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Eight Success Factors of Digital Transformation by Brian Solis

  1. EXECUTIVE SUMMARY Digital transformation is among the greatest catalysts for the evolution of business. It is a movement that spans beyond the scope of new technologies and systems, while also representing the modernization of business philosophy, purpose, competitiveness, and models that shift with evolving audiences. As customers and employees change, they do so at accelerated velocities that often outpace an organization’s ability to adapt. This exposes critical business functions and processes (marketing, sales, services and innovation) to inevitable disruption inside and outside the company. Over the years, Altimeter has consistently focused on an important slice of digital transformation specific to the digital customer experience (DCX). We define digital transformation through this lens as: The realignment of, or new investment in technology, business models, and processes to more effectively compete in an ever- changing digital economy. In this regard, digital transformation represents the quest to understand how disruptive technology affects the DCX. As such, our research focuses on how companies are learning to combine technology and operational excellence to build tomorrow’s business…today. The direction each business takes in pursuing change is complex, and there is no one way to excel. Nor is there one tell-all anecdote, framework or app to map the journey of your next steps toward programmatic transformation. Rather, companies that succeed do so by incrementally staging specific strategies that span multiple departments, technologies, and channels. Throughout our years of digital transformation research, we’ve observed a series of important patterns that companies follow in their work to digitally transform. We learned that strategists take an “opposite” approach to business as usual as they seek new and alternative insights and methodologies to blaze new trails. 2
  2. The O.P.P.O.S.I.T.E Approach Guides Companies Through Digital Transformation In this report, we introduce Altimeter’s O.P.P.O.S.I.T.E. framework, an acronym that represents a compilation of eight best practices guiding today’s successful organizations through their digital transformation efforts (see Page 4). We visualized the OPPOSITE approach as a series of concentric circles. This infographic walks you through each layer, from the ground up, to introduce why each step is important and how it lays the foundation for your next step. By focusing your work around the digital customer experience, the complexities of digital transformation become identifiable, approachable, and attainable. It’s important to note that in our research, we learned that by studying the digital customer, insights lead to new programs and models that not only improve the DCX but also the journey and experience for all customers. 3
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  4. ORIENTATION: ESTABLISH A NEW PERSPECTIVE TO DRIVE MEANINGFUL CHANGE Success begins with a renaissance in perspective, vision, and leadership in order to see customers differently. To change, strategists must first shift how they view and appreciate customers and their distinct behaviors, expectations, preferences, values, and other contextual factors. Change can be scary, and it’s often a political issue. In the absence of information, it’s easy for executives to underestimate or completely overlook the gradual and inevitable trends reshaping markets. Success begins with a vision for digital transformation and dedicated leadership to guide companies and change agents (those pushing for or driving change) in new, unpaved directions. Leadership can come from the top or from anywhere in the organization. Together, leadership, executives, and other change agents must take action even in the absence of a complete customer picture. Start by getting a clear view of existing and emerging trends compared to your current roadmap in order to create a relevant and compelling customer experience. 5
  5. PEOPLE: UNDERSTAND DIGITAL CUSTOMER VALUES, EXPECTATIONS, AND BEHAVIORS Behaviors, trends, expectations, and values reveal new opportunities to earn relevance in every moment of truth throughout the customer journey. By walking the path of digital customers, strategists uncover ways to eliminate existing friction while introducing innovation in the customer journey. Begin by mapping the customer journey and also identifying missing touchpoints. Then, design a DCX/CX strategy that capitalizes on the existing journey but also innovates based on research, data and technology/ behavioral trends. Interviews, research and data, journey mapping, and observation allow strategists to better understand and empathize with digital customers to uncover and guide meaningful investments in a new customer experience. This work must consider customers’ initial intentions, desired outcomes, and eventual behaviors at each touchpoint on all devices. More importantly, touchpoints should seamlessly combine to deliver a holistic, and desired, experience throughout every step in the customer lifecycle. 6 Studying and engaging your digital customers will improve not only the DCX, but also the overall journey and experience for all audiences.
  6. 7 PROCESSES: ASSESS OPERATIONAL INFRASTRUCTURE AND UPDATE NEW TECHNOLOGIES, PROCESSES, AND POLICIES TO SUPPORT TRANSFORMATION In this stage, new business models, organizational charts, and supporting processes, systems, and policies are written to streamline digital transformation. Change agents perform an audit of processes and policies to identify roadblocks. Models, processes, and policies are then either amended or rewritten to support new direction and scale. In our research, we found that change agents drive transformation to the point of scale, at which point governance work is required to standardize and manage new processes. This work is eventually managed by a cross-functional workgroup supported by executive sponsors. Over time, the group’s collaboration and planning leads to the development of interim infrastructures to support pilots and the modification of existing teams and departments. New models are created to scale and continually enhance the journey and the digital customer experience. This agility formalizes as each of the next steps unfold.
