12 digital transformation strategies from GE, Domino's, Scotiabank
The digital revolution is shaking up almost every industry, promising companies huge improvements in operating efficiency through innovations such as big data analysis and the digitization of internal and external processes.
But as companies rush to digitize, they could be missing a vital component of that transition: ensuring they have a workforce that’s digitally adept. If your staff is stuck with an old-world skill set, you can’t hope to succeed in a fast-moving digital age. In fact, your business is probably going to face extinction.
Companies are handling this leadership challenge in various ways. Some are hiring all new people. Others are retraining existing staff. Organizations manage digital transformation differently, but the successes of early adopters are yielding some tried-and-true strategies for getting the whole organization on board and thinking digitally. We spoke to executives at three companies that are well along on their digital transformation journeys to find out what they’ve learned. Here are twelve tactics and strategies that worked.
GE builds digital foundry
General Electric is executing on a sweeping program to transform itself into what CEO Jeffrey Immelt calls a “digital industrial” company.
Although GE's business is healthy, executives realized years ago that the company was vulnerable to disruption unless it learned to use data for strategic advantage. GE decided to solidify its customer relationships and develop new revenue streams by mining the treasure trove of information generated by its industrial equipment.
Immelt declared that GE needed to become a software and analytics company. Today, software is a $6 billion business for GE and growing, thanks to innovations like sensors in aircraft engines. GE uses data from these sensors to create customized maintenance schedules that save customers money and keep aircraft aloft longer.
To transform its workforce, GE chose to go outside for new talent. It realized that its risk-averse, quality-oriented Six Sigma culture wasn't compatible with the fail-fast style of Silicon Valley startups. So GE invested $1 billion in a software development center in San Ramon, California, and hired 1,500 Valley vets to drive its digital transformation.
Hiring the right people was critical. GE wanted to emulate the risk-oriented culture of Silicon Valley, but it also needed to build bridges to its mature businesses. The company decided it needed engineers with at least eight to 10 years of experience and some large-company credentials. GE chose San Ramon, in part, for its family-friendly culture and excellent schools. Employees were selected not just for their technical skills, but also for their willingness to work across divisions.
The secrets of digital transformation success are threefold, GE Chief Economist Marco Annunziata told Harvard Business Review:
- Get executive support
- Encourage cooperation between old-timers and digital natives
- Leverage existing strengths
As with all transformation initiatives, support from the top was essential. “Companies that handle change well are those in which leadership is trusted,” says James L. Heskett, UPS Foundation professor emeritus at Harvard Business School.
Companies that handle change well are those in which leadership is trusted.
James L. Heskett UPS Foundation professor emeritus at Harvard Business School
Collaboration was important, too. Companies that have been around as long as GE (it was founded in 1892) can easily become siloed and risk-averse. GE positioned its digital initiatives as additive to its existing knowledge base.
“Many of our people are good at understanding operational technology; we also wanted them to understand information technology,” said Marc-Thomas Schmidt, chief architect of GE Digital’s Predix data-gathering platform, in an interview with the SiliconANGLE news site at GE Digital’s Innovation Day 2016. “It was important to bring together those two groups to talk to each other.”
The digital group partnered first with peers who were open to change and could quickly benefit from digital enhancements. For example, the aircraft engine division immediately saw the value of customized maintenance schedules.
To make the benefits of transformation real, the company also urged early adopters to share their innovations broadly, and it promoted their triumphs. Celebrating success has gradually brought the naysayers on board. “Almost in parallel with building the platform we also built a popular set of use cases to illustrate what it can do,” Schmidt adds.
Lessons learned at GE:
- Leaders must walk the walk.
- Hire people who have a collaborative orientation and fit your existing culture.
- Make digital additive to—not competitive with—existing strengths.
- Celebrate and promote success.
Domino's transforms from within
The $2.2 billion pizza delivery giant is on a mission to make ordering a Brooklyn-style ham and pineapple pie as drop-dead simple as possible. Its strategy: digital everywhere.
A groundswell of customer criticism on social media initially spurred the overhaul and focused all eyes on the customer. "We were going to be fanatical about delivering a great and unique consumer experience,” says Chief Digital Officer Dennis Maloney. “That means making it as easy as possible for customers to order.”
