I have mulled about writing this post for a while, with multiple snippets noted all over my mobile and laptop, over the last many months. Considering that there is considerable drive now towards cultivating highly ‘Digital’ organizations post-Covid-19 crisis and (inter) national lockdowns, I have pushed myself to compile my thoughts on the said topic in a neat structure of sorts. I am hopeful this post will serve as a ready guideline of typical struggles organizations face in their Digital Transformation agenda and how to play those Elements better, in order make that Transformation initiative(s) succeed. These insights come from my experiences as a Management Consultant as well as an Industry insider with multiple organizations.
5-Steps of Business Transformation
Broadly speaking, all Business Transformation programs can be planned as per the 5D-Framework: Define à Determine à Design à Develop àDeploy. I am going to use the same framework – with an additional ‘Digital’ lens – to outline how to shape and execute the Digital Transformation agenda. [Kindly note that I have used the words ‘Product/Solution/Initiatives’ and ‘Customers/Users’ interchangeably throughout my narrative below, to better adapt to varied nature of Digital programs (internal-facing, customer-facing) undertaken by Organizations. I hope the nuances will be self-explanatory.]
On Digital Transformation
I will now outline why Digital Transformation initiatives typically struggle (from what I have seen), and how to make them successful (from what I have experienced).
| A | Define: Opportunities, Aspirations, Value Proposition |
| No | Why They Struggle | How to Succeed |
| 1 | CDO Agenda: · Most ‘forward looking’ organizations have distinct Chief Digital Officer (CDO) roles or CTO/CIOs who are shouldering an additional KRA of driving the organization’s digital agenda · This approach usually leads to a ‘series’ of digital initiatives – which are only complementary to existing ‘IT/technology’ initiatives - and which do not necessarily translate into distinct benefits realization | CEO Agenda: · Digital roadmap & benefits realization needs to be part of every CEOs KRA which goes beyond a series of exploratory initiatives and focuses on making changes at a ‘business-model’ level impacting every aspect of doing business – Sales, Operations, Marketing, Finance and even HR · If possible, build a benefits realization roadmap in sync with the digital roadmap which thereby acts not only as a business case enabler but also as a measure to track progress of transformation impact |
| 2 | Consulting-led Initial ‘Ideation’: · Organizations typically start their ‘4-week ideation project’ on a digital roadmap with consulting experts, who tend to bring experiences of what they already know from global references · This is fine if there isn’t enough digital-savvy internally – but know that it often lacks prioritization, capability assessment and execution plan specially aligned to your organizational reality | Self-Ideation, Seek Execution Support: · There’s a quote by TE Lawrence which says that ‘With an experience of thousands of years of fighting before us, there is no excuse, when fighting, of not fighting well’. Organizations would be better off doing an initial ‘ideation’ of their own using the same ‘global references’ used by consultants – contextual to their business objectives · Organizations can then onboard specialists known for digital conceptualization and execution skills – for a focused-pursuit of the contextual ‘impact opportunities’ |
| 3 | Business as Usual ‘Plus’ Budgets: · Since the digital initiatives are complementary in nature to existing technology initiatives, as we noted above, the budget allocation is of incremental ‘plus’ nature · These ‘plusses’ hamstring meaningful scope of work & development, which does not exhibit massive impact thereby further worsening budget allocations | Venture-fund ‘Investments’: · The budget allocation for digital transformation projects need to be structured in similar fashion as you would for a new business unit (which more or less happens regularly every year) · Better still, they can be deployed like VC-funds invest in a portfolio of companies – in which any single project gains can overcome all the losses of non-impactful ones · And yes, there needs to be an ongoing investment in Skills development & Tool subscriptions. Most companies underestimate how much their own employees can pull off through learning assignments, if they gave them access |
| 4 | Market Insights as Customer Insights: · Most organizations try and copy what leading market players have created, for their respective customers and extrapolate that your own customers will have same digital behaviours and expectations from your digital initiatives | KYC – Know your Customer: · Invest in understanding your customers with reference to their digital behaviours specific to their journeys & interactions across your customer value chain · Build a rich understanding of how your customers will access and use what you will create digitally – a sales process, a marketing communication, a home delivery, a NPS referral, a mode of payment and so on |