  7. OBJECTIVES: DEFINE THE PURPOSE OF DIGITAL TRANSFORMATION, ALIGNING STAKEHOLDERS AND SHAREHOLDERS AROUND THE NEW ROADMAP Define the goal for digital transformation and why the digital customer experience is instrumental in delivering value to stakeholders and shareholders. Align objectives with key short- and long-term milestones at all levels relevant to the DCX. Initiatives at every step of the journey must map back to over-arching goals, and every group responsible for transformation should be accountable. Determining how progress will be measured is critical in this phase. Articulate what success ultimately looks like and the steps to get there. Document transformation in intervals ranging from six months to five years ahead. Doing so helps stakeholders grasp what they’re working toward and how they’ll translate the accomplishment of important objectives into additional resources and budgetary support. This work eventually becomes a formal strategy process in the following steps. 8
  8. STRUCTURE: FORM A DIGITAL CUSTOMER EXPERIENCE TEAM WITH RESPONSIBILITIES CLEARLY DEFINED With a digital transformation workgroup in place via step three, work expands in step five to include other teams responsible for the DCX. Though customer experience is the sum of all engagements, you’ll find that touchpoints are viewed disparately and are rarely managed collaboratively. The formation of a DCX team unites key stakeholders in multiple groups and roles around a universal understanding of the digital customer. The digital transformation workgroup and DCX team serve different purposes, though they regularly collaborate. The digital transformation workgroup manages transformation at the executive level, while a DCX team is formed to manage the efforts in customer experience throughout relevant departments. One of the biggest challenges in digital transformation is ownership, and having these two groups working in concert helps alleviate those pains. Successful organizations assign specific roles within each group to efficiently drive change and avoid confusion. These are often based on the RA(S)CI process model: • RESPONSIBLE • ACCOUNTABLE • CONSULTED • SUPPORTED • INFORMED 9
  9. INSIGHTS AND INTENT: GATHER DATA AND APPLY INSIGHTS TOWARD STRATEGY TO GUIDE DIGITAL EVOLUTION Gathering data helps businesses develop a digitally native strategy that invests in and optimizes touchpoints and engagement for connected, mobile customers. Companies must continually adapt to technology and consumer trends, behaviors, expectations, and values to perpetually iterate on, and optimize the customer experience. Insights must inform ongoing digital transformation in every group while simultaneously introducing new areas of necessary expertise. Data and research are important throughout the entire process of digital transformation and DCX work in order to reshape the evolving customer journey. However, it’s of limited use until someone translates it into actionable insights. Transactional data is of little value without understanding context, device, behavior and intent. Additional questions include: Why did this transaction occur? What were the customer’s motivations? Which device was used? And what is the cascading series of events that will result from it? These behavioral insights will inform strategies that grow engagement and build relationships throughout the customer journey. The group that houses data and analysts must be empowered to deliver insights to stakeholders and decision makers. This also plays out in RA(S)CI charts. 10
  10. TECHNOLOGY: RE-EVALUATE FRONT AND BACK-END SYSTEMS FOR SEAMLESS OMNICHANNEL EXPERIENCE Working in concert with IT is a must, as the OPPOSITE approach requires strategists to think about technology’s role in the customer journey. But, technology is not an end-all solution. It is an enabler for a larger digital transformation purpose and vision as it facilitates intuitive, frictionless, cross-channel and personalized customer engagement. Note that IT departments are also moving through their own technology roadmaps to modernize infrastructure. It is important to consider legacy investments, plans and how they can and cannot play a role in transformation.They must be updated so that roadmaps align with digital transformation and DCX initiatives. Consider legacy investments and their role in digital transformation, but be wary of outdated or misaligned legacy technology that impedes progress. This includes internal collaboration and external engagement tools. At the same time, strategists must fight “shiny object syndrome,” which means gravitating toward the newest systems and platforms simply because of their novelty. Rather, select technology solutions that solve problems and create opportunities based on every step in the OPPOSITE framework. 11
  11. EXECUTION: IMPLEMENT, LEARN, AND ADAPT TO STEER ONGOING DIGITAL TRANSFORMATION AND CUSTOMER EXPERIENCE WORK Detailed execution is as important as the vision that guides it. The digital transformation roadmap relies on key leaders and practitioners to drive and learn from pilots, programs, and larger initiatives. All implementation feeds best practices and contributes to the OPPOSITE feedback loop. As digital transformation requires heavy investments of time and resources, execution must be broken into tangible steps with associated metrics and key performance indicators to communicate progress and reinforce or validate work. Use the OPPOSITE framework and RA(S)CI definitions as your guide. Even the smallest pilots have the potential to trigger big impacts, moving companies along the path of digital transformation maturity. Execution begets learning, and learning fosters best practices. This new knowledge should live in a central repository and become part of a recurring cross-functional assembly where insights are shared and questions are asked and answered. With each step, new roles, departments, processes, and metrics are implemented. 12 Even the smallest pilots have the potential to trigger big impacts, moving companies along the path of digital transformation maturity.