Thoughtful messaging helped rally employees behind the customer experience initiative. The company adopted a slogan—“Oh, yes, we did”—that underscored its ability to change. That slogan was emblazoned on signs throughout its headquarters and stores, as well as in all its employee communications.
Feedback from social media—both pro and con—also helped raise awareness. Customer tweets were posted in common areas of the office. Employees were encouraged to watch focus group recordings to hear unvarnished customer opinions. CEO J. Patrick Doyle served as cheerleader in chief for the digital makeover.
Thanks to an internal training program, one-third of the staff at the pizza company’s headquarters are now dedicated to building, installing, and promoting digital platforms. The company rejiggered its software development process around experimentation and small projects. Teams were co-located to enhance communication. Large development efforts gave way to small, project-focused groups. Good ideas were quickly prototyped and tested in small markets, where failure wouldn’t be a black eye.
“When we fail, we try to fail small,” says Maloney. “Oftentimes, almost no one even knows.” Keeping failure in context also encourages teams to take risks, he adds: “We’re selling pizza. It’s not life and death.”
When we fail, we try to fail small, oftentimes, almost no one even knows.
Dennis Maloney Domino's Chief Digital Officer
Through a program called AnyWare, customers can now order more than 13 million combinations of crust and toppings from nearly any connected device, even a smartwatch. Rating service Applause recently named the company's mobile app the best in fast food. The digital overhaul has helped drive Domino's shares up 50-fold over the past eight years.
Finally, customers provide constant feedback on Domino's digital services via social media. “Customers give you a never-ending litany of thoughts and behaviors any time they click,” says Malone.
Lessons learned at Domino's:
- Make goals clear and simple.
- Use language that reinforces desired behaviors.
- Keep teams small and projects contained.
- Test in small markets and expand opportunistically.
- Use digital feedback loops.
Scotiabank makes retail banking cool
Digital technologies have made life easier for bank customers, but not necessarily for bank executives. Between ATMs, online banking, mobile apps, and now remote deposit, many customers just don’t visit branches any more, and when a customer’s only contact is via a website, all banks look pretty much the same.
Bank of Nova Scotia (more commonly known as Scotiabank) chose to embrace this shift by reimagining online experiences in a new context. “The days of banks being compared to other banks are long gone,” says John Doig, Scotiabank’s chief marketing officer. “The Apple Store is the consumer’s frame of reference.”
That change in thinking meant retraining everyone from front-line employees to marketers in all things digital. “Digitizing the bank is not just an IT project,” Doig says. “It’s a process change, a marketing change. It changes everything.”
Digitizing the bank is not just an IT project. It’s a process change, a marketing change. It changes everything.
John Doig Scotiabank’s CMO
That's not easily done at a 184-year-old institution in a risk-averse industry. Scotiabank took a page from GE’s book by setting up a tech foundry called the Digital Factory, which employs more than 300 programmers, user experience designers, and data scientists. The factory isn’t just for techies, though. “It’s people from compliance, branches, management, IT, and elsewhere, all focused on how we make the end-to-end interaction better,” Doig says. Part of the team came from the ranks of current employees, while others were digital new-hires. All are focused firmly on creating great customer experiences.
To evangelize the change throughout the organization, the bank held a three-day online "Scotiabank Jam,” inviting 89,000 employees from around the globe to sound off about change, values, and the customer experience. “People could feel free to comment, criticize, or just view,” says Doing. “Nothing was censored.” The Jam logged more than 1 million page views, and the archive is still available internally.
To attract digital natives, the company has stepped up ongoing investments in community hockey and a youth-oriented volunteer program called Bright Future. While recruitment isn’t the primary goal, “more and more of our community investment will be focused on youth,” Doig says.
Lessons learned at Scotiabank:
- Find and involve employees who support transformation.
- Talk and listen a lot.
- Encourage honest feedback, but don’t waver in your convictions.
Despite different circumstances, these three innovators had several things in common. They all started with a solid base of executive support. They all envisioned clear goals and measurable outcomes. And all of them stressed building on a foundation of existing strengths.
Perhaps most important, all learned to forgive—and even embrace—failure. In a business climate that punishes long planning cycles, the ability to “fail fast” and learn must become an intrinsic part of the culture.