Change is hard. Transformation is even harder. When it comes to the digital challenge, most organizations are changing, not transforming. They are digitizing existing processes to take out cost or using new technologies (e.g. biometrics) to increase customer convenience.
This type of change is incremental and is no longer sufficient. The challenge of today is that businesses need to seek to disrupt their own industries, channels and customer interactions before a start-up does it for them. This type of transformation requires not just new tools, but a new mindset, culture and organizational capability.
In a recent post, we discussed some of the findings of a Forrester Consulting study we commissioned. It looked at how companies approach digital transformation amid evolving customer demand and expectations. What we found was that organizations are barely scratching the surface of their digital potential.
It’s clear from the research that businesses recognize the need – and are working tirelessly – to harness digital technologies. However, they are hamstrung by an outdated, constricting organizational structure. Organizational issues are viewed as critical barriers to successful execution of digital strategy. Specifically, lack of digital expertise and skills (57%), functional disagreement on digital ownership (52%) and overall organizational inertia (51%) topped the list of hindrances.
The solution appears simple. Remove the structural barriers to achieve digital nirvana. This, as we all know, is easier said than done. It’s a daunting task, but it is achievable.
Here are five key considerations when embarking on a digital transformation journey.
Keep the customer promise top of mind [Redefine the experience] – Too often we see that the decision-makers within an organization are too far removed from the customer. They make critical business decisions using complex data sets and analytics. Of course, this is an essential part of innovating. However, it is rarely effective on its own. In order to deliver on the customer promise, organizations must always have that promise top of mind. From there, think about how that promise is being delivered (perhaps) through technology. Ask yourself: Does it fulfill a latent need or motivation? Can we do things for the customer that makes their life easier or puts them in control? Is it actually solving a pain point?
Measure projects against customer-centricity vs. internal values – To become customer obsessed project evaluation frameworks need to be changed to apply customer-related measures (in addition to the standard financial measures). These need to provide information about the “trust quotient” and customer advocacy. Too many organisations rely on customer satisfaction scores, we see many banks with good CSAT ratings yet with poor share of wallet for example, customers remain but are not loyal; the challenge is to use a range of measures that provide a better view on brand loyalty such as Net Promoter Score.
Think experience, not functionality [Renew and amplify technology core] – The best products and services provide a holistic experience for the user, rather than complex functionality. Take Uber for example. From a functionality standpoint, the app is fundamentally simple. What it does, however, is give users a data-based, customized and most importantly, easy-to-use, experience. On the other hand, when we look at some retail bank applications, they tend to be rich in functionality, but are so difficult to use that they never deliver on the promise of convenience and superior service. It’s imperative for organizations to strike the right balance between experience and functionality – improve experience using data, without falling victim to IT’s complexities.
Form multi-disciplinary teams [Ensure unified orchestration and management across digital ecosystem] – Forrester puts it nicely in its paper: “To avoid hindering the digital transformation journey, firms must resolve the internal confusion over who owns digital to identify an executive to lead development of an actionable and cross-functional digital vision and strategy”. We would take it one step further and counsel organizations to strike the conventional “Digital Department” approach. Instead, they must shift to a holistically digital business model. Every stakeholder within the business must understand and work to harness digital technologies that deliver a superior customer experience and drive the agility and operational efficiencies needed to stay competitive. This starts with selecting the best implementation or advisory team. A common mistake we see is that organizations will choose a “transformation team” based on tenure. It is critical that this team be made up of the right people with the right skills and weltanschauung– regardless of their title, years of service or relationship with other key stakeholders in the company.
Find the balance – The ideal make-up of a “transformation team,” includes the right mix of analytical and creative minds along with stakeholders that specialize in relationship-building and management/execution. The group can and should be a conglomerate of internal and external parties. The critical piece is that there are no siloes. Our advice to avoid these stifling barriers is to take a Design Thinking approach. At its core, Design Thinking brings together IT, business and operations to increase innovation, collaboration and ideation.
Phil Freegard is Head of Digital Transformation Practice at Infosys