Why your digitalisation efforts have failed up until now. And how to change that to achieve success. Five ideas for a fresh perspective on digitalisation.
A survey* of 1,000 international top-level managers in spring 2019 has brought some thought-provoking findings to light. According to this survey, 58% of managers don’t know where to start with their digital transformation strategy. 56% believe that the transformation processes they have put into practice so far were a waste of time. 87% admit that they did not reassign any priorities from internal processes at the start of the transformation. 63% define KPIs for the transformation without actually knowing what is going wrong in the business. And yet, 33% of the same managers state that they have spent over EUR 500,000 on their transformation strategy in the past 12 months. This all really sounds like the saying: Having lost sight of the goal, we redoubled our efforts. Or to put it even more bluntly: Everything was going to plan. But the plan was bad.
Or, as George Westerman from the MIT Sloan Initiative on the Digital Economy puts it: “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” This raises the question of: How can you tell whether you are creating a caterpillar or a butterfly? We think it’s all about perspective. The focus. An understanding of what the core part of digital transformation is really about. You can read about our five ideas for a fresh perspective on this here:
Idea 1: Digital transformation means: Returning the customer to being the key focus of commercial activity
You could also say: The transformation of your mindset, away from Henry Ford’s concept of “You can have a Ford in any colour… as long as it’s black.” And towards Jeff Bezos’ concept: “The most important thing is to have an obsessive-compulsive focus on the customer. We seek to become Earth’s most customer-centric company.” Old hat? Not at all. “Our service technician will pop by to see you tomorrow between 8 am and 4 pm.” We are all still way too used to receiving these kinds of emails. Customer focus? None at all. Even the District Court of Bremen agreed with a teacher and ruled that customers should not have to wait eight hours for minor services, such as the installation of a telephone connection. Companies that have really absorbed Idea 1 don’t need a district court to tell them this. Rather, they ask themselves: What do I need to do to become even more relevant to my customer’s day-to-day life? What can I do to improve my customer’s life even more? And only then, once they have pinpointed this focus, do they turn to the question of: What digital tools can help us do that?
Tip 1: Customer focus is not a tool but a business model. The customer is not the company’s environment. The company is the customer’s environment.
Idea 2: Digital transformation means: Enhancing creativity in the commercial creation process.
This means much more than “just” creativity in the context of advertising, i.e. images, text, sound, cheeky ads, cool websites or emotional image concepts. It is about creativity as Albert Einstein understood it: “Creativity is intelligence having fun.” It is about asking a different question. The question of what the customer truly wants: Does the customer really want a hammer or does the customer actually want there to be a hole in the wall? And does the customer really want there to be a hole in the wall or do they actually want a bracket for some shelving instead? Does the customer want a better taxi or to get from A to B as quickly and easily as possible? Does the customer want to own records or have unlimited access to the whole world of music? Does the customer want a car or mobility? A hotel or somewhere to spend the night? Frederick W. Smith, CEO of FedEx, describes this concept for his company: “We thought that we were selling the transportation of goods; in fact, we were selling peace of mind.” That’s how to work. And earn money. Creativity applies to all areas of the company, from top management, to product development and right up to sales. A digital mindset means asking the right question. And you need creativity to ask the right question. And you need creativity to answer it as well. Mountains of data are not useful at all if you don’t have a creative mind to identify the relevant information hidden in that mountain of data, select it and make it useable. Technology doesn’t create any ideas. And, if everyone is using the same technology, it’s about using it more creatively than everyone else.
Tip 2: Value beats features. Discover your “Unique Satisfaction Proposition”. What is crucial is not: “What can we do? What do we have?”… but: “What do our customers (really) need?”
Idea 3: Digital transformation means: Production is silver and connection is gold.
The company that is arguably the most powerful in the world at the moment is called Blackrock. It manages assets worth around USD 6.5 billion (in mid-2019), making it the world’s largest independent asset management company. Its customers include pretty much all the big players of this world, from sovereign wealth funds to insurance companies and pension funds. Blackrock’s secret is called “Aladdin”, a supercomputer the size of a village that permanently captures an extremely broad range of data and events happening on our planet – economic developments, exchange rate fluctuations, election results, natural disasters – and analyses and connects these, using them to predict future scenarios and therefore create recommendations for action and investment decisions. In short: Blackrock connects: Pieces of data that do not really have anything to do with each other to create a benefit for its customers. The Lufthansa start-up called YILU does this too. This smart travel platform collects all the information that is relevant for travel in one place and provides this to the respective partners in bundles. This allows the partners not only to learn a lot about their customers’ preferences and travel habits, but also to provide a complete holiday experience that is perfectly tailored to the individual needs of the customer: from the perfect taxi provider at the destination, to the right restaurants located close to the hotel and even special interest offers. This makes the airline a travel allrounder and transforms the hotel into a travel service. The same principle of connection is behind practically all companies that are experiencing a boom at the moment, from Amazon to Airbnb and even Tinder.
Tip 3: Don’t think in terms of product categories but, rather, in terms of the realities of life. Connecting expertise, technology and partners, even outside your own industry, perhaps even with competitors, will increasingly open up key areas of growth.
Idea 4: Digital transformation means: It is not the product itself that is key but what comes with it.
Digitalisation, and the equalisation that goes along with it in terms of location, technology and informality, is increasingly leading to a significant level of ‘sameness’ when it comes to products and services. True USPs based on the product itself are becoming increasingly rare nowadays, especially in the B2B sector. Companies can only stay at the forefront of innovation for a short while before the competition follows suit. The good news: There is one field in which you have unlimited opportunities to stand out from the competition: And that’s service. In the words of the NFL legend Roger Staubach: “There are no traffic jams along the extra mile.” You can turn your extra mile into a four-lane motorway. Think about FedEx: There are limits in terms of logistics. But you can still develop peace of mind: from how the call centre agent greets you right up to the optimisation of the user experience on the website.
Tip 4: Develop your extra mile in terms of service. But: It only counts as “service” if the customer also sees it as added value. The more we get to know our customers, the better we can cater to their needs. This is where we can use our digital aids.
Idea 5: Digital transformation means: The most helpful company wins.
The fifth idea is derived from the first four because it is clear that: In terms of marketing, digitalisation is primarily about creating a “benefit for the customer” and only secondarily about (digital) technology. Only things that the customer sees as added value are worthwhile. Therefore, the key to digital transformation is: The most helpful company wins.
Tip 5: Don’t ask: “What can we do? And how can I make my company more digital?” i.e. don’t try to “improve the caterpillar”. Rather, you should be asking: “What are our customers really looking for? What key benefit are they hoping to find? And (only) once you have done this: “What can we do to fulfil these expectations in an even better way and make our customers’ lives even easier? And how can digital technology help us do this?”
That’s how to start your process of metamorphosis and discover your inner digital butterfly more and more. Butterflies are not always necessarily faster than caterpillars. They are always better, though.
More information is available from:
mario.motzkuhn (at) schindlerparent.de
* Survey of 1,002 C-level managers and 1,009 business analysts from companies with over 500 employees in Germany, Great Britain, the Netherlands
and the USA on behalf of the software company Celonis in January 2019. Source: Miriam Schröder, “Most companies wade straight into digitalisation without having a clue how it works” [“Die meisten Unternehmen stolpern planlos in die Digitalisierung”],
Handelsblatt, 22.03.2019, web.