology created a much more complex funnel.
This also brought revolutionary shifts in the way we connect, and the creation of networks (or the network effect). These are all Complex Adaptive Systems.
Connectedness begets complexity. Complexity begets uncertainty. Uncertainty begets chaos. Unlimited choice leads to paralysis. Uncertainty, therefore, is now the root cause of organizational problems. And this is amplified by Digital Disruption.
Disruption is everywhere. If you think your business or industry is immune, think again.
Think of Clayton Christensen’s influential book The Innovators Dilemma.
Horse & carriage to car.
Fixed line phone to mobile.
Personal computer to smartphone.
New examples (with estimated value):
Google — $369b
Amazon — $181b
Facebook — $104b
Netflix — $20b
Tesla — $18b
Airbnb — $10b
Dropbox — $8b
Spotify — $4b
Uber — $3.5b
Quirky — $0.5b
Warby Parker — $0.5b
“We believe that many of the prominent new internet companies are building real, high-growth, high-margin, highly defensible businesses… Companies in every industry need to assume that a software revolution is coming.”
- Marc Andreesen
Why is this happening? All the technology required to transform industries through software is now a reality and can be widely delivered at global scale.
Software is Eating the World.
Technology is now a permanent fixture in everyones lives. Everyone has a high speed computer right in their pocket, accessible at all times.
Soon: the Internet of things.
“Hardware is just software wrapped in plastic.” — Brad Feld
Social. Location. Real-time. Networks. Customer behavior shifts.
Social, mobile and real-time remain our catalysts. As they intersect, they are fundamentally altering the ways people connect, communicate and discover information. However, many, many organizations are still struggling with the weight of legacy technology and processes.
Complex adaptive systems require systems thinking. Think about corporate longevity. The average corporations lifespan is 12 years. The average multinational is 40 years. Only a tiny fraction thrive for centuries.
Arie de Geus, Director of Strategy at Royal Dutch Shell, put 27 of these ‘thrive’ corporations under the microscope. A number of factors contributed, but the one that stood out most:
“The ability to learn faster than your competitors is the only sustainable competitive advantage.” — Arie de Geus
Again, Digital Darwinism. How long before a Jobs, Zuckerberg, Bezos or Musk disrupts your industry?
Let’s define it:
“The alignment of, or new investment in, technology and business models to more effectively engage digital consumers at every touch point in the customer experience lifecycle.” — the Altimeter Group
Goal: Be digitally relevant through rapid business change.
But first, what are some of the barriers?
Barriers to Change
- Strategy in Silo
Different departments manage different steps in the customer journey. They often don’t communicate, let alone collaborate. They often act as their own fiefdom. They use different standards and metrics. The experience feels disjointed.
2. Internal Politics
Transformation threatens the status quo. This causes self defense mechanisms to kick in. Executives push back. They concentrate on their own priorities. Personal agendas win in favor of what’s right for the organization.
3. Budget Allocation
Digital is new and unproven. It requires experimentation. Often this occurs in silo, and is rarely communicated beyond individual teams. Roi is difficult to identify. This creates ‘chicken and egg’ situations; “show me proof” before budget can be unlocked.
4. Mobile Fragmentation
A lack of mobile first or second screen thinking exists in the organization. Mobile and platform efforts are strewn across multiple departments with no dedicated team. Often the need to rethink websites, apps or e-commerce is a lower priority than other digital initiatives.
Vastly different levels of knowledge or comfort exist in the enterprise. Knowledge is scattered across the organization. A millennial (digital natives) vs baby boomer (digital novice) divide exists causing friction.
Without a vision and someone to lead, employees follow a course of business as usual. Digital is kept at arms length or in fringe conversation. A lack of digital generalists mean strategy is viewed in silo or isolation.
7. Disparate Data
Existing infrastructure and processes lack a model to gather and distribute data. Data remains in silo, spread across departments or disparate systems. There exists a lack of understanding of who owns the data. No investment in staff and process to deliver data with actionable insight.
Breaking Down the Barriers
Improving the digital customer experience takes collaboration, resources, leadership and an understanding of its business value. What it needs is a Framework.
Transformation efforts require an overall vision [purpose], the formation of a team to carry it out [people], and an understanding of the customer experience [process]. With this in place, we can create an ongoing strategy roadmap to optimize the customer experience.
Digital Transformation Framework
- Purpose — “Building a Vision”.
- People — “Building a Team”.
- Process — “Exploring the Experience”.
“Building a Vision”
Agents of change:
1. Updated company vision
2. Change agent & executive support
Digital transformation often requires a business case. This needs more than just evidence. We require a story and vision of what this will look like.
New tech companies are built from the ground up with a purpose that embraces their digital focus and approach. These “non-traditional” vision statements are customer centric versus commercial.
“Our purpose is to make the world more open and connected.”
“Our purpose is to organize the world’s information and make it universally accessible.”
“Our purpose is be the earth’s most customer-centric company.”
“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea” — Antoine de Saint-Exupery
Vision must come from the top. But the reality is transformation rarely begins from the top down. Executives must support and continuously sell the vision for digital transformation for it to succeed. This is the challenge.
Vision therefore requires a “change agent”. A leader or influencer who can stir the pot, drive initiatives and rally stakeholders to action.
- Take data from analytics and social spaces and turn it into insights.
- Document the factors that are disrupting your market. Assemble data or proof points that help to make a case to C-suite or decision makers.
- Articulate why this is critical to your business. Consider conducting a SWOT analysis to assess actual position for transformation.
- Draft a simple vision statement and supporting narrative for the end result of Digital Transformation. Outline advantages and how it improves customer experience.
