The bar has been set high for digital transformation. Organisations such as Netflix and Airbnb have revolutionised their industries in media and hospitality respectively, and these are just two examples of many. Consequently they have raised the pressure on other businesses to follow their example. However, in attempting to do so, most organisations find that a truly revolutionary digital transformation strategy is a lot easier said than done.
It’s the perception of digital transformation that’s holding many back. Outside of a handful of occasions, a complete transformation that overturns industry norms needn’t be the aim – not every retail firm is in a position to be the next Amazon, for example. Instead, the goal should be to create a localised revolution that affects the processes which most need it – whether this means a new app experience or a back-end IT transformation. This approach won’t up-end entire industries, but it will make a crucial difference to individual businesses by helping them provide brand-new and improved experiences and ultimately better engage with their customers.
We rightly laud Amazon et al for what they’ve achieved. Yet their success has, more than any other factor, piled more pressure onto the digital transformation efforts of others. Organisations are driven by demands to be “The next Amazon (or Netflix, or Uber, or…)”, regardless of what success would actually look like and whether it’s actually what the business needs.
Perhaps inevitably, these ambitious targets often prove impossible to meet. Instead, facing an impossible goal, organisations will attempt to make the best of a bad job and make those changes which they feel are within their power – regardless of whether they support the business’s overall strategy. A common result is partial digitalisation; a fragmented outcome whereby a number of new technologies are introduced to tackle certain issues, without any steer on where they might fit within the organisation’s overall strategy. The BBC’s failed ‘Digital Media Initiative’ is a prime example here – where a lack of focus on what the organisation actually needed led to the failure of the project as a whole.
The middle ground
To avoid a similar fate, organisations need to identify what’s working well and what needs to be changed, to create a more informed idea of what digital transformation should actually look like. For instance, in most cases, this will reveal a need to make smarter use of data. Many organisations have built up reams of information, yet won’t have explored the multitude of ways to extract value from it. Making smarter use of data could mean using it for a relatively small change that really makes a difference to the customer experience and how they engage with the business. Simply updating a customer-facing app to provide a more personalised, targeted experience for the end-user can make all the difference.
In other words, instead of transforming their entire industry, organisations should first aim to perform a very local revolution – ensuring that their own critical services are re-tooled for the digital economy. To borrow from the retail industry, John Lewis has been exemplary in this type of transformation. Rather than aiming to match Amazon and expand its offering into a number of new markets, John Lewis has focused on providing a solid online experience for its customers, revamping its eCommerce offering while using technologies such as virtual reality to provide in-store experiences. That a large retailer sells its wares both online and in-store isn’t new – but John Lewis has ensured that their offering is fast, reliable, and adaptable across various devices, focusing on improvements that matter to shoppers.
Large vs small
John Lewis is a large, well established retailer and respected brand name, yet the digital transformation lessons outlined above apply to it just as much as they do for any other business. No longer can digital transformation be understood as something that only concerns either large multinationals or small, agile startups. Every organisation now has to contend with fundamentally different patterns of demand than they did just a few years ago.
‘Every business is now a digital business’ may be something of a cliché by this point, but it’s remarkably accurate, even for the smallest organisations. Independent traders and SMEs now collect vast amounts of data on every business process, and need a means of making sense of it to improve those processes – whether it’s customer engagement, streamlining administration or identifying new lines of business. In this regard, they’re no different from the largest multinationals. Again, while the responsibility for this change rests solely with the tech giants, businesses of any size shouldn’t take the wrong lesson. By doing everything possible to focus on the customer experience, firms like Airbnb and Amazon set a new standard. What they didn’t do is make every business that follows them attempt their own era-defining revolution.
Ultimately, there is a serious perception gap to be addressed. Given the pace of change in customer demand, there’s no hard and fast way of understanding digital transformation, and no general definition to work towards. Organisations looking to embark on their digital journey will find that digital transformation means something completely different for them than for the competition, and should act appropriately rather than trying to replicate the herd. Taxi firm Addison Lee provides a good example here; instead of aiming to match Uber’s business model, it focused on improving its own app experience, making it easier for customers to book and track cars. This led to a remarkable 40 per cent increase in revenue, and while this hasn’t turned the private hire industry on its head, it clearly shows that making smarter use of existing resources makes a huge difference from the customer’s perspective.
To be frank, there’s a reason that only a handful of firms are gaining plaudits for revolutionising their industries. For most, such objectives just aren’t practical or even necessary. Yet through a focus on the middle ground – making smarter use of data to transform certain process and services that really impact customer engagement – organisations will find that their digital transformation efforts are no less revolutionary.