Digital transformation is one of today’s hottest topics. It’s a wide field and the word is often used as a catch-all to mention anything new and technology related. Anyway : it’s a priority issue even if there’s no real consensus on what it means and how to achieve it.
The issue of the 2014 State of Digital Transformation by Altimeter is the perfect occasion to take stock of the state of the art.
No one knows what digital transformation is
Nearly every business (88%) has started something in terms of digital transformation, what doesn’t mean the same same thing depending on the person asked.
It’s not a surprise : digital is, above all, a way to rethink one’s business model and operations. It impacts everything and in various ways depending on the company’s industry and one’s field of concern. It’s a catch-all in which many matters can be found. But, as the reports says, “it does not matter, we’re learning”. What matters is the consensus on the sense of urgency, as for the rest businesses will learn over time. What matters is to start somewhere : all the matters will come by themselves one after the other. Evidence that’s it’s a systemic issue.
According to altimeter, what allows to say that the matter is still poorly understood is that even if 88% of businesses has started something, only 25% started to modelize a new customer journey.
I’m really convinced that the internal transformation will be driven by the external one and that reinventing customer experience helps to make sense of all the rest and understand the value of change. Both sides must come together : external facing operations need the inside organization to be aligned while employees need the sense given by the impact on customers. But something is clear today : the marketing side is pre-eminent and the internal part of transformation is secondary. What is confirmed by the numbers :
A fact that’s sadly logical. CHROs are conspicuously absent and very few observers seem to be concerned about that. But I fear we’ll regret it one day. And if digital transformation can be achieved without them, it will logically lead to questioning the role and legitimacy of HR in organizational transformation.
Digital transformation is still too technology-focused
Hence the report points at another bias :
STRATEGISTS OFTEN EQUATE THE TERM â€œDIGITAL TRANSFORMATIONâ€ WITH A SHIFT
IN TECHNOLOGY INVESTMENT, WHEN ITS TRUE IMPLICATIONS SPAN FAR BEYOND TECHNOLOGY AND INTO THE REALMS OF INFRASTRUCTURE, ORGANIZATION, LEADERSHIP, AND A RENEWED FOCUS ON THE ENTIRE CUSTOMER EXPERIENCE.
63% of respondents confirms that culture is the main issue.
Then follows a well shaped discourse on the only thing everybody agrees on : it’s all about customer experience and how to deliver it.
The only thing everybody agrees on in digital : customer experience
So customer experience is pulling the digital transformation. It makes sense but raises a question to which I have no answer today : will this lever be enough to trigger all the needed internal changes ? It’s easy to understand how easier it will be to transform operations by selling a meaningful re-alignment that has a tangible impact but what about employees that are far from the customer, support functions ? A deep organizational transformation should happen to make these people closer to the customer and make them understand their impact on this side.
So there is no surprise if none of the expected benefit is about internal operations, management or collaboration.
The bothering truth of digital
So digital transformation is a matter of customer experience, what is true as I often wrote. Customer orientation is what drives management philosophy and operations, and caring about others, should they customers or colleagues seen as internal customers drives all the new ways of doing things. Without alignment, employees won’t be able to support customer facing activities and the necessary symmetry of attentions (employees can’t give customers what – attentions, behaviors etc.. – they don’t receive from their company) won’t show any sign of life.
But it’s seems to be an unbalanced vision and the balance point is at the HR level. Some HR get it and jump at the opportunity, some others don’t. We’ll see the result in the future.
But even if we agree to blow the whistle regarding to a vision that’s exclusively relying on marketing and where internal transformation seems to be a minor micro-adjustment, this report is an excellent photography of what things actually are, how digital transformation is sold to businesses. Why this imbalance ? It’s easy to understand : have a look at the budgets allocated to marketing and HR/communication. Consider how visible and fast external change is compared to internal one. It’s easy to understand why the focus is on customer experience.
For the better or the worse ? Future will tell.
Customer experience drives digital transformation but is not the digital transformation. Slight but meaningful difference.
Now you can download the report to go further.
Here’s a quick overview
A the same time, Deloitte and the MIT Sloan issue a new report on social business, with a focus on the generated value for businesses. 73% of businesses consider the matter as important today and 90% think it is going to be important in the next three years. What is also worth noticing and goes against many received ideas is that non US companies are more likely to say that social business is going to change things than US ones (75% vs 61%).
This kind of normalization, the move from an emerging matter to something more anchored in reality has consequences in a field I’m very interested in : results measurement. The previous years the norm was “we don’t measure” – or, to be more precise, we measure external facing activities but not internal ones – but it seems to be changing now.
90% of the Businesses that are the most mature are implementing measurement programs, and half of the less mature ones are doing the same. The metrics used go beyond tool activity measurement which, as I often repeat, only tell that the engine is turning but not that the car is moving. What they try to measure now is operation and finance related. No surprise : the more mature the business is theÂ most sophisticated the metrics are.
Social Business : the need to move beyond marketing
The big difference with the Altimeter report is that according to Deloitte and the MIT Sloan, Social Business is not a matter of marketing (only) anymore. Hence it’s title : “Moving beyond marketing”. Concerns are about :
– making better decision : it’s not only about new activities but data analysis
– build the right vision and leadership : leaders must have a clear understanding of the way social business will radically change the way the company operates.
– moving beyond marketing to make the vision work. It’s about innovation, talent management and operations
You can download the Deloitte-MIT Sloan report here.
My point of view : the idea of moving beyond marketing shows it’s a continuum : being more effective internally is useless if it does not impact the customer but being externally nicer is useless if operations are not aligned and employees unable to support it. Founding blocks are the hidden part of the building, the least exciting one but it supports what is eye-catching.
That said we can see two opposite discourse. And the fact that the two reports aren’t about the same thing (Sociab Business and Digital Transformation) is not a valid explanation : it’s the same thing with two different labels. What is easy to explain :
– because of their DNA, Deloitte and Altimeter don’t consider things from the same perspective
– in both cases, the pre-eminence of marketing is a photography of the situation as it is. A situation some are happy with while others want to move forward.
My conclusion ? Digital transformation is about transformation before all. Don’t be mistaken by buzzwords and trendy concepts and take it by the other end : what does your company need to design and execute new business models. It’s as simple as that.