Defining the ‘Why’, ‘What’ and ‘How’ of Digital Transformation for Success
It feels like every organisation in the world is trying to figure out their digital transformation journey. Irrespective of whether this change is the result of an internal realization or driven by customers, stakeholders or employees, companies are busy charting their path to the digital world, whether proactively or reactively.
New age start-ups such as app-based taxi services, food delivery apps, e-commerce companies and payment wallets are enabling people to explore new, exciting and convenient ways to leverage digital technologies to make their lives easier. Therefore, people are increasingly seeing and expecting a fast, digital world where transactions are easy, simple and intuitive and can be completed in one click.
Enterprises, on the other hand, are moving far too slowly. Therefore, employees often find that while they are exposed to the best of technologies in their personal lives, they still need to deal with cumbersome antiquated processes even for something simple such as getting a document approved. While employees may sometimes be willing to overlook the inconveniences, customers are far less tolerant. For example, let’s say that a customer has relationships with three banks. Given that there is very little differentiation between the offerings, the customer will pick the bank that makes the experience most pleasant. Customer experience can make or break a successful transaction for the bank. All things being equal, the digitally savvy are most likely to win. This is true across various service-led industries, whether utilities, retail or others.
Given the stakes, it is not at all surprising that every organisation wants to desperately get ahead in the digital race. However, while companies undoubtedly need to invest in digital experiences, doing it right is important.
Digital experiences need to be backed by solid strategy for them to really make an impact. Often companies take a quick-fix approach trying to address a specific issue instead of looking at the underlying cause. This leads to disillusionment with the results of the digitalization efforts, causing the company to step back, thereby exacerbating the issues at hand.
A strategic outcome-centric approach
Before an organization embarks on a digital transformation journey, it is important to take a step back and think about the ultimate objective of the exercise. What is the problem that you are trying to solve? What are the outcomes expected? Accurately identifying the ‘why’ is fundamental to the success of any digital transformation exercise.
Also, the expected outcome needs to be defined not in the form of a fancy narrative of what success looks like, but in terms of hard metrics that are quantifiable and measurable. For example, if your stated goal is to improve customer satisfaction, then you need to first think about how to measure it. What would be a real, quantifiable metric that is a good indicator of customer satisfaction? For instance, one retailer may choose Net Promoter Score, another one may rely on an elaborate customer satisfaction survey. The measure of success may be Net Promoter Score, top line growth, bottom line growth etc. Once we identify the right set of metrics we need to base line and then drill down on the what are the drivers of the metrics.
Let’s say that a retailer’s goal is to improve the in-store experience. The question that needs to be asked is, what are the components that make up the in-store experience? Is it defined by the time that it takes for the customer to find the products that they are looking for? Or is it about the time taken for the checkout process? Once you zero down on it, you then need to figure out a way to measure it, so that you have an accurate measure of the current baseline number as well as the goal that you want to accomplish.
Defining goal posts
Identifying the goal posts needs to be a well-considered exercise involving plenty of relevant research. Again, it needs to tie back with the overall strategy. For instance, one approach might be to study the competitor landscape and see where you stand against your competitors. If you find that you are at number five in your category, and want to go to number one, you will need to find how much you need to improve on certain scores to match or beat the competition.
An important consideration to make is when it comes to digital, you might not want to necessarily benchmark yourself against your competition. You might instead choose to benchmark against a completely different industry.
For example, if you are a car dealer who is exploring an online sales model, you don’t have to look just at other car dealers for digital inspiration. Instead, it might be much more fruitful to benchmark yourself against an online retailer from a diametrically different product category, provided you can find the right parallels and contextualize for your industry. If your goal is to provide the best online experience, it is important to be cognizant of the fact that the best online experience that your customers have experienced might not be from your industry.
Once you determine the expected outcomes, these outcomes need to define the strategy. Going back to the previous example, if customer satisfaction is the parameter, then you need to intervene on all points of interaction between the customer and the brand. These could be online ad campaigns, visits to the online store, online transactions, walking into a physical store, calls to the call centre etc. If you want to improve customer satisfaction, you need to look at the entire spectrum of customer touchpoints across all channels.
Process precedes technology
Any large transformational change involves two factors – process and technology. It is important to step back and determine if the solution lies in technology or in process enhancement. Often, it is a combination of process and technology. In fact, the process should precede the technology, because if the process is flawed, no amount of technology can help fix it. Processes are often flawed since they tend to evolve over time in response to specific needs or challenges that the organisation was facing at that point.
Organizations rarely have the bandwidth or the will to evaluate processes deeply and determine their efficacy. It is desirable for the leadership team to step back and ask itself: Now that we have common definition of what success looks like, how do the underlying processes look like? What do we need to change to drive the outcomes?
Given the amount of complexity involved, it may seem easier to solve a business issue by building a shiny new app or a nice new tool or a wow looking store. But unless you do a deep dive and identify where the real issue lies, such Band-Aid measures are likely to yield very limited benefits and that too in the short-term. Reimagining the processes become a very critical part of driving digital experience.
Nobody knows what the future holds and how AI, quantum computing, blockchain etc. will revolutionize our world in the long term. While everyone wants to get on the digital bandwagon and find ways to leapfrog the technology revolution, it is important to first have clarity on your objectives and long-term goals. If you are not clear about the outcomes you are trying to drive, irrespective of which new technology you decide to use, success will be difficult to come by.