Digital transformation: your one-stop customer value creation shop
Today’s CTO needs to think more about value creation than cost reduction.
Across the business spectrum, digital transformation (DX) investments often fail to realise their potential and subsequent returns that were first imagined by the boards signing off the business cases. The expected uplift in commercial performance and increased competitive advantage have simply not materialised for many organisations.
In 2018, McKinsey&Co commissioned a survey,in which only 16 percent of respondents said their organisations’ digital transformations had successfully improved performance. Of that 16 percent, half the organisations revealed their performance had initially improved but that those improvements were not sustained.
Boards are becoming frustrated with the pace of genuine innovation, and badly applied agile development methodologies are all too often responsible for delivering sub-optimal products. It doesn’t matter how quickly you deliver if the product you deliver is not fit for purpose.
Since the global financial crisis, cost reduction and operational efficiency have been the main drivers for most global businesses. Investments in Digital Transformation have been focussed on automating processes and cutting operational cost. However, too often the customer, and improving their experience or service, was not the main focus of these initiatives. It was all too often a case of tech for tech’s sake.
But to respond to the challenge of tech start-ups present in almost every industry sector, businesses need to innovate, create new business models, deliver improved customer outcomes and differentiate themselves from their competitors, and many businesses still seek genuine value creation from their DX investments.
Value creation is back on the agenda
Established brands are having their market share eroded by so-called challenger brands who are beginning to improve dated business models and, using the latest technologies, nail the personalised omnichannel experience.
Accenture report: “A number of companies are using digital technologies to offer customers unique and unforgettable experiences, as enterprises are seeing customer experience as an increasingly important differentiator.” And that consumers: “Expect personalised and highly relevant interactions, catering to their individual contexts.”
As a result, value-creating DX is firmly back on the business agenda, as businesses seek to remove friction across touchpoints for customers and employees, to drive long-lasting advocacy and loyalty.
But value-creating DX is only derived from a deep and intrinsic understanding of the human-centred design process. Without this, businesses will fail to generate genuine and sustainable customer value.
To ensure DX initiatives are worthwhile, owners must create a business-wide focus on delivering customer value. From simplifying outdated internal processes to completely reimagining the customer experience - a DX investment should deliver experience improvements across all touchpoints.
Harnessing the power of CX for greater value creation
To create consistent value, businesses must place customers at their core and design digital offerings around their requirements. They must also consider the cultural and operational changes required to deliver experience at speed and scale.
Businesses that have organised themselves and prioritised their infrastructural transformation efforts around their customers typically enjoy the greatest DX success rate.
Singapore-based DBS is a great example of this. In 2009, their COO employed similar tactics and in two years went from bottom quartile in customer satisfaction to the very top. After extensive research, the team launched ‘The customer hour’ because most criticism was rooted in slow, arduous processes.
Within a year, DBS prevented 250 million hours of wasted customer time and became the best rated bank in the world.
Breaking down internal silos and letting customers in
DBS’ success story also makes a strong case for reimagining company culture. Organisational silos, entrenched practices and lack of collaboration across business lines can compromise the quality and ultimate success of DX projects.
That’s because it's hard for people inside a company to think like a customer. For example, if you've worked in a mortgage business for five years, you’re conditioned and therefore can’t put yourself in the shoes of a first-time-buyer.
It’s important for organisations to find ways to encourage and reward thinking from outside the business. Genuine customer insight and understanding should be referred to and harnessed throughout the decision-making process.
Be like Monzo
Monzo is another great example of a business that places customer understanding at the heart of its operational model.
Whilst the general direction and vision for the business is set by the board and its sphere of operations are known, they have the confidence to let customers guide their priorities and set their experience strategy to create greater customer and business value.
The team at Monzo don't wait for top-down internal decisions on what features/functions are required in the next release of their banking app; they engage with customers to find out what they need most, what additions they'd value, and how they'd expect them to work.
They make beta versions, get customers to trial them and ask how much they'd pay for enhanced features. Effectively, Monzo is developing its strategy with the help of its customers who test and rate iterative prototypes.
To save millions and ensure the success of DX initiatives, companies must focus on value creation activities and the customer experience across all touchpoints.
Coupled with technology, this mindset becomes an enabler and final solution to the customer conundrum. Think of it as a route to all-new propositions and markets too.
One commonality all successful DX initiatives share is the desire to help customers. For a jumping-off point - bring customers into the decision making process.
Pete Ballard is the CEO at Foolproof
Foolproof is one of Europe’s largest specialist experience design agencies. With offices in London, Norwich, and Singapore, Foolproof specialises in providing digital product and service design for global brands such as DBS
- Digital transformation
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