3 Key Takeaways on Tackling Digital Transformation
In the fast-moving world of digital transformation, watching and waiting may allow first-movers to widen their lead—leaving your company lagging behind. Now more than ever, it’s important to stop talking and start doing. In an evolving digital world, knowing what to do can be daunting. Below are three tips to help leaders distill ideas from the broad digital landscape into a structured, actionable strategy tailored to their businesses.
1. Expand Your Competitive Landscape
Innovation, especially digital innovation, often occurs outside of the ‘usual suspects’ that you’ve competed against for years. Companies must broaden their perspective when benchmarking to include “2nd parties” (customers, partners, suppliers), leaders in adjacent markets, and digital leaders from multiple industries.
One way we help clients navigate this process is through our Digital Maturity Index (DMI)™. This proprietary benchmarking tool looks at capabilities across the value chain to identify gaps and opportunities, which helps clients assess where digitization will bring the most value. The result is an integrated business strategy that properly aligns digital to relevant business initiatives.
Using the DMI™, we helped a reinsurance company clarify its vision for digital transformation by looking at examples of organizations that had successfully monetized their data assets to maintain market leadership. Not surprisingly, the two most resonant insights came from outside their industry. First, in examining adjacent markets, the company learned that combining existing digital assets with predictive analytics would enable them to deliver differentiated, custom insights, and therefore more value, to their clients. Second, by studying a leading software company that had also reoriented from products to services, this client learned how they could acquire transformative capabilities through acquisition and apply best practices to realign culture.
2. Assess Your Maturity Holistically
Identifying digital leaders defines what digital maturity means for you. The next step is to assess your company’s strengths and gaps in achieving that level of maturity. From our studies of digital leaders, we’ve come to understand that regardless of where they started, these leaders have digitized their entire value chain. That’s why it’s essential to take a holistic view of digital. If predictive analytics determined that customers bought red shoes when it rains, for example, you could not activate this insight without a supply chain to deliver on it. Some of your digital strategies may be actionable now, while others may require more time, as they demand a long-term commitment to building capabilities and changing culture. Taking a holistic view also allows you to identify the most critical capability gaps to address first.
For example, when CDO/ Chief Marketing Officer Julie Bornstein joined cosmetics retailer Sephora in 2007, she immediately moved development of its digital infrastructure in-house. She then aligned digital and traditional marketing teams via incentives and organizational partnerships. “I recognized that we needed a stronger, more flexible foundation in order to drive digital into the future,” she told Harvard Business Review. The company also invested in a robust customer relationship management (CRM) system, allowing teams to better understand and respond to customer needs. Its investments have paid off with increased market share, revenues, and profits across all countries.
3. Define How Digital Can Help You Do What You Do Best
Leaders also need to be careful not to allow digital to divert focus from their existing business. Improving efficiency/productivity is often the “low hanging fruit” that enables a first foray into digital. For example, the U.S. energy industry has embraced artificial intelligence, automation, and other technologies to improve productivity and output. Large oil companies and smaller shale producers, including Chevron Corp., Devon Energy Corp., Baker Hughes and EOG Resources Inc. are recruiting digital talent to help drive more efficient operations. For many of our oil and gas clients, the greatest returns come from centralizing and organizing data into real-time dashboards, providing everyone in the field with access to the data they need to make decisions.
Digital can also help unlock and scale pockets of capability in your company. In our work with a leading wealth management firm, we helped redefine its B2B customer journey. Our analysis emphasized the need to treat B2B clients more like B2C customers and focus on forging a more personalized experience that creates value in every interaction. We discovered that the system for executing this new process already existed in a different area of the company and brought these groups together in new ways to drive institutional client experience improvements.
Winning companies systematically bring the outside in. They widen their apertures by studying relevant digital leaders outside their industries. Additionally, they take a horizontal view of digital internally, understanding their strengths and gaps compared to those digital leaders. Finally, they stay true to their identity, building capabilities by starting with a focus on what they do best.
We’d love to hear your thoughts and comments. If you’re interested to learn more about our DMI™, we’d love to connect.
Deb Henretta is Partner at G100 Companies and spearheads SSA & Company’s Digital Transformation practice.