March 11th, 2019
5 key Digital Transformation Challenges
29 Nov 2018 Dominic
This year has been a tough one for retail as we all know with high street challenge on footfall, revenue growth, challenging business models and poor growth. All in all, it’s an Annus Horribilus for retail on the high street.
This got me thinking about change in business and in particular business (and staff) aptitude for change and to embrace change in order to move with the times and work to deliver more consumer centric, data led customer experiences.
It only takes a quick look around various industries to see that the companies that are delivering a strong, digitally-centric value proposition make up a substantial portion of the growth whilst many large companies are not comfortable with making the difficult and rapid hard left required to align themselves with how the world has changed.
Moving forward in retail, will it be the innovators that truly succeed and deliver a customer centric experience which deliver value, satisfaction and a sound business model for growth? Are the older companies who have struggled with change (Debenhams, House of Fraser etc) outdated and no longer relevant? Can they change is the question – can they change their business in an agile way into a more forward thinking and relevant customer experience?
Having worked in companies where online sales grew from 10% to 60% of the business turnover, I have experienced some major challenges to overcome in transforming to a digital focused business.
These are (in my mind) the top 5 challenges
1 Organizational resistance to change
The main challenge I have seen in any business which is going through that to a more digitally focused / transformed culture is the resistance to change within the organization. Some people just do not want to go through that change or get on board with what is needed and why.
The digital world as we know is transforming at such a rate that this also becomes the secondary challenge here – whatever you are trying to change could easily then be out of date after 18 months – meaning it is even more necessary to have a culture which will embrace digital transformation.
Digital transformation, by its very nature, upsets a lot of apple carts. However the truth is that in times of change, not changing is far more risky than taking the leap. It just doesn’t always feel that way.
In my experience, it can be difficult getting some Board buy in for digital projects due to lack of understanding, too many people being involved, not enough strong leadership or just apathy to change. In addition, an initial target may be changed further on down the line to a more diluted version of it’s former self or simply to not threaten other parts of the business (in particular other revenue driven channels) as they may cannibalize revenue (for further information have a read at this background to Kodak..)
2 Lack of a clear vision for a digital customer journey
A clear vision is needed company wide for a successful digital transformation – not only amongst the digital teams but everyone. The whole business needs to be able to see the vision and understand how you will get there. Objectives need to be set and these need to be realistic and deliverable against the initial vision.
Companies which don’t succeed you will often find have not planned this clear vision – without which you are setting up for a failure. Would you jump in the car and start driving without a destination? These companies have failed to embrace digital transformation.
To define the vision required, companies need to look at 4 things:
- Assets – what assets do you have eg customers, IP, brand etc and map out where your company is just now – the good and the bad
- Market – study your market thoroughly and apply the above to the competition. How are they meeting your customer needs in ways you do not?
- Technology – what technology trends are current and upcoming which will benefit your market? How does the shift in consumer behaviour influence your market?
- Processes – how are you going to compile the ideas needed to ascertain if they are relevant to your market? Who are you going to involve to create the business hypothesis needed and who / how are these going to be vetted? These new ideas can then be aligned to the vision and tested on current customers.
3 Poor data collection and management
Data is key for any transformation and management of that data should be key in any organization. A lot of companies still have a siloed approach to data collection and storage and this will create challenges in terms of understanding customer behaviour and how you can use this data to inform strategic decisions for your digital transformation.
Other companies may have various siloed data stores with useful information re behaviour but no real way to pull it together. To use this data, you should look at the key attributes of your customers which would enable you to inform your strategy. How can you effectively gather and store that data where it can be used effectively (I have used OMETRIA before and is a very good starting point).
Try and keep it simple and build on this for a more effective approach to data collection and management.
4 Inflexability of technology and roadmaps
Digital change and transformation needs continual focus on development and applying change to business processes to improve key metrics. To do this, businesses need to have a robust, committed and agile approach to development and releases.
“Test and Learn” approaches are key to ensure the best methods ate utilised .. but to do this, companies need to accept failure. In my experience, a monthly test and learn approach has worked best with small (3 or 4) project / releases managed through to delivery.
Agile processes and technologies support even more frequent release schedules but even today I am still surprised at the number of companies who plan for growth during budget season but with no commitment to dev roadmaps or releases.
This approach to greater flexibility should also be reflected in company wide approach to data usage and greater flexibility in developing customer relationships. Companies trying to build flexible and elegant digital experiences on top of out-dated technology stacks are tilting at windmills.
You don’t necessarily have to discard the mainframe, but modern enterprises must make their data read/write accessible via robust and secure APIs, and provide access to their business logic in a way that’s independent of legacy data.
5 Legacy model of inflexibility
Some of the biggest challenges for businesses come from inflexibility in sytems and lack of investment in systems over the years resulting in a very complicated data repository which is difficult to make any sense of.
In addition these legacy issues can also be seen in the rigid “one size fits all” approach to product development. Consider Netflix – who shifted from DVDs to streaming. Or UBER – world’s largest car service without buying any cars. These are companies who understood they had to move with the market and embrace change.
Changes to business models through digital transformation often result in new revenue streams eg sell as a subscription what used to be “a la carte,” monetize via advertising things that used to be paid for in other ways, and re-think how they derive revenue from the value that they create.
Driving this kind of change will result in some failures – but only with a willing attitude to embrace this change will the new organisations drive success.
Tags: business change
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