I recently presented my views on how to succeed as a digital leader to over one hundred retail executives in Asia. They seemed to find it useful, so now I am sharing them here in an article format in the hopes that others might benefit. The content is my synthesis of findings that are derived from many different research projects and hundreds of interviews I have conducted with executives.
Digital winners think differently about digital innovations. They quickly recognize how new innovations can offer benefits. They expect and look forward to finding and capturing competitive advantages in new trends and technologies. They expect, at a higher level, to receive positive ROIs from their investments in new innovations. They are both more optimistic and enthusiastic about emerging technologies and possibilities. They are honest about their digital maturity, and where they are failing to keep up with change.
Digital laggards, on the other hand, are slower to understand how new digital innovations might be useful. They often suffer from normalcy bias. They often underestimate the amount of change that is occurring in their industry and with their customers. As a result, they underestimate the amount of work and resources they need to invest in order to keep up with the cadence of change. They are reluctant to invest in new technologies, fearful of making the wrong moves, and they believe they can delay action today and catch up with digital leaders in the future.
It is fascinating how much the mindset of leaders determine whether a company will be successful or not. More than products, services, technology platforms, funding, talent, ambition and creativity - it's mindset that often has the biggest impact.
Digital winners in retail watch for emerging and moving customer interaction points where they can meet with and address the needs of their customers. These interaction points are constantly on the move. In recent years we have watched them move from brick and mortar stores to websites, mobile apps and then on to social media sites, podcasts, YouTube, TikTok and other digital influencer-oriented sites. Digital winners will be where their customers are moving.
The future is too complex to predict accurately, so digital winners invest in understanding and anticipating a range of possible future scenarios. Digital leaders will then develop playbooks for how best to win in each of the scenarios and create sense and respond strategies that help identify when and which future scenarios morph into today’s reality.
Middle managers often share how difficult it is to interpret an executives’ words, intent and guidance related to digital transformation. When an executive says we must “innovate and transform,” it is critical to follow up with a clarifying doctrinal statement shared with everyone. If the focus is digital transformation, then let's call it a “Digital Transformation Doctrine” that clearly and concisely defines “what, why and how” an organization should understand and respond to it. The agreed upon doctrine will then influence the development of specific business strategies and tactics.
Increasingly digital winners win because of information dominance. When a competitor invests in seemingly unassociated programs and services, ask yourself what data will those programs and services provide today and how can it be an advantage? Amazon Prime and Walmart+ are good examples. Investing in understanding your customers better is a good investment. Look for adjacent market data, or combinations of different data sets that help you see new and different patterns. Winners thrive in taking action on data patterns only they see.
Speed is an important physics concept and an important business concept as well. It just keeps popping up in my research. Is your transformation speed aligned with the speed of changing consumer preferences? Misalignment equates to lost business for you and more business for competitors. Capture the speed of change and use it as an advantage.
Simplify to achieve speed and control. Complexity is the enemy of agility, and acts as poison from the past. Simplify to achieve speed and let leaders focus on customers, employees, high level doctrines and strategies rather than tactics.
How fast can you take meaningful action on new data? What is your speed to action (STA)? What is your speed to action relative to your competition? How fast are you expanding into adjacent markets and industries, or how fast are they expanding into yours?
How much change can your organization manage in a given time frame? How do you even measure an organization’s capacity for change? I propose a need for a unit of measurement called “Transformative Energy Units (TEUs).” All activities either increase or decrease TEUs and knowing how much is available to work with is essential. Leaders must understand how much change their organization has the energy to make. They must recognize how to refresh and resupply TEUs in their organization to ensure they don’t exhaust their people and lose their talent.
How digitally friendly is your business model? I have seen many legacy companies struggle with digital transformation because of friction related to traditional ways of conducting business, compensating sales teams and working with channels. Of all the things that can negatively impact your business - don’t let it be your model.
Reconnaissance scouts have been used in military organizations for centuries as a way to gain greater insight and make better decisions. Innovations and proof of concept projects provide businesses with similar benefits. They allow leaders to make better decisions and investments on insights ahead of competitors. Advantages in insight lead directly to advantages in business.
Today it is very difficult to build a successful business in isolation. Investors want start-ups to invest in their unique differentiators, not on aspects of the business that can be shared across ecosystem partners. Think about the thousands of businesses partnering with Amazon and using their logistics infrastructure and marketing engines. Smart leaders identify and participate in winning ecosystems that provide shared business value, platforms, systems, functionality and data. As ecosystems expand, they can in themselves become a competitive differentiator.
Digital winners do not expect or wait for a return to status quo. Digital winners expect perpetual change and accept they will never return to a past state. Digital winners learn to manage in ambiguity? They create an environment that is future focused, where tomorrow’s opportunities are being anticipated and prepared for today.
Digital winners automate and execute change faster than their competition. Winners have both the agility and the ability to quickly change course and align with fast evolving customer behaviors and preferences faster than their competition. Avoid partners, suppliers, channels and ecosystems that may limit your ability to be agile. The future is different, so never lock yourself into today.
Digital winners really understand what their customers want. Based on this insight they employ the right philosophies, designs, systems, technologies and business processes to provide it. They look for and find competitive advantages in their user experiences, personalization and recommendation engines, business operational tempos, process automations, omnichannel interactions and experiences, analytics and information logistics.
Rapidly evolving and expanding privacy laws reinforce the importance of keeping existing customers enthusiastic and loyal. Customers are willing to share a great deal of personal information about their preferences and buying habits in exchange for fair value. Digital winners honor loyal customers by continually increasing the value they provide.
Digital winners consider the lifetime value of their customers. They create individual profit and loss statements (P&Ls) for each customer. This provides them a long-term view and understanding of past, present and future value. A loyal customer is more than a one-time transaction of a $5 product. With today’s predictive analytics, a $5 purchase today can be considered one installment of a $200,000 lifetime transaction value. Given this recognition, what incentives can you customize and personalize today to help capture the full lifetime value?
Kevin Benedict
Partner | Futurist | Leadership Strategies at TCS
View my profile on LinkedIn
Follow me on Twitter @krbenedict
Join the Linkedin Group Digital Intelligence
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.
No comments:
Post a Comment