Getting Ahead of the Digital Competition
Traditional companies looking to compete with the latest wave of digitally native challengers know they must find ways to offer a great service and digital customer experience. But to succeed, they must be prepared to go much further than this and make some fundamental changes to the way they approach business.
To achieve this kind of fundamental digital transformation, there are three key areas to focus on. The first is using data and software to deliver smart, personalized and timely services. Second, evolving digital brand experiences and systems with a focus on improving the customer experience on digital channels. And finally, shifting organizational culture, systems, and process to be more iterative and dynamic.
The art of self-disruption
For traditional companies in established sectors, such as financial services, healthcare or retail, the biggest barrier to digital transformation is figuring out how to self-disrupt without relinquishing the strengths of incumbency, such as scale, customer reach and expertise.
Take Walmart. Recognizing that Amazon represented a threat that could easily become existential, the retailer – still the world’s largest company by revenue – chose to completely rethink how it operates, right across product, customer experience and technology.
It integrated its internal operations and retail divisions to allow the company to adopt technology faster. It automated customer processes, and set up Marketplace Returns, setting minimum returns standards for third-party sellers on its website. And it started offering online order pick-up in its stores, thus integrating its digital and physical operations.
Walmart also bought e-commerce business Jet.com for $3.3bn in 2016, and last year spent another $16 billion on Indian e-commerce company Flipkart, resulting in a huge increase in its e-commerce sales. It’s also set up its own tech start-up incubator, called Store No. 8, to explore how technology can improve the customer experience of the future.
At the heart of all successful transformations is a strong triad of product, engineering and design – all working iteratively at speed to drive better customer experiences.
Whatever you do, you must keep moving
Digital transformation is a large-scale endeavour for any traditional company. At the heart of all successful transformations is a strong triad of product, engineering and design – all working iteratively at speed to drive better customer experiences.
Once your product team is in place, you need software architects and developers to help build and move fast. And you need designers to bring your digitally native consumer vision to life and – if they’re good – to build design systems that allow you to iterate quickly based on data, customer feedback, and market trends.
Crucially, it’s important to avoid getting stuck in the planning phase. You must make things. Probably the biggest challenge to digital transformation is organizational inertia and risk aversion. The best way to combat that is to create customer-facing solutions, show progress and have impact.
Your design team should paint a North Star vision for your brand, but it must be flexible. The whole point of being digitally native is to be able to adapt at speed, based on what your data and customers tell you.
Design must be an equal partner – with product and engineering – in driving and delivering that vision, creating flexible design systems that help software teams to be nimble.
That three-way partnership must be flexible as well as equal: each partner should be allowed to cross the lines of each other’s responsibilities. It’s still rare to find a design team – in-house or agency – that’s set up to be both visionary and nimble.
The key is embracing a digital way of thinking. Philosophically, this means coming from a place of being comfortable with change – make things, test, learn, and improve – and not a place of fear or risk aversion.
McDonald’s has done just this, engaging design consultancies such as Method and Huge to help reimagine its future and acquiring personalization company Dynamic Yield to create a more technology-driven customer experience. At McDonald’s, it feels as though innovation used to mean finding new ways to make burgers marketable – now it’s more about using technology to deliver a better dining experience.
For traditional companies in established sectors, such as financial services, healthcare or retail, the biggest barrier to digital transformation is figuring out how to self-disrupt without relinquishing the strengths of incumbency, such as scale, customer reach and expertise.
More change ahead
Future-gazing is always difficult, but it seems the next wave of innovation will be driven by machine learning and AI, by blockchain, and by augmented and virtual reality. And it’s already happening. Look at Spell.run, which provides a cloud-based machine learning platform that facilitates collaboration and accelerates organizational change. Or OpenSpace.ai, which brings the power of computer vision and machine learning to the construction and engineering industry. Or the UMA Project, which is using blockchain to change how global investors can engage with derivatives markets.
The key is how established companies in these sectors find ways to marry their established advantages to deliver a better customer or user experience using these emerging technology solutions.
Ritik Dholakia is the Managing Partner & Founder of Studio Rodrigo.
