Digital transformation is one of those overused terms that has become less clear, and less well understood as it has been stretched out of shape by marketers.
Digital transformation is more than IT renewal. At its core, digital transformation is about better meeting the needs of our customers. It changes the way we do business, as well as the way we interact with customers. It delivers customer centricity, personalisation and interactivity. If so-called ‘digital transformation’ fails the customer experience (CX) test then it’s really just IT renewal or business process renewal in another guise.
IT is a digital transformation tool, not in itself digital transformation
Too many companies are struggling and failing to digitally transform because their transformations are IT focused and provide tools and technology in isolation to business or customer need. A good example of this is GE, which embarked on its transformation process in 2011, pumping out great PR and labelling itself a leading “digital industrial” company. It was how GE interpreted digital transformation that was the first clue that all was not well. It may have deployed an impressive range of technology – such as sensors and software platforms for IoT – and renewed key internal processes (such as supply chains and sales), but the way the company thought, operated, innovated, and interacted didn’t fundamentally change. GE 2.0 was simply a more tooled up GE 1.0.
The result was that business performance didn’t budge much, the company was punished by shareholders and the management team paid with their jobs.
We could sit here and reel off failure after failure by both large enterprises and small. (The Harvard Business Review calls out Lego, Ford, Nike, Proctor & Gamble, Burberry and GE, amongst others). These companies are not failing because they can’t deliver technology, but rather because of the lack of executive vision and strategy to reimagine their businesses in the Digital Era, coupled with a lack of corporate bravery to deliver on their vision.
You can spot a digital failure before it starts. The company is simply adding technology and finessing processes, approaching digital transformation not as true transformation but as evolution.
Shareholders want digital transformation, but also expect ‘business as usual’
To some extent I blame shareholders for digital transformation failure. They expect a company to undertake a complete rearchitecting of its business without there being any impact on returns. It’s not realistic. The short-termism of much investment prevents publicly-traded companies from taking the bold decisions needed to ensure their long-term health and their ability to innovate.
Vision should come before technology
We can’t fix the investment market, but we can boost our ability to make good on digital investments. Rather than looking at vendor slides that tell you how they can revolutionise key processes, digital transformation needs to start with a white board. On that board we need to answer key question such as:
- If we came into this market as a start-up how would we do it?
- What are our customers mad about or bored with?
- What do our customers need or use that we don’t deliver?
Once we have a vision of how the business could be, we can perform a gap analysis and isolate what needs to change. What’s important though is to stay true to our vision, rather than to dilute the vision in order to accommodate existing processes and structures.
Employee experience is a critical success factor
Critical to digital success is combining the employee experience (EX) with the customer-centric vision we’re developing. It’s long been known, and remains true, that people largely determine the success of technology projects. Unless employees perceive that new technology makes their working lives easier, they avoid it, change jobs or become unhappy (which in turn affects their performance).
I encounter many companies that have what I call ‘digital skins’. On the outside they look quite slick, but scrape the surface and underneath you have a lot of processes, systems and attitudes that are very undigital. As a customer, when a company asks me to email them I despair. This is 2018 not 1998. Now imagine being in your twenties and working for a company that asks you to engage with core services in the same manner it did 10 years ago.
In fact, many employees are not simply frustrated, but hugely embarrassed by the internal workings of their own companies. They apologise about the dark ages’ way in which things get done (or don’t get done).
Let me give you an example. I recently had to ring my service provider, a very large multi-service operator. The automated message asked me to key in a number – my mobile number if my enquiry was about my mobile service and my broadband account number if it was about broadband. Not only did the CSR ask me to ‘reconfirm’ my number when she answered the call, but she then informed me she would have to transfer me because she couldn’t handle broadband enquiries. When I pointed out that not only was it outrageous to ask to me to repeat my account number in this day and age, it was even worse to route me incorrectly. Her answer was to blame it all on GDPR.
This experience (July 2018) makes a joke of the service provider’s claims to be a leading digital company.
Scrape away the digital skin of this service provider (which is largely marketing) and underneath you find frustrated employees having to navigate badly designed, inflexible processes. They are having to deal with the constraints of automated systems that deliver what I call ‘bad automation’. Automation focused solely on speed and the most common scenarios, rather than on customer need. Employees quickly become as frustrated as their customers.
Some service providers understand the importance of employee experience in delivering a better digital experience to their customers. For example, AT&T has engaged in a massive re-skilling programme for its staff – costing $1 billion – after discovering that nearly half of them lacked the necessary skills needed for its future business. The company had a choice, engage in a costly sack-and-replace strategy or reinvest in its current employees. Its success has seen enterprise customers approaching it to enquire how it’s done and whether they can engage with AT&T programmes to benefit from its approach.
Lessons for B2B providers
B2B service providers are well advised to consider that EX and CX go hand in hand when it comes to digital transformation. Without these two elements, your digital transformation is just a fancy (and better funded) IT renewal and BPR project. The most important component of success, which I cannot emphasise enough, is to not try and make your business more digital, but to imagine how you would build a digital business if you could start from scratch. Having a vision of what you should be doing will help you to identify the most important things to change. Getting external perspectives will help you do that, but companies need to choose wisely where they get those perspectives from. Truly disruptive companies don’t get their edge by listening to the usual big consulting companies, which are extremely adept at evolution, but not so skilled at disruption and transformation.