Insider Insight Into What Makes or Breaks ‘Digital Transformations’
Unpacking the ultimate buzzword of ‘Digitization’ Into Actionable Ideas
By: Chi Lee
“Digitization” (aka Digital Transformation)
If ever these was a buzzword of our time, this might be the one.
Every major business has been using the term for years now. It’s what employers say to employees to inspire them during a process of change. What recruiters say to prospective candidates to excite them to join their journey. What customers hear companies are doing to keep them engaged. Wherever you look, it’s the concern of any stakeholder involved in the buy/sell process.
What’s The Truth Behind What It Actually Means?
Common Answer: “Using technology to transform one’s business”
Real Answer: Technological advances are increasingly advancing people’s understanding of the world around them. Now easier than ever, a consumer is able to compare and contrast goods/services between good versus great businesses given the internet’s ease of accessibility. For instance, Flipp is a Toronto-based app that amalgamates grocery deals and coupons into one source so that the shoppers can easily browse and save money. A standard grocery store likely doesn’t offer this level of comparative options.
The result of this is a power shift. Increasingly, power is allocated to the consumer who now has more choice in how they are spending their money. Consumer behaviour is changing and their expectations rising. For a business to stay relevant, they must not only meet the goals of their customers but stay one step ahead to anticipate their future needs. To do this it is vital to: re-invent the customer experience, upgrade technology stacks, change internal work structures and encourage new ways of working amongst internal talent. All with the help of new(er and newer) digital technology.
Why Does It Seem Like Every Business Is ‘Digitizing’?
Common Answer: “Every industry is being disrupted, take a look at what Uber has done for the taxi industry”
Real Answer: Disruption is another hyped up word in recent years, but it’s still completely relevant. We’re all aware of the usual suspects such as Uber or AirBnb taking up a large shares of the industry they inhabit. That’s because they are able to think outside of the box and deliver a new business model to give consumers back more of the things they want — time, energy, and lower costs. At the end of the day, most consumers just want services/products that simplify their lives.
Take for instance, the banking world. Banks no longer see their competitors as being just other banks. These days, they are competing with two new classes of competition. One, tech giants such as Amazon, Google, and Facebook. Two, FinTech (Financial Technology) startups.
Firstly, banks compete with tech giants because these guys are seriously upping the anti on providing seamless and natural user experiences. Take the basic example of the registration process. No decent tech company today will require you to see the sight of paper in order to become a user of their services. Compared to the disconcerting amount of paperwork most banks still require new customers to complete today, it’s easy to see how the majority of financial institutions still lag behind providing great experiences. Consumers are adopting higher standards, not consciously, but because it is now all around them.
Secondly, banks compete with startups like FinTechs because these businesses are operating without being burdened by legacy processes, softwares and tools. Wealthsimple is a popular robo-advisor that auto balances your investments at ridiculously low fees. Banks can’t easily change their internal structures to build the same system that Wealthsimple uses because the bank’s technology stacks are ancient. If you’ve ever tried teaching an old dog new tricks, you’ll know it’s an excruciating process. The same goes for businesses that have been around for many generations. Replacing old systems is a pain. It takes time. But it needs to be done to stay competitive.
What Does Digitization Actually Look and Feel Like?
Digital Transformation comes in all different shapes and sizes. Here are 5 key tenants:
1. To Be Effective, It MUST Be Prioritized.
Have you ever gone to a potluck where no one has pre-agreed to what they will bring and you turn up to a dinner of 12 pies? Without proper organization and clear direction, people take their best shot and contribute in their own way. They might do it well (aka they bake the most delicious pie in the world), but it loses its effectiveness.
Always, massive change must be supported from the top-down and championed at the highest level of the organization. If not, you have several layers of management who will try to achieve change vaguely in the same direction but with no clear goal. Without it being a concentrated effort, the message of change becomes very disjointed and confusing to employees. “My manager wants me to switch to using this new software, but Greg in Accounting says his team stopped using that months ago. Which way is the right way?”
Large-scale change must be prioritized at the C-suite level in order to deliver a unified and coherent message. “In three months time, the entire organization will stop using A, we will adopt the use of B, which provides the benefits of X,Y,Z.” While commitment should be the first move made by leaders, for radical change to happen, the critical mass must get on onboard with the vision to form the tipping point. The whole organization must be engaged on some level to build momentum and then accelerate from there.
2. Let Change Management and Communication Teams HELP.
Great, so you learned the first time around that not everyone should bring pies. For the next potluck, you whip together a spreadsheet with what items to prepare, what the budget is as well as some ideas for people to choose from. You hit send, sit back, and look forward to the event.
