What is digital transformation?
Technology is changing customer expectations. Widespread access to the internet, mobile devices, artificial intelligence, and virtual reality are a few of the digital advances that are driving a global shift in consumer behaviors. Today, customers demand products that are easy to use and hassle free. Services must be fast, responsive, and personalized. And the entire experience must be frictionless across every interaction — both human and digital.
Listed below are some of the ways that customer expectations are evolving.
Digital | Pervasive access to the internet is changing how customers interact with products and services. Products that were traditionally analog are now increasingly incorporating technology to provide better functionality and performance. Services that previously required human interaction are being supplemented with digital, self-service options. |
Holistic | Customers determine their overall level of satisfaction based on the complete experience — not just individual products and touchpoints. Companies are leveraging digital technologies to optimize the end-to-end journey and provide integrated product ecosystems. |
User-centric | Customers favor intuitive applications that enable them to achieve the desired outcome quickly and easily. This is also driving change in enterprise software as users increasingly expect a similar experience at work. |
Omnichannel | Customers expect a consistent experience across all devices and channels. Using a product on a desktop should be consistent with using it on a mobile device. Similarly, interactions should be seamless across all channels — such as websites, physical stores, call centers, and social media. |
Responsive | The underlying systems that support products are also important to the overall customer experience. Customers expect a fast, secure, and reliable service that is easily accessible and always available. |
No matter what type of products or services your company provides, the cost of not satisfying these expectations can be high. A recent report predicted that by 2020 “customer experience will overtake price and product as the key brand differentiator.” As customers increasingly take control of what they are willing to accept, delivering a better customer experience has become a pressing mandate.
Transformation imperative
Many companies are investing in a digital transformation strategy to modernize their offerings and better serve their customers. This goes beyond prioritizing isolated technology initiatives to enhance “business as usual.” Rather, it requires understanding the possibilities that technology provides and rethinking the way an entire company operates to compete in the digital era.
Here are a few ways that digital transformation drives deep organizational change:
Mindset
The entire company must adopt a customer-centric mindset that combines human and digital experiences to solve customer problems more effectively.People
Organizations must hire people who understand how to apply technology to drive product innovation and make the right technology investments.Process
An agile approach is critical to delivering ongoing value to customers. This enables organizations to respond quickly to feedback and adapt to changing requirements.Technology
Businesses must determine the best way to leverage new technology, reinvigorate product offerings, and modernize the infrastructure required to support them.Go-to-Market
When organizations change how products are delivered, it often requires redefining the complete Go-to-Market experience, including marketing, sales, and support.Measurement
KPIs need to be updated to reflect the desired business outcomes and measure the success of the transformation.
Digital transformation requires companies to think differently about the end-to-end customer experience and to change their business model to deliver it. The forward-thinking companies that truly understand what their customers want and can execute on the promise are the ones that will achieve lasting success.
Digital transformation examples
The impact of technology is disrupting entire industries. Here are some examples of leading companies that have turned to digital transformation as a strategy to reinvigorate their products and services.
Finance
In the finance industry, customer preferences increasingly favor digital banking services. Capital One has built its own product design group called Capital One Labs to develop sophisticated practices in digital product design.
Winners in banking are going to be the ones that recognize that technology is really going to play a central role in how consumers want to bank in the future. We’ve got to be great at building software.
Rob AlexanderCIO of Capital One
Insurance
Creating new digital experiences is a strategic priority for insurance companies. Consumers today expect a self-service approach that lets them manage their insurance policies online. They also expect agents to have access to the same information in the call center. To transform the customer experience, AAA replaced legacy infrastructure to make information accessible across multiple channels.
A year ago... we weren't able to acknowledge how long a customer had been a member with AAA for... we can now do that. We are leveraging information more effectively so that we can deliver that perfect customer experience.
Steve RowburyBusiness Owner at CSAA Insurance Group
Retail
Traditional brick-and-mortar retailers, such as Walmart, are strengthening their IT presence to reflect the way consumers purchase online. Walmart Marketplace is a new e-commerce platform designed to give customers access to a greater choice of products.