- Seek out an executive sponsor or “champion” to help rally support. Find common ground with executives and ensure they communicate the vision to rally employees across the entire enterprise.
Warning — Without support, the change agent role can quickly lead to burnout and defeatism. It must be supported to succeed.
“Building a Team”
Agents of change:
- Organizational restructure
- Alignment & education
Who owns the customer experience? The reality is everyone in the organization does. While most companies have legacy departments and silos, your customers only see one company.
An example is Social Media. This often spans a large number of business units (Marketing, Product Management, Customer Support, HR, IT, Digital) however they often don’t speak to each other consistently or align. Social lacks a cohesive company wide vision and fails to drive business value.
The end result is “digital friction” and a customer experience that lacks cohesion. This poor experience causes drop off and a loss of conversion.
To create transformation, the entire organization needs to put egos aside, break the silos and embrace change. This starts with the creation of a cross functional Digital Transformation team.
- Identify candidates for a cross- functional team. This often works best as a small team of “intrapreneurs” to drive quick wins to prove results. Note, teams need a range of strategists and stakeholders. At this point, there is great value in leveraging ‘Digital Generalists’, who can understand the end to end view of the experience.
- Assign roles and tasks. Consider developing a RASCI model or similar for the group and establish a collaboration schedule and reporting process.
- Form a data collection and insights team. They need to collect and analyze data, but more importantly create a simple story to present this to executives.
- Note, in 2012, Gartner predicted that by 2017, CMO’s would spend more on IT than their CIO counterparts. CIO’s are fighting for their roles, overseeing legacy infrastructure, and often don’t understand the long term vision. This can be a huge source of friction.
- Build a strategic alliance with IT (they must be part of the team). Forge a greater dialogue between marketing and their department.
- Develop a training regimen to bridge the gap between existing and required expertise in the organization. Consider an executive education program. Consider tactics like reverse mentoring.
- Embrace hack culture. Look at rapid innovation cycles and fast problem solving. Our goal is to not be fail safe, but to safe fail.
“Exploring the Experience”
Agents of change:
- Understand the changing customer experience
- Data & insight
Customers are using technology their way, regardless of whether your strategy aligns with their journey. “Born Digital”, “Mobile” and “Second Screen” are no longer predictions, but forces radically influencing experiences.
To bring about Digital Transformation, we need to understand how digital is affecting the customer experience. This requires research, not guesswork. We need to understand behaviors, personas and expectations throughout every stage of the lifecycle.
This means having a holistic focus. We need to move beyond just mobile or whatever technology is trending (think the failed investment in QR codes as an example).
This also extends to our insight gathering. Forget “big data”. Let’s just leverage the easily accessible data we have to make better decisions.
Ultimately our goal here is to foster a “digital first” mindset. We need to stop treating it as a bolt on to existing activity. Start with digital at the centre, and radiate out.
Thought starter — some key exploration questions:
“What uniquely defines the persona of our customers?”
“What is different about their customer journeys?”
“What are the touch points they frequent, how do they use them, and on what devices?”
“What are their expectations, what do they value, and how do they define success?”
“How are they influenced and by whom? In turn, who do they influence?”
“What is the customer’s (new) path to purchase?”
- Connect the dots between disparate data stuck in silos. Connect data from Marketing, IT and CRM.
- Interview stakeholders about the customer journey as it exists today. Explore digital customer behavior and highlight challenges and opportunities.
- Forget demographics. Observe the psychographics, personal traits and characteristics that are unique or dominant in your digital customer. Create customer personas (the phrase ‘18-25 years old’. What does that even mean?).
- Create a customer journey map including all touch points. Outline what the right experience could be, based on behavior. Organize by channel and screen. Recognize customers may not follow any one route.
- Observe the gaps in touch points and where there is and isn’t investment. Assess the processes, policies and systems that prevent success in engaging the digital customer. Pinpoint what can overcome hurdles.
- Pay careful attention to network effects in play. Look for direct customer journeys versus the journeys of those who influence customers or amplify.
- Be on the lookout for serendipitous ideas for product or service innovation. What is the biggest customer pain point? Can we provide anything new to solve it?
At this stage, you will hopefully have made headway on starting the journey to Digital Transformation. Mapping the customer experience, having a vision and building a team will go a long way in aiding investment choices and optimization and driving real business benefit.
A summary of benefits are as follows:
- Updated Vision — Modernized, and more importantly, humanised.
- Increased conversion & loyalty — Seamless, 360 experience improves long term results.
- Improved customer journey — Less friction & improved outcomes.
- Greater competitive advantage — An edge over or brace against the competition.
- Increased collaboration — Less friction between internal teams.
- Empowered Workforce — Employees and executives feel educated & empowered.
- Improved Efficiency — Processes and decision making are more rapid.
- Deeper Data Analysis — Deeper understanding of the customer and their behavior.
- Culture of Innovation — Serendipitous products & service innovation.
I have used the word transformation a lot here, but remember the danger of this word is it suggests an end point. Transformation does not end. It must become a mindset, to constantly evolve and respond to changing forces.
“The ability to learn faster than your competitors is the only sustainable competitive advantage.”
To get a further take on the fact that “Software is Eating the World”, check out the BRANDZ Top 100 Most Valuable Global Brands listing.
Only three of the top ten are not software companies by nature or choice (sourced via Bud Caddell).
The following links provide further insight into techniques to develop the required Vision, People and Process to drive Digital Transformation. Some are quite radical, but represent some very interesting takes on modernising the organisation:
Finally, for a great read on a business struggling with the ins and outs of Digital Transformation, have a read of the recently leaked New York Times Innovation Report, a document created by a digital committee to try and enact change. Some great learnings on the complexity of the challenges associated with modernising a business.