Many organisations are failing to move with the times -- from simple survival to fuelling business growth -- through “digital transformation”. For the most part its lack of understanding of the term that is the greatest hurdle.
Even the official definition is way too complex. Digital transformation is the profound and accelerating transformation of business activities, processes, competencies, and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritised way, with present and future shifts in mind.
iTWire has published many articles on the subject but still, it is more a buzzword than practical advice. iTWire asked Luca Martini, Accenture Strategy Managing Director for Australia and New Zealand and South Korea, to give an enablers position.
Martini has a Master's in Business Administration degree from the University of Verona, Italy. He is based in Sydney, Australia. With more than 20 years prior at McKinsey, he has worked in more than 20 countries across Asia, Latin America and Europe. His client work has encompassed operations strategy, technology strategy, growth and innovation, and digital transformation.
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“To realise long-lasting returns for their digital investments, organisations need to understand the levers that drive growth across the value chain. If they focus on applying digital initiatives in a way that is harmonised across all the factors that can influence the total customer experience, growth will follow,” he said.
Companies today have made significant investments in adopting digital technology to reduce costs and enhance efficiency. Speaking broadly, do you think these investments have paid off?
It is a given that digital transformation can accelerate and automate complex processes by delivering billions of data points to users’ fingertips in fractions of a section. Take the London-based IntelligentX Brewing Company. The Company has developed a digital system to continuously collect and incorporate customer feedback, which the system itself uses to brew new versions of the company’s beers. The system offers an infinite wealth of information at the touch of a button that allows users to move effortlessly from the physical to the virtual world.
In a business context, digital has assisted organisations to transform the customer value chain. However, recent research from Accenture Strategy has revealed that digital has not delivered the growth that many anticipated. Only 24% report their company consistently delivers on strategies that drive value and create a competitive advantage for the organisation.
What do you think is getting in the way of growth through digital?
Accenture’s Agility to Compete Research had five main takeaways about the lagging progress of achieving growth through digital. Firstly, executives are not certain about where to invest.
Only 23% of executives’ report being able to consistently identify and remove business activities that do not add value.
Secondly, teams are not working together to decide where to invest and what related actions are required. What’s more, although teams have achieved cost saving measures through digital, many have missed out on growth objectives and improved customer loyalty solutions. While many companies have adopted digital initiatives, they have failed to address the ways that digital transformation can conflict with legacy cultures and ways of doing business.
Finally, the research found that digital needs to be part of a bigger plan to fuel growth. Rather than investing savings in areas that deliver incremental benefits, cost savings should be reinvested strategically in line with business practice.
Can you provide a case study of how these obstacles to digital growth can play out in reality?
Accenture works with a range of clients to address these issues. Recently we worked with a large global telecom provider who wanted to digitally transform portions of its online service.
The goal was to allow simple and fast ordering and installation for residential and small business customers. Their digital strategy was to automate call centre activities with the goal of reducing the time and minimising the labour required to process the volume of transactions.
This resulted in a reduction of operational cost but reduced the overall customer experience. After a few hiccups, the organisation eventually developed a strategy for improvement that would allow customers to effectively self-install equipment rather than going through a technician. This improved customer service levels independent of digitally transforming call centre operations.
Given this failure to fuel growth, what is the missing link?
The missing link is finding what value stands to be unlocked by digital in the customer value chain. To raise sustainable growth through digital investment, organisations need to collaborate from within and form a complete view of the customer experience. Given that 73% of companies cannot consistently deliver on strategies and execute the activities that drive value for an organisation, they need a game plan.
Moving forward, what steps can be taken to identify possibilities for growth and understand the customer value chain?
Organisations need to move away from a “siloed mindset”. Very often this occurs in companies with employees in multiple functions, at widespread locations, which produce diverse offerings.
Autonomous groups within an organisation often don’t easily share information with other groups in the same organisation. This can result in a narrow approach and broader opportunities are potentially missed. Breaking down the siloed approach to information sharing has proven benefits in creating opportunities for business.
While diversity is a positive business attribute, other factors that make a company successful can get lost amid functional silos. To overcome this, leaders must encourage a holistic view of the business and the uninhibited flow of information. This will facilitate an understanding of exactly where digital capabilities are required to drive growth.
Can you tell us more about breaking away from the silo mindset?
Breaking away requires a coordinated approach. One method would be to create an end-to-end blueprint that provides an accurate depiction of the way an organisation operates, not just the way the organisation is structured. The blueprint should consider processes, people, systems, data and business rules all in the context of designing and delivering each distinct product or service for unique customer segments. By understanding the overall customer value chain, organisations can make targeted enhancements to ensure a seamless customer experience.
What can organisations hope to see if these solutions are realised?
Once the business understands where digital can truly deliver value and optimise the customer experience, it can stop shooting in the dark with digital implementations. A clearly defined link between value creation and growth strategy provides businesses what they need to maximise growth potential and differentiation.