Second time around — okay, less pies, but still, people have brought duplicates. What went wrong? Maybe not every checked their inbox, maybe some emails landed in junk mail, maybe Emily knew that Rachel was going to bring an Almond Frangipane Tart with Honeyed Pistachios, but didn’t care and thought hers would be better so she went ahead and brought an Almond Frangipane Tart with Honeyed Pistachios anyway.
Good intentions don’t always translate to desired outcomes.
Don’t underestimate the power of the Change Management and Communications. They are the ones who make sure that your vision is complete, the message is unified, all stakeholders are aware of what that message is, and most importantly — they care about it. Once you’ve got the right leaders in place to champion the change, you need to ensure that down every chain of command, you have troops rallying behind you ready to deliver. How do you get these troops aware and ready? You need effective change techniques coupled with a solid communication strategy.
Change is not easy for everyone. While some may view change with optimism for advancements, other may worry that their jobs are on the line. Whatever the case may be, you need to ensure every member of the organization is kept up to date on the transformational progress and that they have a genuine understanding of how that change will impact them personally. Beyond that, if you truly want to gain the support of your team, you need to deliver more than information. You need to send a message that will connect to the core concerns and interests of its receivers. It needs to inspire and move them into action out of their own will.
“Guys, third time is the charm. We came, we saw, we had one too many pies, but now we are going to conquer. Someone call up the Guinness World of Record because we are setting a new standard for the best goddamn potluck the world has ever seen. Who’s with me?” (Ok, Stacey, we get it. You love your potlucks.)
3. Fail Fast, Fail OFTEN and Fail Cheap.
Get comfortable with the culture of failing — you’ll need it to adapt to the increasingly popular method of working Agile. Agile use to describe a software development approach, these days, it’s also a mindset. It’s understanding that the best products aren’t being creating behind closed doors and revealed five years later despite having the smartest minds and the widest budgets to support it.
In our rapidly changing digital landscape, you work against the clock. Businesses can’t afford to build massive plans, roll them out with a big bang and expect that it will succeed. It won’t. By the time these plans actually execute, the whole market will have changed. New technology will be on the horizon, customer expectation will have levelled up exponentially and the initial plans will be seen as outdated.
In lean software development, there is a term for pushing a product out quickly, testing and learning from real user responses and then going back to the drawing board to iterate and improve quickly. It’s called building a Minimum Viable Prototype. You’ve probably come across a number of these in the mobile app store without much notice. The concept is to build the minimum working model of a product to satisfy early customers, get their feedback, then incorporate that feedback to continue building higher-fidelity models overtime. This way, you get user-engagement upfront to learn where to pivot early instead of sinking too much time and energy towards unsuccessful ventures.
This concept can be applied beyond just a product to how an organization runs as a whole. You may have heard about the arms race for large organizations to open their own versions of ‘Accelerations Hubs’:
May 2016: Accenture Opens Digital Acceleration Center in Dubai to Fuel Innovation and Advance the Digital Transformation of Organizations.
Dec 2017: PwC Opens Digital Accelerator to lead its clients through business transformation in its new Toronto innovation hub called the Digital Experience Centre.
Feb 2018: Nestlé launches Global Digital Hub in Barcelona as pillar of its digital transformation strategy.
Whether called a hub, centre, or accelerator, these places all serve the similar purpose of testing new digital ideas and rolling them out quickly. Some have torn down existing offices, or built up new buildings altogether in the name of facilitating a culture of ‘fail fast, learn faster’. These innovative spaces are meticulously designed to be highly vibrant, promote creativity and facilitate collaboration by its open nature. It enables teams to come together by limiting barriers and encourages members to try out new ideas without fear of failure. If something doesn’t work out, it’s seen as valuable experience and knowledge.
4. Avoid Surface-Level Change, Think Deeper.
Transformation is not about putting lipstick on a pig. It’s about actually doing things differently. When the rise of the internet came, YellowPages saw this as a threat with uncertainty as to where their business fit in with the new world. They didn’t take the easy way out by making a grab for the lipstick and simply transferring their directory from analogue into digital form. They didn’t just upload hundreds of thousands of listings onto a website, slap a search bar at the top and call it a day. Instead, they realized they weren’t just a paper business, they were in the business of connecting people to businesses. Today, YellowPages has expanded their services into YP Dine (service to directly make reservations and order online)and YP Shopwise (service that aggregates shopping deals and flyers).
Sometimes you need to stop focussing on how to improve the current way of doing things, completely scrap the old and just reinvent the new.
