Digital Innovation needs to start with people, not technology
Key Insights
Companies around the world waste more than the Australian GDP on failed Digital Transformation endeavours annually.
Digital transformation should be approached seriously as a program of work with three main objectives, executed in strict chronological order.
Every digital transformation should begin and end with the customer.
An open leadership mindset is critical for having digital-savvy leaders in place.
Employees must acquire easy-to-manage capabilities to make their work enjoyable.
Experimentation and radical transparency are essential components to a successful digital transformation delivery.
A reminder for the Digital Transformation enthusiast: Don’t forget that if customers don’t buy, you don’t have a business
One of my significant findings from my PhD research in e-commerce was that those organisations thinking about digital transformation, and moving their business into a digital environment, would have to first reimagine the customer experience around their offerings and determine their desirability to satisfy a need in this new space.
There is no other way but to re-invent - which means to innovate.
To illustrate the point, let’s explore our universal need to search for information. In the past, when we searched for information, our first stop would be the library and it would look something like:
search index cards -> go through bookshelves -> find the book/journal -> pick our info.
If we now imagine digitising that similar process, we would search books on a library computer, print them out and bring them home to continue our research.
Instead, Google reimagined how people could access information and developed a new process, where by just typing in an empty box in a web browser, the topic we want to explore is laid out for us. Instead of saying, "I’ll go to the library”, we are now saying “Google it, mate”.
My message for companies that think they don't need to innovate [re-invent] for digital customer desirability is: You're not looking hard enough.
In this article, I want to address some concerns around the digital "movement" in companies and some learnings that might be practical to consider.
How much is Digital Transformation costing us?
When I hear somebody say “we are doing a digital transformation”, it sounds like word play. Unfortunately, both these words paired together don't provide clear orientation and direction. Digital Transformation as a term is so generic. It comes as no surprise then that IT people get involved from the get-go and start focusing on system integrations/replacements/upgrades under the banner of Digital Transformation. The consequence is that we lose our customer focus, and direct investment into the wrong priorities.
Some numbers circulate showing that 2.1 trillion dollars will have been spent on Digital Transformation in 2021. But, at the same time, Tabrizi, Lam, Girard, and Irvin in their article ‘Digital Transformation Is Not About Technology’ (Harvard Business Review, Mar, 19) pointed out that only 30% of Digital transformation projects succeeded. This means that companies around the world waste more than the Australian GDP on these endeavours. How is this ok?
We need to be more specific about our digital transformation to avoid these massive failures.
The three main objectives of Digital Transformation
Digital transformation is a program of work with three main objectives:
Identify which aspect of our business (product or services) customers would receive a more outstanding experience through using a digital environment.
Understand the extent to which we can reimagine a product/service to satisfy customer needs
Assess feasibility and viability of the overall transformation
The process should go in that exact order. You may find that tech companies have a different definition as they start from technology, but I am here to argue that digital should be focused on people and therefore start with developing a deep understanding of your customers and employees.
What does a digital transformation framework look like?
There is not one universally applied digital transformation framework. It is mainly dependent on customer desire, but some critical principles should be followed.
1. Every digital transformation is going to begin and end with the customer
A customer (not technology) is critical for our digital success. Because of this, we start by understanding customer desire and how they see value in digital engagement. In this scenario, it is very beneficial to look at the extreme users' perspective, for example, talk to people who are nervous about digital technology (usually older generations) and with people who are early adopters (generally younger). It will have some revealing learnings, which can be very relevant for shaping your Digital Transformation.
For example, I've seen a superannuation company leader insist on creating one app for both superannuation and transaction banking products, which made sense for the company but not for their customers. A couple of months later, they had to separate it. Based on the understanding of customers, we determine to what extent we need to modify our product/service or reimagine it completely.
2. An open leadership mindset is critical for having digital-savvy leaders in place.
As in every other company activity, leadership is critical here too. However, we are still seeing leaders uncomfortable with new and emerging digital technology and that can have a negative impact on overall project success. My caution to these leaders is: if your teams can design something, but your organisation’s leaders are nervous to implement it, how can you expect your customers to be comfortable trying this new digital service?
Digital Transformation requires mindset shifts and a requirement to be comfortable with change, as digital solutions have new delivery methods. Understanding how to test solutions is essential. The humble prototype is your key. Leaders need to be able to be comfortable with knowing that it is possible to create many prototypes which might fail, until you develop the one that succeeds. It might sound counter-productive, but this is the better approach to risk management.
3. Employees must acquire easy-to-manage capabilities to make their work enjoyable.
Employees' engagement around digital requires an identified approach to developing and implementing initiatives on digital assets. Many leaders immediately translate that into an agile approach. It makes sense if the team clearly understands what would create value for the customer. I asked an agile leader once if they used customer insights to write their user stories. The answer was “No. We write them, and if they don't work during the agile sprint we put them into a backlog”. I was left wondering why they call them user stories.
Suppose we establish and train people around specific methods and tools they should follow that would result in legitimate, fact-based insights into customer preferences? In this scenario, employees would be much more confident delivering outcomes based on their customer understanding (as they are no longer founded in assumptions derived from semi-detached, internal people). Only in that environment does using agile make sense for solution implementation.
Another critical aspect of capability building is that employees should be empowered to make decisions while working in new ways. Leaders often say that, but they don't show much trust in it. For example, a leader from a global pharma company mentioned that they solved this issue by forbidding senior leaders to make confident decisions for 3 months, instead delegating that opportunity to the next leadership level down. The results were outstanding for confidence building across those lower organisational tiers.
4. Enable experimentation in the digital environment
Although digital technology is expensive, the tools are becoming cheaper and cheaper. This allows us to establish an experimentation program where people are able to test whether solutions produce value for customers and establish how they would interact with it. Using the free POP app for prototyping could create low-fidelity interaction with customers, which would assess the content and be close to the experience. This would allow people to be comfortable with prototype development, as failure would not cost as much money.
5. Radical transparency as a communication strategy
Transparency stagnates when we have internal comms teams who control the information flow. Instead, these roles should help facilitate the different streams of messaging, from different corners of our organisations, creating alignment with future direction and investment in goal achievement. I don't just mean official communication either. Project updates (and not in a spreadsheet or boring ppts), key learnings, failures, digital developments and crowd should fall into these buckets. This is the way to build trust across an organisation and help people feel they have a solid understanding of movement in your organisation. This is particularly relevant for today's environment where many people have adopted remote working as a primary way of engaging with business.
Munib is an award winning marketing and design professional, with over 30 years’ experience applying innovation methodologies and human-centred design to create long-term impact for organisations. He has helped to shift the innovation culture at more than one ASX 20 company.
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