FAILING DIGITAL TRANSFORMATIONS

The fact of the matter, after talking to many CEOs of different sized companies, is that a lot of the Digital Transformation projects currently underway are failing. And some even big time. But Marina Specht has her own take on that: “Let me go into why so many Transformations are failing. I think there are a number of reasons, but in my opinion the main one is that often companies believe that digital transformation is about technology. And that the key thing is to make the right technology decisions. What happens is that companies get a little bit blinded, I would say, by the gee-whiz of Cognitive Computing, AI, Robotics, RPA, and so on. There is such an overwhelming amount of new technology out there, that is very easy to fall in love with it”.

“And the main issue here, in the companies that are succeeding, is that they are doing exactly the opposite. They don’t start with the technology. They start with the people. And when I mean people, I am saying ’customers’ or ’consumers’. First of all, it’s important to try and gain a deeper understanding of what is frustrating or wrong or a pain point in the customer experience. And then, secondly, it’s crucial to focus on their own internal people. What are the changes that I as a company am going to have to make to empower people to actually succeed in this proposed digital transformation? What are the people that I have in my organization that I can leverage? For companies that do this, there are many interesting things happening in the employee space. So I think that if companies fail, a lot of times it’s because of a lack of focus on people first”.

ORGANIZATIONAL COMPLEXITY IS A PROBLEM

The complexity of today’s organizations and the variety of tasks they have to accomplish is enourmous. And then there is the relationship between these tasks, which even complicates things further, as well as the constant change of processes and systems in modern companies.

But that kind of scenario isn’t everything, as Ms. Specht points out: “Sometimes leaders don’t get what the problem at hand is, and therefore they underestimate the complexity of this ’organizational entanglement’ as we call it. Things are often way too complex, because companies lack simplification. The important thing is to set specific objectives. If you embark in three year long projects, by the time you have finished them, the technology has become outdated.”

If Digital Transformations fail, it’s because companies focus on technology first, not people

THE PATH TO TRANSFORMATIONAL SUCCESS

Anyway, among all companies that are applying a Digital Transformation to their corporation there surely have to be companies that are doing the right things. This means there has to be a set of actions the rest can apply or pitfalls they can avoid. “Yes”, says Marina Specht, “the first thing is that when they talk about transformation, they don’t talk about technology. Technology is a means to and end. But what they have is a clear vision of what their customers expect from them. And that is the real starting point for everyone in my opinion. Today, customers expect that every experience is like an Amazon or an Uber experience. And the same is applicable to B2B, not only B2C. So they always expect companies to behave as ’Best in Class’”.

Specht continues: “Let me give you an example: Walmart approached RIGA (part of IPG) and asked them to make their commerce as powerful as Amazon’s. We, at IPG, believe that every transformation starts with the right question. If you’re not able to ask the right question, you will never find the right answer. And Walmart’s right question was ’How can we compete with Amazon?’, not ’How can we BE Amazon?’. Summarizing everything a lot, what RIGA did was to analyze the customer journey, locate the pain-points and start about 30 Transformation Projects to address the issues”.

5 DIMENSIONS TO ACCELERATE YOUR DIGITAL TRANSFORMATION

After analyzing a couple of companies, for sure there must be a, let’s say, “recurring theme” to them. Or, to say it another way, some topics or problems common to them, even if they are from disparate sectors. Isn’t that so? Marina Specht concurs: “After analyzing Walmart, Nike, BASF, and others, I arrived to the conclusion that there are like 5 dimensions to accelerate your Digital Transformation (which I will discuss at my Keynote at DES). These 5 dimensions are:

• Digital Leadership, culture and talent.
• Customer and employee experience.
• Operations/Process automation and optimization.
• Technology, Data and Innovation.
• New Business Models and Connected Ecosystems.

This first point, by the way, is hugely important. One of the reasons why Digital Transformations are sometimes unclear or lack some kind of specific definition is that companies don’t make clear statements of what the new Business Model they want is going to be. Nike, for example, is really clear about becoming a B2C Company. They still are going to sell shoes in stores, but they are transforming. For example, they have been able to cut their media spent in a big way, because they have created this ecosystem of direct connections to people”.

If you’re not able to ask the right question, you are never going to find the right answer for your Digital Transformation Process

THE ROLE OF MARKETING IN DIGITAL TRANSFORMATIONS

Usually, the first thought, when someone talks about Digital Transformation, goes to the people in IT and in management. But a successful transformation can only happen if everybody is onboard, especially the marketing people. Marina Specht, coming from the Marketing side herself, has a similar opinion: “I think the Marketing people are key. As we all know, the #1 objective of the CEOs around the world is growth. But in order to allow for growth, you have to transform the experiences, the products and the services. And the people that bring the deep consumer understanding to the table (that we’ve mentioned before) are, in a great degree, marketing people. So CEOs are now making CMOs co-responsible for the transformation programs. And, as a result, these CMOs are shifting their focus a little away from ‘brand’ and more to ‘customer experience’. That’s what is happening right now”.

She continues: “In fact, over one third of the investments in technology, are driven by CMOs, when it used to be only CIOs. Technology, by the way, is becoming the biggest expense or investment in a CMO’s budget. And this is an interesting challenge for some CMOs, that come from a more traditional approach to marketing, because they now have to drive these kind of transformations”.

So, as in all changes, the more traditional side of a company role is getting sidetracked by these new evolutions of their workplace and demands.  And this could be one explanation of why so many Digital Transformations are failing, due to the inability of the company, or its key people, to adapt to the new demands. The thing is, is this an endemic problem or just a short-term circumstance? Ms. Specht has an answer for that: “Of course, some of those people are having a hard time to jump on the bandwagon, to reinvent themselves. So it is fair to say that it is a very big challenge. But the CMOs are certainly trying and they will continue to play a big role in all of this”.

CHANGES IN CONSUMER BEHAVIOUR

The way we consume goods and services nowadays has nothing to do with what we did just a decade ago. The way we shop, or travel or interact with consumer goods is completely different now. And when someone invents a new, more comfortable way of doing things, we get accustomed very easily to it, and expect the same from the rest of brands. Where do you think this leads in the near and medium term? “I think that consumers are a bit overwhelmed and a bit exhausted by the aggressiveness at which brands and technologies come at them 24/7. I would like to talk about three trends that I see happening”:

The first one is what we call ‘digital dieting’. We are beginning to see a serious backlash from consumers that are saying ‘We don’t want to be shouted at. By any brand. You have enough data now, to whisper to us, not shout.’ So this 24/7 on the screen is having an impact on our lives, and we are seeing that people are wanting less. A kind of ‘digital detox’. And that has consequences for brands, which have to be quieter.

Another one is ‘data minimalism’. One year into GDPR, we think it was a good thing. Many of our clients lost a substantial part of their customer data, but on the other hand, they cleaned their data up. What users want, is that companies come back with a relevant experience. Nobody is willing to answer a list of 25 questions anymore. So companies have to be more precise.

Finally, the third trend for me is that people’s expectations are now to receive meaningful personalization.

All of this is because consumers think that if they can have this experience at Amazon or other places, this is the new normal. And the rest simply have to catch up.