Similarly, back to the example of banking customers being burdened by paperwork, to truly create value for consumers “going paperless” is just one step of the game. It’s the initial lipstick on the pig. We live in an e-Everything world where offering e-services is the rule, not the exception. Businesses can’t just stop when they’ve met the standards of today, they have to constantly think one step ahead to anticipate the needs of tomorrow.
To stay connected, there must be a strong focus on developing exceptional user experiences. The sum of all experiences a consumer has with a business defines how they feel overall with the brand. Brand experience is paramount to building consumer loyalty, trust, and in ultimately winning over business. To improve user experience, it’s not enough to passively buy customer data from research agencies to understand their behaviour. You need to engage directly with your customers through focus groups, direct feedback channels, or live events. By doing so, this will help you accurately build out key personas and a full picture of your customer’s journey starting from their moment of awareness all the way through to purchase and beyond. With this knowledge, you can understand pain points as well as moments of delight as they move through the process of interacting with your business. This will allow you to narrow in on where the opportunities are to enhance their overall experience with you.
For instance, too much foot traffic around a busy public transit station is a common problem, particularly during rush hour. It slows down pedestrian movement and efficiency of the entire transit system. To combat this, public transit providers are gravitating towards contactless payments (reloadable tap cards). Moving away from paper, cash or token and using cloud-based technology, the payment and management of the rides creates a more convenient experience for transit-goers. Digital doesn’t just have to be about something you interact with visually (a website or an app), it can be an experience.
5. Break Down As Many Silos As You Can
When it makes sense to do so, common data should be shared horizontally across an organization, period. To explain why, I’ll use the IoT (Internet of Things) as an example.
In short, IoT is the network of physical devices (cars, home appliances, electronics, etc.) that are connected to the internet, as well as with each other, which in turn enables data-flow between devices. The smart home is a popular application of the IoT — Google Home is an example of a device that talks to your internet, your mobile, and your TV. Because data isn’t stored centrally, it can be accessed across different means.
To provide a retail customer experience example, these days you can browse your favourite stores online and add desired products to the store’s cart via your mobile, then later log back into the page via your desktop to complete the process of checking out. This is called an omni-channel experience.
We see the trend that consumers are increasingly busy with limited ability to dedicate large chunks of time towards unessential tasks. Technologists have picked up on this and developed methods to share information across products so that you are able to pick up any device and continue where you left off. Ever try to copy text from your Macbook and paste it into your iPhone? It works.
Now, to apply this logic on an enterprise level. If information can be share between different groups within a business — customer service, marketing, development, data and analytics — then theoretically this will also create a seamless experience for employees who no longer have to waste time finding out who holds the data, acquiring access to them, waiting for the data to transfer, etc. Automatically sharing data horizontally across an organization is important to break walls between business groups so that no information is centralized or hoarded.
Likewise, walls should be broken between the Business function of an organization and the IT function of the organization. No longer should IT teams be seen as service providers for Business teams. They should be seen as equal partners. Whether most organizations consider themselves as being in the software business or not, either they are, or they should be. Having an online presence is the norm for any business today, and with that online channel comes with it a host of opportunities to learn more about your customers. IT continues to have a direct line of sight into online channels and need to have a seat at the table in Business-driven discussions. They bring ideas that Business-teams don’t have the insight into, simply because they manage a different set of processes. Listen to your IT folks. They see where the opportunities are.
To close out the topic of decentralization… years ago we applied this same idea to the media landscape. No longer do multinational media broadcasters and news outlets exclusively own the ability to share information with the masses. The internet has decentralized the sharing of information and this has dramatically benefited everyone, everywhere for the better in terms of having more choice plus better ease of access. Decentralization is good. Hoarding is bad. Breaking down silos is necessary.
There has been a seismic shift in the way we live our lives. Increasingly, our realities exist in an online world. We meet people for the first time online, build businesses online, buy goods, learn news, share ideas and entertain ourselves all online. We’ve come to rely on our technology to keep our information safe, protect our privacy and facilitate most of our transactions whether it be educational, social or financial. Recognize that this isn’t a trend but a reality.
This seismic shift has fuelled a change in human behaviour so significant that it demands innovation from businesses. This is where Digital Transformation comes in. As we all adapt for life in this digital revolution, we look for ways to simplify our day-to-day. An important way businesses are doing this is by bridging the gap between consumers’ online an offline worlds such that they become so tightly integrated, there is no friction that remains between the two. That is Digitization, in a nutshell. There is no end-game to it. From here on out it will be an ever-evolving process dictated by new trends, expectations, and technology.