In this article my colleague and digital transformation strategies expert Rahul Tyagi, shares his insights on digital transformation. He is an alumnus of Harvard Business School and IIT, Roorkee, India. Enjoy!
The dictionary meaning of digital is anything that has digits [not helpful]. The software industry has been dealing with digital for the past five decades via mainframe software, PC software, client-server software etc. So why we are talking about digital now? I recently conducted a Google search to find what the world is saying about digital. I looked at the Federal Government Digital Strategy, I skimmed thru Cisco’s Digital Point-of-View, reviewed MIT Sloan's digital perspective and many more. I found no satisfactory insights.
I will share my point of view now. Let's look at the key drivers of Digital.
DIGITAL DRIVER – INNOVATION AND ITS PROLIFERATION
We looked at innovation happening in organizations, and how it proliferates across industries over last 100+ years. Here are few examples
- Ford perfected assembly line concept (circa 1910) that helped produce economical cars for broader demographics. Over next 5 + decades the assembly line concept was gradually adopted by other manufacturing industries e.g. steel mills, food and beverages and cloth manufacturers etc.
- Motorola invented concept of Six Sigma (circa 1970) to produce high quality electronic components. Over next 3+ decades Six Sigma is adopted by thousands of organization across many industries e.g. telecom, software, manufacturing etc.
- IBM created Eclipse in year 1998 and later open sourced it. Over last 1+ decade Eclipse is adopted by software developers across industries.
- Google invented Map Reduce concept (circa 2001) to process large size data sets. Over last decade Map Reduce is widely adopted by IT departments across many industries.
Today we observe a huge amount of innovation happening around personalized user engagements in various form factors, the micro measurement of user behaviors, advanced analytics and social aspects, cloud etc. We believe today that user centric innovation is ripe for adoption across industries to provide more meaningful user engagements.
DIGITAL DRIVER – SUNDAY NIGHT AND MONDAY MORNING USER EXPERIENCE
Today we can use many engaging tools which are available for free in the public domain e.g. Facebook, Google search, email and calendar etc. On Sunday nights we use engaging tools available in the public domain for free to get work done, e.g. Google search to get answers, Facebook to catch up with friends, public emails and apps to communicate, mobile apps etc. On Monday mornings, however, we start working with tools provided by our employer to get work done, e.g. information portal with inferior search capability, Timesheet applications that may have poor usability, archaic support systems etc. On Mondays if we reach out to our personal or business service providers, e.g. home utility service provider, cable provider, IRS etc., we are mostly dissatisfied with the quality of the customer engagement. Here are some examples:
- The user engagement (e.g. information relevance, information organization, communication etc.) with my service providers seems archaic
- Why doesn't the IRS provide easy access to my past tax returns on a portal?
- Why do I have to struggle to get answers to my questions from my employer, when Google has all the answers outside of work?
DIGITAL DRIVER – CUSTOMER ENGAGEMENTS ARE GETTING MORE AND MORE VIRTUAL
More customers are purchasing online. In fact online retail sales grew 6 times faster than all other retail sales in US in year 2014. Increasingly, customers are engaging with service providers via e-channels e.g. mobile, social, online portals etc. At physical retail locations, consumers are finding basket assortments themselves and doing self checkouts. This indicates customer engagement is becoming increasingly virtual, where fewer customers are interacting in person with humans. In person engagement, although costly, gives service providers opportunities to identify customer issues and solve them.
In an era of virtual customer engagement, service providers should look for opportunities to identify customer issues digitally and proactively resolve them to minimize churn and attract more customers. Savings should be routed to measure, analyze and act on customer engagement statistics.
DIGITAL DRIVER – THE AGE OF THE CUSTOMER
Jim Blasingame the author of “The AGE of the CUSTOMER” says, ”An epochal marketplace shift is causing the 10,000-year-old Age of the Seller to be replaced by the Age of the Customer.” In the Age of Seller - competitiveness can take a holiday. In the Age of the Customer, your brand does not have that luxury. Your brand is under microscope 24/7/365, on Main Street or Cyber Street”.
Today's customers are empowered by information. Your site (eCommerce or physical) is probably the last place a customer goes in a path to purchase journey. Customers are making product purchase decision outside of your visibility and influence.
Per US census demographics, 41%+ of US population is under age 35 (Gen Y). Gen Y is natural adopters for new digital processes, newer tools and technologies. Gen Y uses extensively tools available in public domain. Gen Y has higher expectations for better user engagement. Organizations should adopt to meet and exceed expectations of their key constituents (Gen Y).
WHAT IS DIGITAL?
In our current context, digital means "providing always meaningful engagement to your key constituents," e.g. customers, partners and employees. To provide always meaningful engagement we will need to make changes to People, Processes and Tools.
Always meaningful engagement also encompasses continuously innovating products and services to meet and exceed customer’s current and near future needs. For example customer engagement in personal banking industry has evolved with online bill pay, email/text based payment, check submission over mobile etc.
Here are some quotes about Digital:
- President Obama wrote following statement to set Digital Government vision “I want us to ask ourselves every day, how are we using technology to make a real difference in people’s lives.”
- Robert McDonald P&G CEO talks about use of digital to build customer relationship “P&G’s purpose is to touch and improve lives…Digital technologies enable us to build indispensable relationship with our customers.”
- Stefan Olander Nike’s VP Digital Sports Division talks about use of digital to improve products “[using digital,] How can we understand more about you…your motivation…[to make] better products.”
If you are reading this section (Thank You!), by now you should have some idea about Why Digital and Why Digital Now. Businesses will face a number of imminent challenges if they don't implement digital transformation.
- They will have less relevant customer engagements, which will cause a poor customer experience and most likely reduce Net Promoters Scores.
- They will also see a higher customer churn rate, which impacts both top line and bottom line.
- They will not know their customers' current and near future needs. It will be harder to launch creative products and services for customers.
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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.