| 5 | Omnichannel/Phygital USP: · From my experience (and this may be a biased view in that sense), most organization’s digital aspirations are centred around omnichannel and phygital initiatives which intersect between physical and digital mediums · I appreciate that this intersection is a given, considering the physical mediums are already in place and organizations are now building digital on top of that · However, this approach restricts thinking on truly digital opportunities that may be out there, which in many use cases may completely eliminate the need of physical and create new impact | Build a Unique “Brand/Digital” USP: · Building from KYC above, a unique Brand/Digital USP needs to emerge from your digital transformation initiative · Why? If you do not articulate a genuine benefit for your customer to go digital with your business, there will always be a hurdle for them to do so · There’s a mindshare bias working in favour of a single USP in the digital landscape today – Ola for anytime taxis, Swiggy for convenient food options, Moneycontrol for stock market analysis and so on. This bias needs to be adhered to even in your digital proposition to your own customers, since they will expect that precision of proposition |
| B | Determine: Objectives, Scope of Work, Teams |
| No | Why They Struggle | How to Succeed |
| 1 | Tactical Initiatives Pursuit: · A consulting-led ideation list will straight talk about 25+ (say) ‘holistic opportunities’ (because anything less will not be looked favourably by your organization for the monies spent) · No, a consultant’s initiatives prioritization matrix will not be aligned with your real priorities. They are usually aligned to ‘market best practices’ | Outline New Way of Doing Business: · After an initial self-study and analysis, there can be an identification of 5 (say) ‘impact opportunities’ which is much better than a list of 25 items to chase · What are ‘impact opportunities’? These can defined as only those initiatives which create a new way of doing business and does not only address efficiencies in existing models |
| 2 | Inward-out Knowledge Repository: · Problem/Opportunity determination typically comes from within the organization – An in-efficient process, an outdated system, new business functionality, etc. that needs to be built afresh or updated · Counsel is sought from organization elders who will (by default) suggest that a solution already exists and there is no need to do anything new. A rag-tag solution will be conceptualized, using existing resources, and pursued with vigour, till it becomes insufficient again · At best, in the above exercise, industry benchmarks will be explored and multiple vendor interactions will be held to outline the best solution. Following which, organization will try building it all on their own from the multiple solutions they sourced from multiple vendors · Key reason for pursuing this approach is to limit the expenses of solution design and development to outside vendors | Outward-in Knowledge Labs: · First, recognize that as an organization you need to change your inputs in order to get better outputs. Using the same inputs, but expecting a different output does not help when ‘transformational’ outcomes are the plan. At best, they can help make incremental gains · Next, recognize that mature models exist now in the market, wherein Incubator Initiatives with Next-gen Start-Ups can be pursued that is win-win for both entities (HDFC & Kotak Banks work with 100s of fin-tech & consumer-tech start-ups to not only give them a test-bed for developing next-gen banking concepts, but also to deploy the successful ones for themselves right away) · The knowledge transfer in this case is a proactive outward-in flow in the organization, thereby raising the general ‘Digital Quotient’ of the teams who are aligned to these projects, who are then better equipped to conceptualize & develop the 2nd & 3rd wave of digital initiatives themselves – maybe with a exclusive start-up partner itself |
| 3 | Champions allocated from other Teams: · Once the above approach is approved, organization elders will typically nominate a champion from each functional team to work on the initiative and take it to deployment · This champion is usually one of the 2 extremes, depending on the elder’s interest in the same - Either he will really be the best person to do it but who will be forever crunched for time (since he has been nominated for many similar projects across the organization). Or, he will be the person with the most bandwidth but with little idea about what to do on the said Initiative · Functional Skills, Domain Knowledge and Interest/Intent are rarely evaluated for these individuals as it is just assumed that they will deliver their best, irrespective what project it is · A Team full of such champions will be ineffective to do what’s necessary, which will eventually validate the elder’s assessment that it does not work for us | Nurture an Agile “A-Team”: · For any project of ‘transformational’ nature, you need to build a multifunctional “A-Team” whose only KRA will be the success of the transformation agenda · This core ‘A-Team’ must be aligned with the CEO from Day One in terms of their Interest/Intent and the progress must be tracked on a regular basis · Functional Skills and Domain Knowledge have to be that of an ‘Expert’ level, considering the transformational nature of work which has to be delivered quickly · The CEO must help them navigate the organizational work practices, as they go along the journey · The A-Team on their part need to address the What-is-in-it-for-Me (WIFM) question of every other Functional Team/Individuals that they will work with towards the Transformation agenda · Without this organization-wide buy-in, the program will not even move into the Design phase (or even if it moves, it will be a poorly designed one, with lots of holes to plug later) |
