Transform your customer experience to unleash your company's full potential
Have you ever felt a bit of anxiety over how others seem to be having more fun than you? You may be suffering from FOMO, or fear of missing out.
The corporate equivalent of FOMO is alive and well in boardrooms around the globe. Should we be using blockchain? Everyone seems to be talking about blockchain. What about AI? Let's go find some opportunities in artificial intelligence to boost our market position. How can we make our products more connected with the Internet of Things? People love IoT.
It's the wrong approach to digital transformation, and unfortunately, it's far too common. Fear of missing out on IT trends won't help corporate leaders figure out which technologies will lead to new revenue streams. Instead, they need to start with their business strategy and goals. Companies seeking to transform their business models should identify their customers' problems first and then find the technologies that are best to build a solution.
Please read the report: Accelerating the future
When rethinking the solution for customers' problems, you might stick with your existing capabilities and knowledge. At this point, new digital technologies can help you tackle the problems in a new, differentiated, more meaningful way for your customers. But start with the new concepts and potential of digital technology, not the product or the solution that is offered to you.
Applying digital technology to the core value proposition of your business can put you at the leading edge of new kinds of customer interactions. Consider technology as both a short-term cost-cutting measure and a long-term investment in new value. Here are some practical insights for management teams to embrace when they set out to innovate their business models with digital transformation.
Become the disruptor
Traditional, non-digitally native companies often don't see it coming: A startup enters their market with an innovation that makes them obsolete. Blockbuster, Kodak, Xerox―the list goes on and on. Companies like these don't have a sense of urgency to reinvent themselves. They're too focused on what their direct competitors are doing to even see the true disruption coming. If they decide to try to digitally transform, they often take the easiest route instead of the most impactful one.
In the digital era, customer experience will overtake price and product as the key differentiator. The key question you need to answer is how is your business redefining the experience for your customers and creating unprecedented interactions that differentiate you from others? Bain reports that although 80 percent of companies believe they deliver "super experiences," a mere 8 percent of customers agree.
Empathize with your customer and your employees
We're living in the age of insights and pursuing the idea to understand the past and predict the future by applying artificial intelligence to data. But AI remains artificial. New ideas and experiences need empathy with your customers to see, feel, and understand their needs. Radical new experiences can emerge when AI, based on combined data sources, and human empathy come together―the combined power of data insights with emotional, cognitive, and social empathy. That creates completive advantage and is true customer focus.
Becoming customer focused is a cultural step, and it's equally important for both B2B and B2C companies. With business customers, the relationship is often more complex and the expectations on the part of the buyer may be greater. It's often easier to empathize with customers, but the impact of that empathy can be much more significant with business customers. Either way, it's about exploring your customers' unsatisfied needs and creating solutions to overcome them.
It's also important to show empathy for your own employees and co-workers in a digital transformation. Adopting a digital mindset requires breaking down traditional silos and becoming cross-functional. There is no one-size-fits-all approach to doing this―it's a very unique process to the company going through it.
Craft your digital transformation story
It is understandable that many companies will tackle the low-hanging fruit first when they embark on their digital transformation. They'll start within their comfort zone, which often means automating internal processes. This is not necessarily wasted time―automation and digital tools can make all areas of your company faster, stronger, and more flexible. But addressing business efficiencies alone won't get you where you need to go.
So, how should companies start their journey? Before you invest in an innovation, you want to craft the compelling need: What is the value proposition for the customer, and how can you create unexpected relief for your customer's problems? Having that, you can start to test your ideas with friendly customers to get their reaction and convince stakeholders to buy your idea, based on a crafted, meaningful narrative.
Get buy-in from your management team and think holistically about your organization. Take pragmatic first steps that are tangible and build on small successes as you go. Develop and communicate constant principles that keep you guided. Balance is sometimes the key―you need to develop an innovation pipeline that allows you to profit from current revenue streams while also giving the opportunity to invest in new ones. This kind of organizational ambidexterity is a way of constantly embracing and seizing change, and it will help beyond digital transformation.
Create a digital ecosystem
The World Economic Forum estimates that 70 percent of new value created in the economy over the next decade will be based on digitally enabled platform business models. Ask yourself: "If I could start a company to compete with my own, what would I do?"
It starts with an open ecosystem. Your company alone might not be able to fix your customers' problems. Develop relationships and systems where others can deliver value along the customer journey. For example, Apple fosters an immense developer community that has collaborated and innovated countless solutions for Apple's customers.
A digital ecosystem also requires entrepreneurial spirit within your ranks. It's a cultural transformation as much as a technological one. Employees must learn to constantly ask themselves, "How can this be automated or improved?"
And it's impossible to understate the importance of data in a digital ecosystem. You can't redefine your customer experiences without having the right data. The entire organization must become centered around data, both internal and external data that can help you redefine customer experiences and differentiate you from your competitors.
Fail fast, but show successes
"Fail fast" has become a cliché, but so many organizations claim this paradigm that no one is really living it. It requires a cultural shift―employees need the psychological safety to go beyond their boundaries, and leadership needs to be a role model. Work iteratively and look for opportunities for minimum viable products (MVPs). This allows you to release innovations in short cycles, and more important, it gives you an opportunity to test new products and features with your customers, leading to early successes. Alternatively, if your customers don't respond well to a new innovation, you haven't burned up too much time and money.
It's helpful to think holistically and use management techniques of the full innovation spectrum. Agile product management is one of them and focused on MVPs. But without the right idea, there is no innovative MVP. The key to making your idea tangible is to start with design-thinking techniques followed by a design sprint. A continual deployment pipeline allows for faster release cycles.
A common problem when companies embrace an agile environment is that they try to use it for all projects even though some aren't fit to be agile. Try a hybrid approach instead. Run everything in a stable and consistent manner, and at the same time, allow employees to innovate. Most important, know that transforming your business model won't happen overnight.
In a few years, it is possible that no one will be speaking of digital transformation because the term will have become irrelevant: Non-digital businesses simply won't exist.
Fear of missing out on a hyped technology won't drive your journey to digital transformation. Reinvent your business model by merging innovation and efficiency. Advance existing revenue streams and create new ones. Focus on solving your customers' needs both today and tomorrow in innovative ways that are enabled by digital technology.
This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.