  12. An OPPOSITE approach is the beginning of innovation. 13 The OPPOSITE framework visualizes your work building toward digital transformation and shaping the DCX. It’s also part of a larger movement in the modernization and, in some cases complete innovation in business dynamics and models. How you manage these dynamics during the next few years will define the future of your business and also the arc of your career. Think a decade ahead, to when people will ask two questions: Did you see this technology-based sea change coming? Were you able to capture the commercial opportunity? Consider how you’ll answer. Through this work, your organization becomes not only technologically savvy, but also people-centric. As such, the company becomes agile and sets the stage for even greater innovation. New understanding of technology, data, and people is reflected in the operational capability to continually anticipate, rather than merely react to customers. Human-centered approach informs your digital transformation strategy in ways not otherwise possible. And, it is this digital transformation that will carry profound implications for your market, your employees, your customer relationships, and your partners. Basically, everything and everyone related to your business. 13
  13. 14 METHODOLOGY Over the past three years, Altimeter conducted a series of qualitative interviews with executives that informed this research, among other reports. We interviewed digital strategists and executives at organizations undergoing digital transformation efforts about their journey in adapting to the new digital customer experience. This report includes input from 32 industry stakeholders from large organizations in the following industries: Academia, Automotive, CPG, Energy, Financial Services, Food and Beverage, Healthcare and Pharmaceutical, Hospitality, Nonprofit, Real Estate, Restaurant, Retail, Technology, and Telecommunications.
  14. BRIAN SOLIS Brian Solis is a digital analyst, anthropologist, and also a futurist. Solis studies the effects of disruptive technology on business and society. More so, he humanizes these impacts to help people see people differently and understand what to do about it. He is an award-winning author and avid keynote speaker who is globally recognized as one of the most prominent thought leaders in digital transformation and innovation. Brian has authored several best-selling books including What’s the Future of Business (WTF), The End of Business as Usual and Engage!. His latest book “X,” explores the intersection of where business meets design to create engaging and meaningful experiences. JAIMY SZYMANSKI Jaimy Szymanski is an industry analyst, focusing on how organizations adapt their digital strategies and core business models to serve the new “connected customer.” She has authored multiple research reports and artifacts on the topics of digital transformation, the autonomous world, consumer mobile, customer experience, and the Internet of Things. Jaimy provides independent research and advisory services to companies in varied industries that are affected by emerging technologies. ABOUT ALTIMETER Altimeter, a Prophet company, is a research and strategy consulting firm that helps companies understand and take advantage of digital disruption. In 2015, Prophet acquired Altimeter Group to bring forward-thinking digital research and strategy consulting together under one umbrella, and to help clients unlock the power of digital transformation. Altimeter, founded in 2008 by best-selling author Charlene Li, focuses on research in digital transformation, social business and governance, customer experience, big data, and content strategy. Strategy Consulting. Altimeter creates strategies and plans to help companies act on business and technology trends, including ethical and strategic data use and communications. Our team of analysts and consultants work with global organizations on needs assessments, strategy roadmaps, and pragmatic recommendations to address a range of strategic challenges and opportunities. Education and Workshops. Engage an Altimeter speaker to help make the business case to executives or arm practitioners with new knowledge and skills. Advisory. Retain Altimeter for ongoing research-based advisory: conduct an ad-hoc session to address an immediate challenge; or gain deeper access to research and strategy counsel. To learn more about Altimeter’s offerings, contact Altimeter, A Prophet Company 1 Bush Street San Francisco, CA 94104 Tel: 415 699 7612 ABOUT 15