| C | Design: Product/Solution, Methods, Tools |
| No | Why They Struggle | How to Succeed |
| 1 | Product Management for Digital: · Design phase usually is pursued with a traditional product management lens for a digital ‘project’ – an initial product wireframe (what is possible to make using existing tools available to the organization) serves as a template to start work and customer stories are ‘identified’ to match these designs · Iterations are repeated till a coherent narrative emerges for priority customer stories, with references to how they use an organization’s current offerings · These priority customer stories (read: features/functionality) form the baseline product that gets built · Product Owner owns the delivery of the product and its future builds | “Digital” Product Management · Design phase for a “Digital-first” product starts with unique understanding customer behaviours & market needs · These insights lead to identification of unique customer stories that need to be designed for the organization’s digital offering with a long-term release plan, starting with MVP · Product Manager not only owns the vision and roadmap of the product but also its business KPIs like, Customer Acquisitions, Campaigns and ROI · If I were to simplify the difference between the 2 roles, a Product Owner is a Techno-Functional Head of a Digital ‘Project’ whereas a Product Manager is a Head of the Digital ‘Product’ |
| 2 | Technology + Mobile Ecosystems · Business & Solution Architecture is founded on the existing Technology infrastructure, with an add-on (read: force-fit) Mobility Solutions layer · This approach leads to suboptimal process and system flows, which eventually adds friction throughout the value chain rather than smoothen them out, which was the key objective of a digital initiative in the first place | Mobile-first, Mobile-only Ecosystems: · All business use cases needs to be conceptualized as Mobile-first to begin with, using Mobile-only Ecosystems – Apps for every Function, APIs Library, Cloud Systems, User Generated Content, Notifications, Click/Swipe Confirmations, OTP Validations and so on · Only when these use cases can be better served by existing Systems should they be integrated with the Mobile Ecosystem |
| 3 | Pilots & BOND Testing: · The days of creating 100% bug-free solutions, after tens of days of testing and review won’t fly in the digital era, where solutions & concepts in the market emerge faster than compilation of the BOND test reports shared by dedicated testing teams for review · Somehow organizations tend to push pilot testing for prolonged periods of time, and obsess over creating a perfect product or solution, before final development sign-off · Post this design phase & right at the start of the development phase, there’s usually another speed-breaker in the form of final ‘IT Budget’ approval – for the development efforts and infrastructure requirements, which tends to go back to business for final ‘business requirement’ approval. Possibly, months are lost working in these legacy ways | MVP Designs & CUG Testing: · Chase & design Minimum Viable Product (MVP) and push for a holistic (Closed User Group) CUG rollout, similar maybe to how FMCG companies did their sampling studies for new product launches – to continue improving Product design (applicable even to Solution designs) · Technically speaking, you can literally have a daily release of an iterated product which can be upgraded by users with a single swipe on the mobile. Do it. Release your MVP to as many users as you possibly can. Product & User insights generated from this Alpha/Beta release will be more valuable than any BOND testing reports · Kindly provide a CEO-level approval to the Product Manager to manage the MVP Design & Development phase, with broad P&L Accountability · Consider it as an investment in a ‘start-up’ managed by your organization and structure it as ‘corporate entrepreneurship’ on an ongoing basis |
| 4 | Dependency on Consultants: · Designing a digital transformation blueprint is probably the most important step of the whole exercise, where dependency on consultants can be tricky · The blueprint ownership needs to be with the organization, such that the ‘memory of the entire initiative’ stays within the company and does not transfer out if a consultant moves out someday · There’s a reason why Apple phones are designed in Cupertino, but made in China | In-house Digitally-savvy Teams: · Organizations must invest in the digital designers of tomorrow – UIUX Experts, Product Managers, Digital Marketers, Affiliate Relationship Managers, API Library Manager, Content Creators, Social Media Influencers, Google Analytics and such - besides the Technology team who is well versed with consumer technologies as well as they are with enterprise technologies · This way the memory of an organization stays within the company and lessons are learnt well and fast as a team |
| D | Develop: Working Style, Culture, Customer Connect |
| No | Why They Struggle | How to Succeed |