The reality is that customers want everything. They want to go online to see hundreds of millions of items and to find anything they’re looking for. But many also want to have a delightful experience in a physical store environment.
Doug McMillonCEO of Walmart
Healthcare
The concept of technology-enabled care (TEC) is gaining traction in the healthcare industry as a way to improve the the quality of care through better access to data. Examples include mobile health applications, wearable technology devices, and predictive analytics.
In healthcare, digital transformation is a question of thinking differently about how you use data to change the way you treat and engage patients. It means changing the way consumers empower themselves. The issue is much broader than the digital platforms themselves.
Michael WeisselGroup Executive Vice-President and Head of Strategy at Optum
Industrial Manufacturing
The transformation of GE into a digital industrial company illustrates the broad-reaching impact of technology. GE has built a software platform called Predix that brings information to industrial systems by putting sensors on machines such as gas turbines and jet engines. This enables to them improve machine productivity, performance, and reliability to bring more value to their customers.
For the past 16 years, GE has been undergoing the most consequential makeover in its history. We were a classic conglomerate. Now we’re a digital industrial company that’s defining the future of the internet of things.
Jeffrey Immeltformer CEO and Chairman of GE
Common to all of these examples is the acknowledgment that, to compete in the digital era, every meaningful company has to become a software company. This requires incorporating technology into all aspects of the business and bringing in software-first leaders who understand how to drive innovation.
Common challenges
Companies going through a digital transformation are required to rethink much of what made the company successful to start with. Here are some of the common challenges that can hinder transformation projects:
Understanding what customers want and delivering a Complete Product Experience is hard work. Companies must listen to customers better than ever before and gather feedback in real time to continuously improve.
Developing the digital skillset of the organization is essential to conceive, design, and implement new experiences. A lack of internal technical leadership and expertise can make it difficult to respond quickly to market disruption and make the right technology investments.
Aligning around a common vision is essential to avoid a fragmented transformation approach. All teams must understand the strategy and work together to focus on providing a better customer experience.
Adapting quickly to customers’ evolving needs is vital to ward off intensified competition. Companies must plan, build, and deliver new experiences in an agile way that allows rapid iteration in response to customer feedback.
Solving customer problems requires cross-functional teams to work together to optimize the end-to-end journey. Companies must create a transparent and collaborative environment that overcomes internal silos.
Keeping track of transformation progress is challenging for many organizations as information is typically spread across multiple presentations, documents, and spreadsheets. The lack of a common tool to bring people together contributes to confusion, misunderstandings, and oversights.
These challenges are amplified in large enterprises. Legacy processes, policies, and systems often stand in the way of change and slow down progress.
Digital transformation is more profound for companies who have been around for a long time, rather than younger companies that were brought up with it.
Joseph PuthusseryVP of Digital Marketing at Cisco
Companies investing in transformation must understand that it is not a one-time effort, but a multi-year journey that completely changes the way an organization operates.
Importance of product management
Product managers are in a unique role to influence every aspect of the customer experience and the digital strategy that makes it possible. This is because they already provide cross-functional leadership to engineering, marketing, sales, and customer support teams to bring new experiences to market.
As companies embark on a transformation to leverage digital technologies, product managers have a critical role in defining the new experience. The transformation may have been mandated by the executive team, but product managers are the vital link between strategy and execution that makes it happen.
Product managers are also in the best position to understand what customers actually want. They interview users and understand their needs. They define personas and develop product strategies. And they work with engineering teams to bring the new vision to life.
Moving forward
As your organization embarks on a digital transformation, it is important to focus on the “why” that is driving the need for change. Transformation is the enterprise response to the impact technology is having on customer behaviors and preferences. Focusing on what your customers actually want should determine the timing for new products and improvements. This will guide exactly what engineering groups need to build.
Organizations will not be able to achieve lasting success by relying on technology alone. An enterprise-wide transformation is required that changes the fundamental DNA of the business and delights your customers.
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