05 May Digital Transformation Advisory: Understanding Transformation
Demand for digital transformation advisory has never been higher. More and more organisations are becoming truly digital, leaving their competitors floundering. Its popularity is illustrated here using Google Trends to display volume of searches for that term (click for larger image):
Rise and Rise of Digital Transformation Advisory
Web Inclusion offers a consultation service for organisations who are exploring the possibilities, or who have already taken the first step, in competing and operating more efficiently by digitising their business.
What do we mean, ‘Digitising’?
It is not enough for established organisations to adopt a digital strategy. Instead they have to digitise their business strategy. People used to say they were ‘going digital’ when their business started taking online payments, or launched an app for their customers. But these were mere bolt-ons to an existing business operation. They were vanity steps, reactive adjustments in response to competitive forces. Little or nothing was done to change the actual mindset of the organisation towards a digital approach.
Meanwhile, out of the organisation’s control, other digital activities were emerging. Social media, for example, which suddenly put corporate messaging in the hands of employees, not just management. Now anyone who can do a hashtag, can release newsworthy copy, and generate a following, for their company. No longer is projecting a company’s brand and messaging sacrosanct for board members only: Anyone with a smart phone can do it.
Only recently have we seen a significant proportion of directors whose professional lives started after the begining of the digital age. Growing up with social media, there are characteristics these directors bring to a company’s culture which would have never been understood before. For example, they can see the significance of encouraging staff to live and breath the brand: If they’re going to spout about what company they work for, make sure only good things are said. More than that, use social media as an opportunity. One by which the brand is heralded by its employees, celebrated with just the right tone and sentiment to portray the character of the organisation as a whole.
How can you control what your employees write about your company in Social Media? – we have some great examples and ideas for that very purpose, and with good digital transformation advisory, this can be achieved. But first, lets get to the two key areas which will help us to measure how well your company is competing along its road to digital transformation.
What Metrics to use for Measuring Digital Transformation
The fundamentals which organisations have used in the past for competitive edge – such as efficient distribution, strength of brand, and economies of scale – are no longer of such importance in the digital age. Now special attention must be paid to the dynamics of the market you operate in, and the speed required to remain competitive. And you must watch these two metrics whilst maintaining a culture of embraced responsibility because all staff are now potentially customer-facing.
With dynamics and speed in mind, we need to identify the metrics that will measure your company’s success on a ‘transformation dashboard’. This output helps us to monitor and maximise your effectiveness in digital. It is based on a core principal which is now clear: Digitising a business strategy means rebuilding the three key activities of the organisation: Operations, Customer and Finance. With each in mind, we can then place metrics and monitor their progress to assess how well your company is doing using a central dashboard.
The speed at which your company can release its products to market is key to its competitive performance. Digital provides you with numerous new methods, many never even thought of before, by which you can improve rapidity from concept to purchase. A valuable exercise is to research and identify some of these methods for individual processes in the product life cycle. Next, using agile project groups in close consultation with relevant staff, work on a shortlist of chosen processes to test. This will give a unique set of metrics showing the dynamics and speed of that process in selected digital conditions. But don’t stop at just processes in the product life-cycle for leaner results. Alongside speed-to-market, the digital methods you introduce can also make employees more productive and maximise asset utilisation. There are metrics here which should be measured too.
As we venture further into the Digital Age, we are seeing a different sort of interaction between customers and their chosen products. No longer is it a simple case of buyer and bought, where the customer pays the agreed price to own the product and walks away. Now we can see customers building a real relationship with their chosen brands. But it is one in which they expect to be in total control. The more control they can experience, the more likely they are to repeat-purchase. And what does ‘control’ mean in the digital age? – It will vary according to the product, but here are some of the metrics we might use: simplicity of transaction, speed of delivery, pre-sales enquiry time, post-sales enquiry subject (advice vs complaint)… and so on.
To remain competitive in the digital age, you must re-engineer how your business creates value for your customers. It is important to identify those points of value and put in place a set of metrics to measure progress and outcomes. These should measure customer interaction at every granular step of their journey through the organisation’s sales funnel.
By our experience, the impact of digital on your organisation’s finance is best shown by metrics which can be monitored on a daily or weekly basis. These are more likely to indicate whether efforts are heading in the right direction.
When it comes to any form of change, it is in the financial area where care and attention to detail should to be at its most scrupulous. Sometimes we must overlap new processes with old. When this happens, you have to do both for a time until the new process can justify its place in the mindset of employees. Such an exercise can cause more work in the short-term, but is likely to free up staff for useful tasks, and more responsibility, afterwards – as long as the new process is received well.
The metrics used for measuring digital adoption in Finance will be dictated by those in Operations and Customer areas of the business. That’s because we will look for financial measures which provide incentives for the entire enterprise to embrace ongoing digital change. For example, one retail client is measuring gross margin by category, rather than by channel. In doing it this way, it is able to track how well the organisation is working together to drive sales: That financial data complements operational metrics for channel integration, and customer-focused KPIs measuring share of loyalty and cross-channel satisfaction.
Who make the Best Transformation Leaders?
One of the reasons many businesses struggle with successful transformation is because the architects of it are themselves laden with the decisions and culture of the past. Sometimes it is difficult for an organisation to pass the reins of leadership in this area. But as McKinsey has advised, among others, getting external help is the only way transformation can be achieved:- “CTOs should be independent (certainly not associated with the decisions of the past), have experience of similar turbulent corporate environments in their earlier careers, and enjoy support from the board, the CEO, and top management.” – The Role of the Chief Transformation Officer. Nov ’16.
The organisation has a choice therefore: To appoint its own Chief Transformation Officer – an experienced change leader and digital evangelist – from outside the organisation; or to hire an external Transformation Consultant at board level, to come in and guide the company through its necessary transition.
The decision it makes will depend on the nature, the size and the shape of the organisation itself at the time. Most will know instinctively which option is best for them, but there are some for whom either might work. One thing is clear however: No organisation can afford to go with neither.
Why Do You Need Digital Transformation Advisory Now?
There is more than enough evidence: Companies which embrace digital compete better in today’s world. They can stand up and shield themselves from disruption: Disruption occurs when there is a shift of market-share in favour of more nimble players unhindered by the ‘old ways’ of doing things. And it seems there is no industry which can claim to be immune from disruption. Digital Transformation Advisory is a consideration for every business in some way or other, and the next two years will see those who adjust, winning, and those who don’t, losing. It really is as simple as that.
For a free initial consultation about digital transformation, and to learn how it could help the future for your organisation, get in touch: