Everyone wants to go digital. The first step is truly understanding what that means.
Companies today are rushing headlong to become more digital. But what does digital really mean?
For some executives, it’s about technology. For others, digital is a new way of engaging with customers. And for others still, it represents an entirely new way of doing business. None of these definitions is necessarily incorrect. But such diverse perspectives often trip up leadership teams because they reflect a lack of alignment and common vision about where the business needs to go. This often results in piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts. The decision to go digital must be led by the business and is a fundamental part of your strategy. It must be used to create value for your customers and the markets and communities where you serve (Through the products and services you offer), which in consequence will bring value to your company in the way of a sustainable business.
Even as CEOs push forward with their digital agendas, it’s worth pausing to clarify vocabulary and sharpen language. Business leaders must have a clear and common understanding of exactly what digital means to them and, as a result, what it means to their business.
It’s tempting to look for simple definitions, but to be meaningful and sustainable, digital should be seen less as a thing and more a way of doing things and to create value:
- Value for the market and the communities we serve: Creating value at the new frontiers of the business world.
- Value for customers: Creating value in the processes that execute a vision of customer experiences.
- Value for the company: Creating value by building foundational capabilities that support the entire structure.
Critically, digital isn’t about just working to deliver a one-off customer journey. It’s about implementing a cyclical dynamic where processes and capabilities are constantly evolving based on inputs from the customer, fostering ongoing product or service loyalty. Making this happen requires an interconnected set of four core capabilities:
- Proactive decision making. Relevance is the currency of the digital age. This requires making decisions, based on intelligence, that deliver content and experiences that are personalized and relevant to the customer. Remembering customer preferences is a basic example of this capability, but it also extends to personalizing and optimizing the next step in the customer’s journey. For example, by blending data from multiple channels into one view of what customers are doing and what happens as a result. In the back office, analytics and intelligence provide near-real-time insights into customer needs and behaviors that then determine the types of messages and offers to deliver to the customer.
- Contextual interactivity. This means analyzing how a consumer is interacting with a brand and modifying those interactions to improve the customer experience. For example, the content and experience may adapt as a customer shift from a mobile phone to a laptop or from evaluating a brand to making a purchasing decision. The rising number of customer interactions generates a stream of intelligence that allows brands to make better decisions about what their customers want. And the rapid rise of wearable technology and the Internet of Things represents the latest wave of touchpoints that will enable companies to blend digital and physical experiences even more.
- Real-time automation. To support this cyclical give-and-take dynamic with customers and help them complete a task now requires extensive automation. Automation of customer interactions can boost the number of self-service options that help resolve problems quickly, personalize communications to be more relevant, and deliver consistent customer journeys no matter the channel, time, or device. Automating the supply chain and core business processes can drive down costs, but it’s also crucial to providing companies with more flexibility to respond to and anticipate customer demand.
- Journey-focused innovation. Serving customers well gives companies permission to be innovative in how they interact with and sell to them. That may include, for example, expanding existing customer journeys into new businesses and services that extend the relationship with the customer, ideally to the benefit of both parties. These innovations in turn fuel more interactions, create more information, and increase the value of the customer-brand relationship.
Digital is about unlocking growth now. How companies might interpret or act on that definition will vary but having a clear understanding of what digital means allows business leaders to develop a shared vision of how it can be used to create and capture value.
To pursue sustainable growth and to create a strategy for it, leaders at all levels should first look in the mirror and ask:
- Do we understand customers preferences, needs and requirements?
- Are our core businesses generating sufficient earnings?
- Do we have a strong performance orientation to push profits higher in the next few years?
- Is our cost structure competitive with that of the rest of our industry?
- Has operating performance been stable?
- Has market share grown or been stable?
- Are we reasonable well protected from new competitors, technologies, or regulations that could change the rules of the game?
- Are we using technology as an enabler for transformation and sustainable business growth?
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