Recipe for Digital Transformation for Enterprise world
As a consumer, we see every aspect of our lives impacted by digital disruptions around us. And over the years, the enterprises and industries have drawn inspiration from such consumer experiences and have attempted to replicate these in their business processes with varying degrees of success. For instance, the banking sector has digitized their customer facing and back-end operations to an extent that the number of high street retail branches are regularly shrinking, and indeed led to the raise of digital-only challenger banks in markets such as UK. The energy utilities industry has simplified and harmonized their operations to enable automation of consumption monitoring, enable rapid supplier switching etc. The manufacturing industry has automated the industrial processes and have connected devices to regularly monitor, predict and optimize their asset and resource efficiencies.
Even though there are significant successes witnessed across industries, there are still avenues to expand the disruptions across all nodes of the value chain. According to a Mckinsey Global Institute 2018 study, across the tech enabled sectors, the digital maturity of the traditional incumbent firms is still relatively low, growing thus for only to 25% of the potential. There are still economies, especially from the developing countries which have not realized the full impact of digitization for most of its sectors. The digitization parity is not always equitably distributed across industries which presents the opportunity to engage, explore and experiment to seek out new ways of digital optimizations for enterprises.
A Recipe for Digital Transformation
The success of any digital transformation initiative of an enterprise can be measured by how effectively its customer facing processes are simplified, its operations are streamlined, its employees & partners are engaged and its products & services are consumed. While there are industry specific subtleties and considerations that determine how to go about, measure and implement digital initiatives, there are certain universal principles and frameworks that can be adapted to ensure the initiative stays in right track and moves towards the right direction. These principles apply to varying scenarios, whether it is about harmonizing the customer experience or about streamlining the internal operations.
1. Deconstruct your process journey and draw out alternate channels, forks, deviations and convergences
Every digital transformation initiative begins with an appreciation of the process steps involved to achieve specific outcomes. This is not as straight forward as it sounds. Many traditional enterprises still carry the baggage of legacies or patchwork of processes set with certain historical context in mind which are not relevant anymore but intensely complicated to carve out or decommission. To add to this layer of complication are various channels that lead towards the same end goal but operate at varying levels of speed and accuracy.
Take the retail banking customer onboarding process or a loan origination process for instance. Surprisingly much of these processes still remain manual, error prone, time consuming and risky inspite of the millions spent on the systems managing these processes. These processes involve multiple customer touch points through alternate channels that could originate through a retail branch or through banking mobile applications etc. Each of these channels could offer varying experiences and different lead times due to the burden of legacy. Not all products could be exposed in all the channels and the lead time for processing could differ for each of these pathways. The first step is to understand all these pathways, process nodes for which different channels exist, and process bottlenecks where multiple channels converge and choke the progress due to the lead time involved.
2. Assess persona based experiences through different channels
As a result of number of years of centralized decision making and stiff budgets focused on inward facing optimizations, the experience from the perspective of multiple external and internal persona were not prioritized. Enterprises were able to get away with such limited focus during the era of limited choices. This is no longer the case and in fact have become the primary motivation for number of new entrants in the industry. Perhaps no other industry was impacted by such renewed focus on customer experience than retail banking industry. A number of digital challenger banks have arisen with the singular differentiation on customer experience. These smaller entities have severely challenged large traditional banks on parameters such as customer acquisition, customer satisfaction, innovative products etc.
Traditional enterprises can learn from this by focusing on the experience factor for all its stakeholders interacting with its products and services such as customers, partners, vendors, employees, contractors etc. from the prism of each of these stakeholders how do the processes vary, what lead times apply, what are the stakeholder touch points and the level of transparency the system offers.
3. Identify avenues to harmonize the stakeholder experience through all channels
A true omni-channel experience ensures its participants to undergo the same experience and steps irrespective of the medium being interacted with while enabling them to switch the medium of interaction without a discernible change of experience. From an enterprise point of view, this would mean that all its channels and categories are harmonized and operated under the same platform. When a customer initiates a transaction through mobile application or through contacting the customer care, the customer should be exposed to the same level of transparency of the progress of the transaction and lead times.
This is a critical step for digital transformation and requires an ideation process which takes into account the perspectives of multiple stakeholders, internal and external. Many enterprise adapt techniques such as design thinking to churn out possibilities that the situation presents.
4. Earmark and define changes
The enterprise world presents a number of challenges and constraints to stifle any innovation initiatives. The budgets are limited, the stakeholders do not always possess the necessary expertise and the deadlines are constantly looming. This when combined with the fact of continuously evolving customer needs and industry imperatives makes it a challenge to define a road-map for transformation. 5 year road-maps are increasingly becoming abstract. Successful change initiatives begin with a backlog of short term spurt of changes adhering to a long term strategy, with realistic and achievable outcomes defined.
This presents a considerable challenge for enterprises steeped with hierarchical power-plays, grandstanding, and the desire for leadership to overemphasize on strategy prone to compromises due to infinitely growing list of stakeholder alignments. However the critical step for success is to identify the need for specific tangible change in the process steps, prioritize them as per their impact and to package them into unambiguous bundles that can be dispatched and executed in a time-boxed manner.
5. Implement the changes through iterations and experiments and validate your changes
Any success of digital transformation initiative is defined by the effectiveness of its execution rather than the grandness of its vision. The successful execution involves engaging with the stakeholders early and as often as possible, experimenting, failing fast and adapting to what clicks as quickly as possible and publishing digestible bites of changes in their products and services so that its customer base and other participants ride along the journey of change.
Most enterprises adapt practices such as agile to remain nimble and flexible in its execution. With the advent of cloud computing which drastically altered the proportion of Capex vs Opex, the implementation of SaaS, PaaS and subscription based models have enabled the enterprises to start their changes small yet significantly expand and scale based on the customer feedback loop. Some successful transformations involve strategic bets in M&As as well, with the focus to acquire capabilities to build high performance units within the organization following a bimodal IT model manner.
6. Manage organizational behavior
Finally, a significant piece in the jigsaw is the way the enterprises handle their organizational behavior. The people constraint is the biggest of all constraints a change tackles with. With a significant majority of the enterprises torn with internal divisions of varying motivations, objectives and incentives, lots of effective visions and initiatives never get to see the light of the day. Hence it is extremely necessary, while excruciatingly complicated, to align all internal divisions to a common goal, incentivise leaders of various departments for common realization of vision and to cultivate teamwork as a measure of success. This is the significant step that the traditional enterprise has to overcome when competing with a digital native organization which has it its digital backbone set to new ways of working. An executive leader who could pull up its organization to move in a singular direction is a crucial differentiator for the success of an digital transformation initiative.
According to Mckinsey estimate, digital natives represent only 12% of the total revenue generated across sectors of developed countries. This emphasizes the fact that the traditional firms still have significant potential to automate, streamline and digitize their processes through digital means and benefit from lower costs, improved brand loyalty and increased revenues. However the journey for digital transformation remains a challenge that needs to be planned and executed carefully with the right principles.
"Recipe for Digital Transformation for Enterprise world" by Vinoth Haldorai is licensed under CC BY 4.0. You are free to share and adapt this material with attribution.
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