| 1 | Drown in Documentation: · Old-school organizations focus on documenting everything – minutes of meeting, ideas, concepts, scope of work, illustrations, process documents, solution documents, architecture diagrams, test results, report formats, approval notes of all kinds, feedbacks, change requests, etc. Even App UI files are in vogue – hundreds (if not thousands) of screens created on XD files – with 5 options – for visual feel before final approval · Fact is, only 10% (random statistic, but you get the idea) of all of it is useful towards final product/solution development. Rest is just a waste of everyone’s time & effort, and more importantly, focus & speed which are so imperative in the digital era | Document Only What is Valuable: · A digital transformation project will iterate daily, in tens of ways…in everything I noted above: Merchandising, Customer Journeys, Marketing, Payment Modes, Etc. · Rather than documenting each and every iteration and noting what doesn’t work, focus only on the last combination that works and document it precisely · Recall that your Product/Solution has started from a MVP mode and is planned for iterative upgrades on an ongoing basis. What you document today, will be outdated tomorrow · Document only what works and what is valuable, to serve as a foundation of improvements for the next upgrade. Eliminate everything else |
| 2 | Non-Contextual Global Use Cases: · A consulting-led digital transformation exercise will have started with global references and hence pursuit of global use cases will be a compelling move. And, most of the times this is indeed a useful and convenient approach to pursue – what’s worked globally can even work for us faster · However, organizations must properly contextualize for the consumer and business ecosystems they work in. In omnichannel retail pursuit, I am certain every Indian retailer has provided for BOPIS (Buy Online, Pick In-Store) option to customers, without really studying whether Indian customers aspire for it in the first place · And, somehow nobody is chasing digital warranty management which is a norm worldwide and – in my personal opinion – will be a massive differentiator for organizations who offer it | Develop Local Use Cases: · Linked to knowing your customer, digitalize Local Use Cases which are relevant and contextual for your customers – and then align your entire organization’s efforts towards achieving that end-state · Flipkart’s COD (Cash on Delivery), McDonalds’ India Home Delivery (which was a global first for the chain), HUL’s Gang of Girls Community, Passport Seva Kendras, Etc. are all digital initiatives which spoke to its true Indian customer and succeeded in the process |
| 3 | Pursuit of Incremental Changes: · Most use cases that will be developed above, will chase incremental changes – in pursuit of efficiency (how well something is done) · Few truly transformational use cases will be developed which will improve effectiveness (how useful something is) | Develop a Digital Way of Doing Things: · Focus on digitalization rather than digitization. Digitization is a systemic process of completing an analog activity using digital tools whereas Digitalization means restructuring intuitively the way an activity is conducted using a host of digital enablers · This approach will even address ‘what will not change scenarios (credit to Jeff Bezos)’ whereby you focus on developing a digital way of doing things for activities that will exist for a long time E.g. making frictionless payments everytime |
| 4 | CSAT (Customer Satisfaction Score): · Once they start, these initiatives are Operations-focused and Work-flow focused – with emphasis on tracking how has the average work day changed · And yes, measuring if the customer is satisfied with all the initiatives we are doing for him in an annual CSAT measuring exercise, outsourced to an external agency (more often than not) | NPS (Net Promoter Score): · Measuring the impact of Digital Transformation initiatives is a relentless pursuit and possibly tracked through the end-to-end customer journeys · It is measured at a transaction-level, if not at a click-level, and emphasis of communication is on saying Thanks to the customer for his patronage · And, further support is sought, to promote the organization to his friends and becoming a brand promoter for us |
| E | Deploy: Go-to-Market, Distribute, Revise |
| No | Why They Struggle | How to Succeed |
| 1 | Business Case for GTM Rollout: · Believe it or not, but many organizations have another layer of approvals after the product/solution is ready – to decide whether they really want to go-live with what they have created · Since there will be additional investments in rolling out the initiative, there’s a ‘business case exercise’ where the product owner (and others) have to prove the rationale of rolling out this initiative all over again – with one additional check - Can’t Fail scenario · The Can’t Fail scenario requires the team to tediously explain again – with a consulting type of detailed study – on why they think the initiative will be a raging success. To recall a quote from Marc Randolph’s book on Netflix – Nobody.Knows.Anything, organizations will still spend time on this activity · Such exercises go on for a long time, often blunting the innovative ‘Digital’ edge (while similar launches happen in the market), through sheer lack of speed to go live | Fail Fast Approach for Rollout: · Once MVP has been validated and there’s a roadmap of releases lined up, it is in the organization’s interest to go-live as soon as possible – in order to seek quick clarity on further capital allocation to the said digital transformation agenda · I think there is an Anand Mahindra quote which says that what you lose in terms of quality, you gain in terms of speed. It could not have been truer for the digital era we live in. The feedback – positive or negative – is so quick that there is no need for a deliberation meeting to decide whether it is working out or not – all the digital markers will tell you · There’s need to reinforce what’s working and there’s a more critical need to cut out what isn’t working, in your next releases – and refresh your Digital agenda · Onwards and upwards, if things are going well. Fail fast, if things aren’t going well. The idea is knowing quickly which option to choose |
