How to Navigate Around the Top Pitfalls in Digital Transformation

Avoiding Pitfalls in Digital Transformation Customer Experience


John T. Chambers, the outgoing President and CEO of Cisco, recently made the following statement about digital transformation:

“Forty percent of businesses in this room, unfortunately, will not exist in a meaningful way in 10 years,” adding that 70% of companies would “attempt” to go digital but only 30% of those would succeed, and then he said:

“If I’m not making you sweat, I should be.”
“It will become a digital world that will change our life, our health, our education, our business models at the pace of a technology company change”

Chambers went on to warn companies that they could not:

“miss a market transition or a business model”
“underestimate your competitor of the future — not your competitor of the past.”
“Either we disrupt or we get disrupted”.

 Everyone has been hearing the call to become a “digital first” but many have not succeeded in getting efforts off the ground.

A recent survey of 274 executives released by Capgemini Consulting, and the MIT Center for Digital Business found that only seven percent — have successfully used digital technologies to evolve their organization into truly digital businesses. This digitally evolved seven percent were twice as likely to be reporting industry-leading growth, profitability and customer satisfaction than their competitors.

The following are ways to navigate around the leading roadblocks to success in digital transformation

1.Thinking Digital Transformation  is a fad– Accenture recently reported that since 2000, 52% of the Fortune 500 have gone bankrupt, been acquired or ceased to exist in large part due to the disruption by digital.  For B2B companies that think they are immune to becoming a victim to the new digital era I would tell them that hope is not a strategy.  The digital era is creating a digital darwinism. According to McKinsey, “digitization is placing unprecedented pressure on organizations to evolve. At the present rate, 75 percent of S&P 500 incumbents will be gone by 2027.3 “ That means that digital transformation is crucial to survival.

2.Not driving it from the very top CxO Level - In the ideal world, the  CEO should drive digital transformation.  But the CEO may not have the skills or time to drive a digital agenda.  Customer Experience is at the heart of digital transformation and the CMO is the person who owns the customer touchpoints on the web.  If they are not appropriate then it is time to recruit a Chief Digital Officer (CDO) or a trusted advisor.

3.Thinking that Digital Transformation is about Technology –Technology is just a means to an end – in this case about delivering the best possible customer experience with greater agility to sell more more profitably.   In the digital age a buyer’s first impression of your company is on the web and they want to build their relationship with your company digitally.  I heard someone say “When people shopped in stores no one said that the customer experience should be led by the construction team”.

4. Delegating the digital transformation to the CIO – Customers are demanding a more personalized self-service experience. Today is the age of the customer and this means putting the customer experience first.   Digital Transformation is about how the business engages with the customer.  IT is not chartered to deal with customer experience but marketing and the line of business is.

5. Not seeing that Digital Transformation is about building a competitive advantage by changing your value proposition to the customer:  Customers no longer want to shop in stores or on the phone.  They want a digital experience and as a result business models have to change.  This is the opportunity to gain a competitive advantage. Many top analysts are calling this the age of customer.  James McQuivey of Forrester has stated “the only source of competitive advantage now is a focus on knowledge of and engagement with customers.”

6. Failing to realize that great platforms are beating great products and services –Every company is destined to become a digital platform.  Look at what Uber, Amazon, Airbnb, eBay, have done to entire industries with their platforms.  They focused on changing the customer experience through a digital front door and building unprecedented speed internally and with their ecosystem partners. 

7. Thinking you can delay and there is no harm in being slow and risk averse – In the last century moving slow and not taking risk was acceptable.  But today we are living through unrelenting disruption of every industry.  Gone are the days of spending months on a strategy.  Moore’s law has exponentially accelerated the pace of business – the rate of change is doubling every two years.

8.Not realizing that internal employees may be threatened.  Digital Transformation is not just a threat and opportunity for the business but the employees inside the business.  The best way to address this concern is education.  Ironically Millennials are digital natives and may feel more comfortable with the change to digital than without it.  Regardless the best way to address concerns is education.  Employees today often have 2-3x more work than they can possibly complete.  Giving each employee their own digital advisor and administrator will make them happier.  This “Better Together” philosophy is key to competitiveness.  Would you want to compete against a company that has armed their employees with Digital Advisors and Administrators and leave your workforce without this digital advantage?

9.Not realizing that now is the time to address the siloes in your company:  Siloes are a major opportunity in digital transformation.  Today they are interconnected with human middleware performing high touch rules based repetitive actions.  Making a map of all the human touch involved in back office and changing the human middleware into digital pathways will boost corporate agility and focus workers on higher value-add tasks.   

10. Failing to engage the customer to make a map of different customer journeys and build the best possible experience for each –  Making a map of customer journeys and giving the customer the best possible experience is the key to profitable revenue growth.  Breaking journeys out by transaction purchases versus subscription and renewals is also critical.  Harvard Business Review (HBR) managed to quantify the effects of good customer experience. One of the businesses was transactional and the other was subscription based. What the researchers found was that “after controlling for other factors that drive repeat purchases in the transaction-based business, customers who had the best past experiences spend 140% more compared to those who had the poorest past experience”.   For the subscription business the researchers found that “a member who rates as having the poorest experience has only a 43% chance of being a member a year later.

11.  Not realizing you can take small horizontal steps – Breaking out each customer journey is a sound approach.  Too many companies think digital transformation is making a standalone tool.  Instead it is making a continuous self aware digital thread through the business.  You can build digital roads by type of experience to eat the elephant a bite at a time.

12. Not realizing you need to bring in outside implementation help now – The majority of businesses do not have the right team or talent.  In a recent survey by Technical University of Munich only 17% of companies said that their employees had the right talent for digital transformation.  According to Forrester 45% of Decision makers identified lack of skills as an issue in shifting to digital.  You should bring in outside resources that can provide:  a) domain expertise b) consultancy and c) rapid implementation skills.  It’s not enough to define it you need partners who can build it.  And you don’t want to waste precious time educating consultants about your business or industry.

13.  Thinking you have to build tools instead of leveraging a platform – Now is not the time to reinvent the wheel.  If your company has a culture of “Not Invented Here” you will probably find a real history of “Never Invented Here” - where the business was forced to wait for something that IT could never get built properly.  CEO’s are often sold on internally built technology based on three false arguments:  1) we can do it cheaper 2) we can do it quickly 3) we can do it without any additional risk.  While all 3 of these arguments prove to be false in a slow moving environment in today’s environment listening to these arguments may kill a company's one chance to become digital first. 

14.  Focusing on ROI from Increased Revenues more than increased profitability.  Digital Transformation should be built to both increase revenues and decrease expenses.  B2B sales organizations tend to focus more on revenue growth without necessarily increasing profit from existing revenue.  They also don’t understand what business they may be losing without improving customer experience.  If you make your customer call you are most likely losing business.  With Digital Transformation you may not see an immediate growth in sales but you will see an immediate growth in profit from those sales.  Depending upon your ability to measure you may see customer loyalty increase as you become the easiest to do business with.

15. Making it more difficult than it really is!  A small empowered team can make great things happen.  Ironically we have seen a few members of the line of business define customer journeys, build digital advisors and administrators and bring about change more quickly than large task forces. 

Digital transformation is a process of continuous improvement.  Ideally the digital pathways that you build will self-act and self-identify areas of improvement.  By avoiding  the pitfalls above your company can become the seven percent with superior growth and customer satisfaction vis a vis your competitors.

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