In January 2020 digital transformation was considered a best practice, an ideal state of business. In March 2020 it became table-stakes. That whiplash is going to leave a mark. Within 1 quarter, we’ve seen an incredible shift across industries, bringing to light how fragile some of our current business strategies are in a connected, saturated marketplace. Whatever gaps we had, we’re now scrambling to deal with the fault lines that have appeared.
Industries are now divided between those who had invested in a scalable digital infrastructure enabling them to pivot quickly and those who can not. The reality is that technology, and how it’s used, is no longer a function of business, it’s a core value proposition. Failure to digitally transform is cited as the main reason over half of the Fortune 500 companies have disappeared since 2000.
Businesses, once dependent on the face to face interaction both internally and externally, are forced to reconcile the lack of infrastructure or process to support an online existence.
Seemingly untouchable staples in our community, such as grocery stores, now need to answer the question — what if people can’t shop in our stores? Meal delivery kits such as Hello Fresh are seeing record high share prices as a result of increased demand, while Instacart balanced a 218% increase in app downloads from February to Mid-March this year.
Financial services are now reckoning with the fact that fintech solutions provide a consistent touch to their clients in the midst of chaos, reaching places where legacy can’t. Wealthfront reports 68% higher account sign ups since the downturn started. Betterment is reporting a 25% quarterly increase. Moreover, when we look to the future, venture capital raises in fintech aren’t slowing down. Despite the global shut down, fintech is alive and well. A small nod to what’s in store for those who are paying close attention.
Healthcare services, which were shy about telehealth options in January, now are looking for connected solutions that close the gaps between humans and the care they need. And, since covid, nearly two thirds of Americans report being comfortable with receiving medical consultation via an app.
Restaurants, accustomed to wait times and parties of 4, are now faced with the prospect of transitioning to ghost restaurants — kitchens that offer only take-out orders. The challenge of creating efficiencies around delivery and partnerships with mobile app ordering are now top of mind for survival.
As the world is forced online, for both work and play, internet usage is up 70%. Consumption of competitors, new platforms, and new experiences is seeing an exponential increase. Whatever behaviors that were considered as adoption hurdles in January 2020 are now irrelevant as we’ve fast-tracked into evolutionary behavior changes of the monumental kind. And we aren’t looking back. In connected marketplaces, organizations that provide a streamlined experience, the ability to move between online and offline with ease, while delivering value to the market are the ones that will sustain through this season and the seasons to come.
For Executives, the proposition of digital transformation sounds great on paper. But in reality, 70% of digital transformation efforts fail. Of the $1.3 Trillion dollars spent in 2018 on digital transformation efforts, an estimated $900 billion went to waste on initiatives that never made it through the finish line. It seems almost disconnected that an initiative so mission critical to business strategy is almost impossible to implement well.
However, there are some hard earned lessons that one can take and implement into their digital transformation efforts. Consider these an order of operations in transformation efforts. While most organizations start somewhere mid-stream, there is power in walking before you run. What time you spend in applying principles 1 through 3, you make up for in a well articulated, clear roadmap direction. In this approach, the value isn’t only the successful transformation — it’s the process that is developed enabling your organization to transform, over and over again.
Lesson 1: Define your business strategy first.
In order to successfully innovate, you must evaluate and define a clear business strategy. It’s not enough to just build a product or introduce a new online touchpoint. Even if the technology is built exceptionally well, if it’s not aligned with your overall business strategy and purpose, it will fail to move the needle on your business goals. And if that’s the case, then what’s the point? Digitally mature organizations are 23% more profitable than their less mature peers. From a more holistic perspective, digital transformation and a focus on customer experience can generate a gain of 20-30% in customer satisfaction, coupled with an economic gain of 20-50%.
Your business strategy must evaluate your market, the competitors in the space, your target audience, the metrics that are most important. Creating a business case around the existence of the technology, defining how it serves your business goals, and what parts of your business this transformation extends, allows you to not only build toward a target, but works to align operations, talent, process, and affords the ability to extend into adjacencies that would have been second thoughts otherwise.
Lesson 2: The voice of your target audience is critical.
