To stay competitive, companies must stop experimenting with digital and commit to transforming themselves into full digital businesses. - Unni Kurup
Dubai, 24 June 2019 – The age of experimentation with digital is over. In an often-bleak landscape of slow economic recovery, digital continues to show healthy growth. To stay competitive, companies must stop experimenting with digital and commit to transforming themselves into full digital businesses. Here are seven traits that successful digital enterprises share.
1. Be unreasonably aspirational
Leadership teams must be prepared to think quite differently about how a digital business operates. Digital leaders set aspirations that, on the surface, seem unreasonable. Being “unreasonable” is a way to jar an organization into seeing digital as a business that creates value, not as a channel that drives activities. Some companies frame their targets by measures such as growth or market share through digital channels. Others set targets for cost reduction based on the cost structures of new digital competitors. Either way, if your targets aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough.
2. Acquire Capabilities
The skills required for digital transformation probably can’t be groomed entirely from within. Leadership teams must be realistic about the collective ability of their existing workforce. Leading companies frequently look to other industries to attract digital talent, because they understand that emphasizing skills over experience when hiring new talent is vital to success, at least in the early stages of transformation. The best people in digital product management or user-experience design may not work in your industry. Hire them anyway.
3. “Ring Fence” and cultivate talent
A bank or retailer that acquires a five-person mobile-development firm and places it in the middle of its existing web operations is more likely to lose the team than to assimilate it. Digital talent must be nurtured differently, with its own working patterns, sandbox, and tools. After a few false starts, Walmart stores learned that “ring fencing” its digital talent was the only way to ensure rapid improvements. A couple of years ago, the retail giant’s online business was lagging. It was late to the e-commerce market as booming physical-retail business. When it did step into the digital space, talent was disbursed throughout the business. Its US$5 billion in online sales in 2011 paled next to Amazon’s $48 billion.
4. Challenge everything
The leaders of incumbent companies must aggressively challenge the status quo, rather than accepting historical norms. Look at how everything is done, including the products and services you offer and the market segments you address, and ask: “Why?” Assume there is an unknown startup asking the exact same question, as it plots to disrupt your business. It is no coincidence that many textbook cases of companies redefining themselves come from Silicon Valley, the epicenter of digital disruption. Think of Apple’s transformation from struggling computer maker into (among other things) the world’s largest music retailer, or eBay’s transition from online bazaar to global e-commerce platform.
5. Be quick and data-driven
Rapid decision making is critical in a dynamic digital environment. Twelve-month product-release cycles are a relic. Organizations need to move to a cycle of continuous delivery and improvement, adopting methods such as agile development and “live beta,” supported by big data analytics, to increase the pace of innovation. Continuous improvement requires continuous experimentation, along with a process for quickly responding to bits of information. Integrating data sources into a single system that is accessible to everyone in the organization will improve the “clock speed” for innovation.
6. Follow the money
Many organizations focus their digital investments on customer-facing solutions. But they can extract just as much value, if not more, from investing in back-office functions that drive operational efficiencies. A digital transformation is more than just finding new revenue streams; it’s also about creating value by reducing the costs of doing business. A variety of frequent testing is critical, but teams must quickly zero in on the digital investments that create the most valueand then double down.
7. Be obsessed with the customer
Rising customer expectations continue to push businesses to improve the customer experience across all channels. Excellence in one channel is no longer sufficient; customers expect the same frictionless experience in a retail store as they do when shopping online, and vice-versa. Moreover, they are less accepting of bad experiences. A healthy obsession with improving the customer experience is the foundation of any digital transformation. Processes that enable companies to capture and learn from every customer interaction -positive or negative- help them to regularly test assumptions about how customers are using digital and constantly fine-tune the experience.