Thanks to Andy Green for his contribution to this post.
Perhaps the hottest topic currently in the industry, digital transformation is on everyone's lips these days. Driven by the digitisation of consumer behaviours, from shopping to entertainment to management of their lives, digital transformation has become an imperative for virtually every business. And with $1.97 trillion forecasted to be spent on some facet of digital transformation in 2022, there are a lot of technology vendors, consultancies, agencies and more pushing hard to take a slice of all this action.
The evidence of new business models is everywhere, changing how people live and the fortunes of the companies that sell their products and services to them. Airbnb has welcomed 500 million guests since its creation in 2008, whereas Thomas Cook just went out of business after 178 years. Uber has been challenging the business of taxis, Dollar Shave Club the business of personal care giants, Amazon the business of… everyone. Although many of these new models have not yet been proven over medium to long periods of time, and that many still survive on investment rather than profit, they are either way out-manoeuvring older ones - surely a reason to transform.
Almost no one can readily identify an organisation that has cracked transformation and is reaping the benefits. There are lots of early starts, decent levels of investment, and some solid progress being made, but there are also a lot of challenges being faced. The early success stories are generally those companies that already have part of the digital transformation within their DNA giving them a head start and removing some of the barriers to success.
What hinders digital transformation
According to iProspect research, marketers identify having a robust connected data strategy, building the right technology infrastructure, and defining a clear culture transformation strategy as the three most important components of a successful digital transformation. On the opposite -and surprisingly- aligning with top management lags at the bottom of their priorities.
Interestingly, when comparing the dimensions they see as the most important and the facets they see as overlooked or underestimated, the three instances where the latter outscore the former are all about people: culture, learning and development, and C-suite alignment. This could suggest marketers are torn between what the industry often dictates as the alpha and omega, data and technology, and their own experience in which the human side can be too often put in the backseat.
Although no two companies are exactly the same and have the same business transformation ambitions and roadmaps, there are a number of common blockers we repeatedly see in organisations at various stages of digital transformation.
External uncertainty, internal inertia
More than one marketer out of two see increasing levels of competition as a barrier to better relationship with consumers. One out of three see data protection regulation in the same way. One out of four thinks the same about the fragmentation of the media supply chain. Adding up other factors such as uncertain geopolitical future and increased scrutiny from consumers can lead some organisations to indecision and inaction. Only when leadership is aligned behind the why of transformation and sets a true vision for change for all the stakeholders can transformation succeed in uncertain times.
Silos drive chaos
The failure to break down the silos within an organisation (incentive based, structural, cultural, etc.) means teams and technologies won't connect, processes won't be seamless and ultimately the consumer experience will be at best disjointed and at worst contradictory. Digital transformation generally requires a rework of the operating model and a reorganisation to integrate new responsibilities into the existing marketing organisation. However, too often digital is added as a separate entity onto an existing infrastructure without working out how the existing process and culture need to change. Organisations should also be careful about putting digital natives, who don’t always have the depth of business knowledge necessary to deliver effective change across the wider business, in charge of digital transformation, which demands strong transformational leadership. With one marketer out of five admitting they see internal collaboration as their most difficult challenge, sharing information effectively across the departments has never seemed more important.
“It’s important to internally market marketing. Lately, I’ve started turning the tables on Chief Financial Officers, asking them ‘Hey, why are you not using more automation?’ Because usually, that's the question they ask of marketers. And their reaction is often ‘Whoa, I don't… what do you mean?’” - Todd Haskell, Chief Marketing Officer at Hearst
No real measurement, no real progress
Eighty per cent of marketers believe they need to take more responsibility for product and service innovation in the next years. Therefore, it is important to remember that the lack of a robust measurement framework is almost always a guarantee of failure, particularly for pilots and innovations. The business needs provable successes in order to scale new practices, otherwise there is a risk to be caught in an endless flywheel of pilots that don't progress and to not see the expected change. This is further amplified where marketers resist commercial accountability. Beyond measurement tools, this is where strong culture and process make it easier to pilot new ways of doing business and make that part of the emerging working practices, to eventually influence markets at scale.
The not-so-magic technology bullet
According to Dentsu Aegis Network, 79% of marketers see the need to transform their businesses through technology. Although technology can definitely be an enabler of digital transformation (the how), it should never be the strategy itself (the why). Before investing in technology, companies should have real clarity about their business goals, the role of digital in the go-to-market model, and the various implications for the organisation. This is particularly important for leaders deciding to in-house technology, which is often seen as a way to internalise operations such as marketing activation but is only one aspect to consider among many (e.g., hiring the right specialists, negotiating the right partnerships with platforms, ensuring teams are kept abreast of the latest product features, regularly checking data sources are vetted for legal compliance). It is critical for a company to conduct a thorough review encompassing the customer experience, the potential return on investment, the impact on the organisation and change management if it is to avoid joining the ranks of the 40% of marketers who invested in technology to collect customer data but don’t know how to turn it into business value.
A framework for digital transformation success
TCF’s proprietary SCHEMA® benchmark database, with thousands of data points describing how organisations approach manage customers in the digital economy, clearly shows that Leadership, Process, People and Operational efficiency are the four pillars that either drive or kill digital transformation. And that getting these right leads to better connections with customers and prospects, a more effective and efficient business and a future-proofed strategy for more disruption to come. Furthermore, getting any of them wrong means risking being a part of the billions of dollars of wasted digital transformation money. The 10-step model below draws on SCHEMA® best practice and is proven to help maximise the chance of successful digital transformation.
This article is excerpted from the report Future Focus 2020: The Next Ten Years. Download it now for key insights on the macro trends that shape the new digital economy.
SOURCES:
International Data Corporation (IDC), Press release, Worldwide Spending on Digital Transformation Will Be Nearly $2 Trillion in 2022 as Organizations Commit to DX, According to a New IDC Spending Guide, November 2018 - link
Airbnb newsroom, Fast Facts, as displayed on news.airbnb.com as of October 2019 – link
Thomascookgroup.com, Compulsory liquidation of Thomas Cook Group plc, September 2019 – link
iProspect, iProspect 2019 Global Client Survey, October 2019
Dentsu Aegis Network, CMO Survey 2019, July 2019 - link
iProspect, iProspect 2019 Global Client Survey, October 2019
iProspect, The Roundtables, Those who Tell the Stories, Rule the World, September 2019 - link
Dentsu Aegis Network, CMO Survey 2019, July 2019 - link
Dentsu Aegis Network, CMO Survey 2019, July 2019 - link
Dentsu Aegis Network, CMO Survey 2019, July 2019 - link
thecustomerframework.com, SCHEMA® Assessor Benchmarker™ - link
