Today, I want to tell you about those companies that are doing Digital Transformation right. I call them the Trailblazers. They have governance, management, resolve, financing and assets, that are dedicated towards going digital, that is at the core of the organization. As a result, they enjoy an overall increase in performance across all key functions. These are companies that are in tune with their customers’ best interests.
So what do these trailblazers do that is so different?
Well, the first thing is Digital Competence. Digital competence is about the differentiation you can achieve by using your IT systems for a competitive advantage; more resilient, responsive, adaptable, and secure. The heart of your Digital capability is your software – that’s the quote-end-quote legacy software that currently runs your business, the new software you’re writing for online and mobile experience, and the capacity of your organization to transform that software to follow your Digital vision. If your team and your digital assets are too ossified to adapt quickly and constantly, your Digital strategy will lead you nowhere.
As such, transformation initiatives that do not first tackle functional, data, and technical complexity issues are setting themselves up for failure. Data shows that those that attack functional, data, and technical complexity achieve cost savings of 15% to 20% of their total technology budgets while increasing their agility and reducing risk. Reducing complexity involves three actions: identifying redundancies, improving key software characteristics, especially changeability, and risk factors, and measuring the impact of transformation in terms of capacity, time to market, and business value. Measuring software at a structural level is the only way for Digital-minded executives to make the right trade-offs between delivery-speed, business-risk, value and technical debt. Dealing with technical and architectural complexity during digital transformation can be difficult. Tech leaders who employ a standards-based, factual approach will avoid the hazards that have derailed past simplification and transformation initiatives.
Now, we talked about trailblazers having digital competence. They also get the process right – the how part – in other words how they do it is unique and extremely efficient. It comes from developing leadership that’s completely clued into the digital mindset, are key sponsors of it and drive it, instead of just hiding behind the tech and hoping the automation works. Technology replicates and automates good strategy, so if the operational strategy or customer experience is sub-standard, the technology enabling it will also be sub-standard. So the trailblazers develop the leadership competence to drive digital transformation.
So what else are these digital trailblazers doing really well? Well, four things.
Customer Experience, Operations, Business Model, and Leadership.
First, they are reimagining the entire customer experience based on the data they are collecting and redesigning how their customers interact with all touch points between the customer and the company, whether they are apps, mobile, desktop, Facebook, Snapchat, or any other social platform, making it exceptionally user friendly.
Second, a subset of these companies are going a step further and attempting to digitize their operations. Now, there are three steps to going about digitizing your operations.
The first is digitizing business processes such as finance, accounting, human resources, and marketing. What is interesting is that there are thousands of companies out there especially at the divisional level, that continue to use paper-based processes for conducting day to day business such as submitting and approving expense reports. Businesses that enjoy visible gains in efficiency are those that are digitizing their operational processes.
The second step in operations digitization is that of employee empowerment to enable them to interact, connect and communicate better no matter where in the world they might be. Employee empowerment via a shared digital platform is fundamentally changing the modus operandi of how employees work and exchange ideas.
The third and final step in operations digitization is that of data management. This phase is all about improving performance, and through transparency, helping the company understand how their customers come, what they do, and how they buy.
Digital trailblazers understand everything about who their customer is – their actions, aspirations, research and buying patterns, their likes and dislikes, and of course what segments they belong to. The companies that invest in customer facing technology without really understanding their customers do not really gain from the investment. So, know your customer well. A friend of mine working for Coca Cola got posted in the middle east and he started this three poster Coke campaign. The first poster showed a man lying in the hot desert totally exhausted. The second showed the same man drinking a can of Coca Cola. And the third poster had him refreshed and running again. What my friend didn’t realize is that, in that region people read from right to left – man was running, had a coke, and then he fell flat in the desert.
Brands like Safaricom and Wamton have mastered this aspect of digitization by offering app experiences that are focused around your individual preferences thus allowing them to target specific messaging to you based on information that you desire. Wamton tries to bring the in-store retail (Ottlet), color, design and runway experience to their customers inside of their online shop.
The next aspect of operational digitization is personalization and targeting – and that comes from an analysis of customer data – collecting and harnessing lots of data followed by lots of analysis. For that you need real good data analysts, like the one whose wife had twins. He was delighted. He rang the minister who was also delighted. “Bring them to church on Sunday and we’ll baptize them,” the minister said. “No,” said the analyst. “Baptize one. We’ll keep the other as a control.” So that’s the type of analyst you want.
I will try to explain this using the hotel and hospitality industry as an example. Hotels are starting to use insights from big data analysis to create innovative offers and personalized services. Personalization is an art driven by data science, and has evolved into an entirely new approach to consumer marketing. Hotels are starting to use the collected data, but very few are actually extracting its full potential.
Starwood Hotels for example are conducting advanced analytics, on customer, weather and property specific data, to figure out what price and incentive to offer a guest that is just right for the guest to book the room. They also use the data to determine the length of promotion and the amenities that might be of most interest to a particular guest, so they are offered to the guest at check-in.
Besides rooms, hotels also have spas, restaurants or other services that they aspire to fill and that’s where data comes in yet again. Not too long ago the CMO’s office would create a broadly defined monthly marketing offer that would then be disseminated by hotel staff across the properties. This “one size fits all” method obviously missed the vital component of whether the offer would be attractive enough for a particular guest. Let’s take Hyatt Hotels as an example that enjoyed a 60% increase in non-room revenue over the course of a year by using data analytics to arm their front desk staff with upgrade and service offers.
The final aspect of operational digitization is bringing legacy and the future together in a way that works. Going digital and chasing a future while ignoring the past is an ineffective strategy. Executives think they can simply let go of the past and pursue a new future bereft of legacy baggage. I can tell you that is a recipe for disaster. If you are a retailer, consider doing augmented reality for example where you offer a variety of alternative colors and material for an item that may only have one piece on display at the physical store. A blend of virtual with physical, future with legacy.