To improve is to change; to be perfect is to change often. – Winston Churchill
According to Wikipedia, Digital transformation is the change associated with the application of digital technology in all aspects of human society. In the ‘aspect’ of the corporate world, digital transformation is one of the hottest issues these days. It is also the topic that causes many misconceptions, misinterpretations, miscalculations and, sadly, mishaps.
The world is digital, so what are you waiting for?
It’s not always that simple. Digital transformation is tricky, to say the least. Most companies are struggling with it, and, according to Forbes, more than seven companies out of ten, fail. Being tech-savvy and agile is easier for start-ups and much harder for large organisations. This is especially true within sectors not necessarily known for their flexibility, like insurance or finance. This is understandable; digitalisation challenges the established ways of operating and threatens safe and trusted management practices.
Do we even need digital transformation?
“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.” – Niccolo Machiavelli
Do the words ‘new’ and ‘digital’ necessarily mean better for your business? Transformation means money: a massive investment that is not always worth it. There is always a risk, but ‘going digital’ just for the sake of doing it or because ‘everyone else is doing it’ can lead to problems. A lot of research should be conducted to map return on investment or development costs could spiral out of control. Without a clear plan and structure in place, it is easy to get side-tracked with new gimmicks and the latest tech. To decide whether you need to go digital, answer a simple question: will it add tangible business value? Does it positively transform customer experience?
There is a reason why some grocery stores have stayed offline. No matter how hard the e-commerce companies have tried to shake it, and despite a change in consumer shopping trends, there is still a large population of shoppers who love the ‘physical’ experience. From an avid chef looking to smell and touch their ingredients before purchase to that student grabbing a pint of milk on the way home, sometimes it is just more convenient. People have always enjoyed grocery shopping, and they’re likely to continue doing so. Amazon quickly realised this, and instead of adding extra features to their Pantry (only 1% of the American grocery retail market), they introduced Amazon Go: a physical shopping experience without the annoying bit, namely the queuing. Just scan the app on the entrance, grab your groceries and as the name implies, go.
Another fact proving traditional retail isn’t going anywhere fast is that their CX score rose by 40% (2015 to 2016.) This is more than twice their digital counterparts at only 18%. Apparently, the in-person experience is still more important for users than the convenience of e-commerce.
When digital transformation goes wrong
“Digital is the main reason just over half of the companies on Fortune 500 have disappeared since the year 2000.” – Pierre Nanterme, CEO of Accenture
According to Forbes, 84% companies fail when trying to implement digital transformation. Going digital is much harder than it seems, and it requires lots of teamwork and a massive cultural shift.
Ten common barriers to digital transformation
- Stalling. It requires rethinking the entire business, and it takes time and action. Sometimes it is easier to stall than to work through it.
- Trying to change all at once. Inevitably, this leads to burning out, confusion and loss of track.
- A loss of urgency. Digital enthusiasm might fade, and it’s important to stick to the strategy even at this point. Sometimes a company’s leadership changes and the new management don’t see the digital transformation as a priority.
- The introduction of new technology just for the sake. There is no point without a calculated business reason.
- Change Resistance within the organisation itself, which is quite reasonable. (Read our blog post about the reasons why many customer service teams are change resistant)
- Inability to prove the profitability of digital transformation and, therefore, lack of enthusiasm and support from the top-level management.
- Fear of losing control by top management because digital transformation challenges the traditional structure of the top-to-bottom initiative.
- Too much emphasis on the process rather than rethinking the entire way people work and focusing on customer experience
- Bureaucracy – needing multiple approvals from top managers or the board members that in some cases never see customers face to face
- Fear, uncertainty and doubt.
This list is not exhaustive. However, the main reason for less than the optimistic success rate of digital transformation is a common misconception about its very nature. Many entrepreneurs believe that going digital takes being a Millennial or Generation Z’er. This is not always true; the real recipe for success has a clear strategy, boldness and determination to make things happen.
One of the organisations that didn’t immediately succeed in implementing digital transformation was HMRC. In 2015 HMRC had a big slump in service quality because of misjudging its digital strategy. It involved introducing automated telephony and paperless self-assessment processes. Making it up for the budget, HMRC released 5,600 staff members from its tax department. However, as the NAO report said: “HMRC believes it was over-optimistic about the cumulative impact of the change and had not built sufficient contingency into its plans.” The average waiting time increased, so HMRC had no choice but recruit another 2,400 staff to reinstate the standard of services. According to Ruth Owen, HMRC’s director general for customer services, the organisation “have since fully recovered and are now offering our best service levels in years’. Well, hopefully, the rollout of the controversial Making Tax Digital delayed until 2019 will be more successful and better thought-through.
There are two lessons to learn here:
- If you do it – do it properly and be realistic about where you are;
- User experience goes first.
Digital transformation the right way
“When in doubt, choose change.” – Lily Leung
Even though the idea of digital transformation seems extremely disruptive, there is lots of evidence that implemented correctly; it’s worth the hassle because it improves many aspects of the business. The most significant benefit of going digital is, of course, creating a more personalised, tailored customer experience. But it’s not only clients’ loyalty that gets boosted as a result of going digital. According to the Government Digital Trends Survey, 80% of employees of different ages would prefer to work for a digitally mature company. People want to develop the skills that allow them to stay relevant in a digital economy.
Traditionally, it’s harder to implement digital transformation within large organisations with lots of different departments (often siloed) and established borderline set-in-stone culture. Their budgets are bigger however most start-ups were founded with digital in their “DNA”, having more space for agility. An example of successful digital transformation is Westpac, an Australian banking giant. Forrester specifically mentions the organisation as ‘leading the pack’ in Australia regarding digital experience. The bank’s strategy revolves around putting the customer at the centre of the transformation, designing the changes to meet customers’ needs and anticipations. This includes an enhanced online and mobile experience. The bank was quick to realise its competitors in digital experience doesn’t stop with the banking industry – they’re being measured against giants like Google, Uber or Amazon.
Breaking with the stereotype the bank set about removing as many frustrations on the client journey as possible. The bank was agile enough to implement their innovative ideas quickly and use digital environment to improve their customer experience. The process of opening a bank account or purchasing any other bank product has become faster for it no longer takes multilevel verifications and can be done using a smartphone. No long phone calls, no queuing, no Kafka-esque forms filling. The combination of being both digital and customer centric has also changed the bank’s way of recruitment. The financial background for new employees stopped being a mandatory giving its way to attitude and the ability to learn.
Six quick tips on implementing the digital strategy
The ‘how to’ of digital strategy implementation deserves an inch-thick guidebook but here are a couple of quick tips based on our experience and customers’ successful study cases:
- If you decide to go digital – see it as a priority.
- Make sure your approach is right – moving as fast as you can in the wrong direction can be disastrous.
- Create clear vision of what you want to achieve and stick to it – this is the best way to achieve success.
- Start small – even changing the language you use within the organisation from professional jargon to the one close to your customers.
- Think user experience – Don’t get bogged down on the technology, think of the end user.
- Measure the ROI, not milestones – Don’t fall into the trap of asking ‘when will we achieve that milestone’ when what you should be asking is ‘what impact will this have on our bottom line.
Any change, even a change for the better, is always accompanied by drawbacks and discomforts. – Arnold Bennett
Digital transformation is not just leveraging latest technologies such as AI, IoT, mobile, analytics and social media to improve the performance of the organisation. It’s a massive corporate culture shift not installing new software or ‘going cloud’, and its elements will only come together when a company rethinks its entire business model.