"Digital Transformation" is big business for the world's top consultancies. The pressure for business to adopt digital practices has never been greater, and still it may feel inaccessible to many. You don't need a 6-7 figure consulting engagement to get started.
Here are some models for assessing and organizing how a business leader can manage digital change that can help.
Going Digital
What does “going more digital” in your business mean? In short, business leaders are faced with making sure their businesses can compete and achieve their ambition at a time when digital channels, technologies and behaviors are changing basic business processes from marketing, sales, operations, talent management and more. You ‘go digital’ because you have to in order to meet your goals today and tomorrow.
Larger businesses have been feeling the pressure to adopt more digitally-based capabilities like marketing via digital channels or streamlining operations by integrating data and supply chain management. They have been investing millions in digital transformation. See the digital change stories from Nestle, Walmart and Aetna. Small startups have made digital a competitive advantage as they build their business around these changes without the ball and chain of legacy systems or cultures. Often their whole business is made possible by new digital platforms and behaviors. See Venmo, AirBNB, CoverHound, HelloTech and many, many more.
For everyone else, there is that careful assessment of what changes can be made in the business to reap a financial benefit quickly while committing to building new capabilities that may payoff beyond the current fiscal year. Where does a business leader start?
There are two approaches that may make sense for your business: Portfolio Management and Journey-based Transformation.
Portfolio Management
Whether you are a regional construction company with $100M in revenue or a new retail store hoping to break $1M in annual revenue, you can create a practical plan to “go more digital’ around a portfolio management approach.
Woody Driggs, EY Americas Advisory Digital Transformation Wavespace Leader has a solid POV on managing three portfolios: Protect, Optimize and Growth. “Protect” asks you to identify that part of your business that is mission critical and where you may have significant risks. Think customer data and privacy or any areas of your business governed by regulation. “Optimize” has you find those parts of your business where an incremental improvement can deliver cost savings or some other benefit in the near term. “Growth” is a bit more speculative and requires you to plan for bigger changes that can help your business grow into the future. This may be in response to industry disruptions - e.g. how hard it is for construction companies to find experienced workers. Woody suggests you manage this third portfolio as a private equity fund:
““For a successful growth portfolio, a company needs to try to understand future trends and changes that will impact customers,” he says – for example, the ways in which Gen Z consumes services differently, or the shift in the healthcare sector from a focus on paying for procedures to paying for outcomes. “They then need to make a plan by working backward to apply resources to these scenarios while determining their market feasibility at the present time.””
Journey-based Transformation
Whether you are a B2B business like a medical device company that sells to hospitals or medical practices, or a B2C business like a retail store that sells online and on main street, you can easily re-imagine your business through the lens of the customer. This starts with simple frameworks that break down your business into phases that span from marketing to customer engagement to loyalty and retention.
There are lots of ways to document a customer journey within a particular business. There is also a bit of an art to documenting the real journey versus the one that senior execs may think is happening.
Click here for a gallery of customer journey maps to give you a sense of that diversity.
Take a simple journey like this:
Now, examine how your business supports the customer in each phase and determine what Incremental improvements can be made via digital processes that make for a better experience and reduce cost. Next determine what bigger, Growth changes could be made that would help the business grow and compete in the near future. These are the big, transformational changes like selling directly online or developing new products based upon digital insights. Essentially, this is applying a portfolio approach to the journey phases. This ensures your innovations will deliver value to your customers and are not digital for digital's sake. You don’t have to be a Fortune 100 company to benefit from this type of analysis and management.
Once you have a view of what you might start with, it’s time to prioritize. You will not have the resources to make improvements across the board. Start with a known priority – you may need to acquire new customers or improve retention with the ones you have. You may need to improve the performance of your salesforce or simply drive down the costs of servicing existing customers. Then look at what can be done more easily – low-hanging fruit – and those changes that may take more time with some foundational effort happening immediately.
Last Word
Digital Transformation is never easy (here are reasons why digital transformations fail). Still, these are methods that any business can use to begin to get a handle on what they can do to make their business more digital over time.
From NextNow Digital:
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