| 2 | Use Traditional Distribution Models: · Once the product/solution is ready, organizations tend to pursue traditional distribution models which are essentially their existing sales ‘channels’ for their Go-to-Market push · These customer acquisition channels include their stores, dealer outlets, sales-force, website and social pages – essentially an aggressive chase across all available routes to them · Organizations chase acquisition and usage, all in the same fashion, channel by channel · This approach is not really ‘optimized’ (across marketing, service, process) for a customer-channel fit and tends to fall short on all customer acquisition & usage metrics, across all channels | Use Hybrid Distribution Models: · A sales channel is not a distribution route in itself. An optimized distribution route is a function of the product/solution that has been built and many channels where its customers are present · A hybrid distribution model therefore needs to be multilayered: At layer 1, it needs to address actual delivery of the product/solution (which may happen in one channel). At layer 2, it needs to address actual usage behaviour by customer (which may happen in another channel altogether) · A combination of these 2 layer characteristics will actually indicate multiple segments of your customers – who then need to be invited for acquisition and usage – with contextual marketing, services & processes · Organizations will then actually have a grid of multiple customer-channel fit approaches, which is further optimized for acquisition & usage metrics |
| 3 | Focus on Sales & Cost Optimization: · The moment a product/solution is live, there’s detailed scrutiny on the intended outcomes – Increasing Sales and/or Optimization of Costs · It is the right thing to do, no doubt, but there’s a need to look at it with a digital era lens (gains could be really slow to begin with and then suddenly turning exponential) and not a traditional distribution lens (linear growth – more hubs it reaches, the steadier the gains) · There’s an urgency to define the initiative as a success or a failure, basis the linear metrics collected in the first few days of launch and too often changes are made hastily defeating the chance of an exponential growth | Additional Focus on Network Effects: · Apart from focus on Sales and Efficiency metrics (but for a longish period rather than a quarter), it is imperative to focus on growth phenomena of the digital era like, Network Effects (I’ll just stick to one for now) · Network Effects: Help reduce friction (in adoption, since recommendation comes from early users), Needs low commitment from the organization (since advocates will do that job for you), Compels quick product/solution improvements (which further impacts NPS, say), Identifies new growth channels (traffic sources, adjacencies, complements), and Recognizes large distribution nodes (markets, segments) · Network Effects: Even help you track the all important Retention objective – metrics of Old cohorts vs. New cohorts which readily give you insights into priority features/functionality that should be pursued in your next release · It takes some time for Network Effects (and others like Flywheel Effects) of digital initiatives to shape up and throw up significant insights on your efforts. It is imperative to invest in this time today |
| 4 | Large Numbers Obsession: · Again, a legacy of traditional business lens, there’s obsession in ensuring mass adoption of the initiative – downloads, installations and logins · Any numbers below 10+ million (India-context) transactions will be considered as a failure and questions will arise about the feasibility of continuing the initiative and efforts (read: budgets) · More promising initiatives have been killed by organizations, courtesy this pursuit, as compared to actual rejection by users. An exaggeration, of course, but the sentiment does exist | Quality Engagement Obsession: · Organizations are better off obsessing over ‘just’ 1 million users (say) to begin with but with high engagement levels (DAU, MAU, NPS, Reviews & Ratings). These users should be the focus-segments who can possibly influence others and help with organic growth · Content Contributions, Likes/Shares, Community Posts, Hashtags, Referrals, LTV, Retention, Churn, Etc. – these are the true quality metrics that organizations should be caring about |
In Conclusion
While this post has taken me a few days to write, it really is a summary of my observations and musings over the last few years. I hope it was an insightful read and serves its purpose of being a credible guideline on How to Influence Digital Transformation and Win as an Organization… I conclude now with a Marketoonist special.