Innovating outside of a dialogue with your target audience is not only short-sighted, but will ultimately cost you far more in time and money than originally estimated. Creating digital experiences are only valuable if they are utilized. People don’t use technology for the hell of it. Even now, in this bull market for digital experiences, people use technology out of necessity. It must create value, deliver on an objective, or solve a unique problem. There are far too many options available. Your consumer doesn’t have to go looking for options, competing varieties are served up in their customized feeds around every corner.
Understanding your consumer’s needs, the points of friction with the available solutions in the market, expressed expectations, and their current process of solving the problem in question can provide your organization with clear ways to differentiate. This not only provides you with insight on what they constitute as valuable, but also what scale would look like in the market. What problems can you solve? What experiences can you deliver? How can you offer value? How can you establish a new way to connect with your target audience? What should that digital experience provide to the market? To your workforce? How do you measure its success?
As much as we think we know about our target audience or about our industries, we know less than what we think. Whether you’re building for an internal function or a consumer facing digital experience, talk to the people you want to serve. They will offer insight that is critical for the success of your transformation.
Lesson 3: Reassess your business model and operations.
Transforming customer experience, developing a new digital product, creating a new economic model — all of these innovations fundamentally change how you do business today. The introduction of digital solutions requires a new approach to operations, a new process and workflow. If successful, digital transformation introduces new opportunities in the market, new touch-points, and provides new efficiencies around workflows — however, the right people need to be in the right seats. A culture shift of this magnitude reinforces the need for clear communication from the executive branch.
More than that, aligning operations to support a revamped business model is work that pays its value in dividends. Taking the time to create this type of people-driven scaffolding positions your organization to capture adjacent opportunities and pivot quickly in the event of a fast-moving change (e.g., covid), as they surface — versus finding yourself in a competitive market playing catch up.
Lesson 4: Develop a clear roadmap forward and explore adjacencies.
A map to a destination provides a 10,000ft view of where you are now, where you are headed, and the multiple routes you can take to get you there. A digital transformation roadmap is no different. A clear roadmap, an order of operations around your transformation tasks provides your organization with the freedom and flexibility to explore doors that open along the way, without derailing the initiative altogether. It provides a clear yes/no approval system on feature sets, touchpoints, users needs, that either clearly perpetuates the aligned goals or it doesn’t.
Inevitably, digital transformation opens up new verticals and new needs for your business to meet in the market. It provides your brand with far more flexibility and more ways to engage. Because of this, adjacent markets that you may have never had access to emerge with clear paths forward. All of a sudden new ways to provide value just make sense. These adjacent opportunities, their timing, and their alignment with your goals become actionable when you have a roadmap in hand.
Lesson 5: Over-communicate the value proposition and the vision. (Here’s looking at you Executives)
Digital transformation, of any variety, doesn’t just offer a new point of interaction. It demands a shift of internal perspective. A hell-bent pursuit of value. A shift in operations and the willingness to rethink the way you’ve always done things. This type of shift requires we acknowledge ambiguity in the transformation process and offer our teams clarity every opportunity we get– or better yet, the room to be comfortable with the ambiguity and the freedom to challenge those traditional perspectives in the product creation process.
In fact, 94% of organizations with successful transformations report a visibly engaged CEO in their transformation efforts. A holistic transformation is 5.8 times more likely to succeed when CEOs communicate a high-level change story and 6.3 times more likely when those senior leaders align to the same vision. Your organization needs to hear from leadership on where the organization is headed and how it intends on getting there. The overarching vision, the purpose, the goals, and how you are measuring success. In reality, innovation falls apart at the point of implementation. Poor project coordination and communication causes over 80% of project failures.
I get it. There’s a lot of uncertainty that comes with digital transformation. A lot of uncomfortable moments where you and your product team come face to face with ambiguity. But, forging through this phase systematically and with eyes wide open is where we see greatness born. Far too often, organizations run headlong into transformation efforts with nothing but gut instinct and the loudest voice in the room driving. Unfortunately, it’s impossible to sustain that sort of innovation in the long-term.
Covid has presented a perfect storm for organizations across industries. This storm will pass. Standing on the other side will be those organizations that made hard decisions around their own evolution. Is your organization poised to do hard things? Are you willing to make the investment now, in order to extend your market reach in the future? I can tell you this with perfect certainty, the future waits for no one.