Altimeter Group - The Eight Success Factors of Digital Transformation

8/18/2019 Altimeter Group - The Eight Success Factors of Digital Transformation

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EXECUTIVE SUMMARY Digital transformation is among the greatest catalysts for the evolution of business.It is a movement that spans beyond the scope of new technologies and systems, whilealso representing the modernization of business philosophy, purpose, competitiveness,and models that shift with evolving audiences. As customers and employees change,they do so at accelerated velocities that often outpace an organization’s ability toadapt. This exposes critical business functions and processes (marketing, sales,services and innovation) to inevitable disruption inside and outside the company.

Over the years, Altimeter has consistently focused on an important slice of digitaltransformation speci c to the digital customer experience (DCX). We de ne digitaltransformation through this lens as:

The realignment of, or new investment in technology, businessmodels, and processes to more effectively compete in an ever-changing digital economy.

In this regard, digital transformation represents the quest to understand howdisruptive technology affects the DCX. As such, our research focuses on howcompanies are learning to combine technology and operational excellence tobuild tomorrow’s business…today.

The direction each business takes in pursuing change is complex, and there is noone way to excel. Nor is there one tell-all anecdote, framework or app to map the

journey of your next steps toward programmatic transformation. Rather, companiesthat succeed do so by incrementally staging speci c strategies that span multipledepartments, technologies, and channels. Throughout our years of digitaltransformation research, we’ve observed a series of important patterns thatcompanies follow in their work to digitally transform. We learned that strategiststake an “opposite” approach to business as usual as they seek new and alternativeinsights and methodologies to blaze new trails.

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The O.P.P.O.S.I.T.E Approach Guides Companies Through Digital Transformation

In this report, we introduce Altimeter’s O.P.P.O.S.I.T.E. framework, an acronym that represents a compilation of eight best practicesguiding today’s successful organizations through their digital transformation efforts (see Page 4) .

We visualized the OPPOSITE approach as a series of concentric circles. This infographic walks you through each layer, fromthe ground up, to introduce why each step is important and how it lays the foundation for your next step. By focusing yourwork around the digital customer experience, the complexities of digital transformation become identi able, approachable,and attainable.

It’s important to note that in our research, we learned that by studying the digital customer, insights lead to new programs andmodels that not only improve the DCX but also the journey and experience for all customers.

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ORIENTATION: ESTABLISH A NEW PERSPECTIVE

TO DRIVE MEANINGFUL CHANGESuccess begins with a renaissance in perspective,vision, and leadership in order to see customersdifferently. To change, strategists must rst shifthow they view and appreciate customers and theirdistinct behaviors, expectations, preferences, values,and other contextual factors.

Change can be scary, and it’s often a political issue.In the absence of information, it’s easy for executivesto underestimate or completely overlook the gradualand inevitable trends reshaping markets.

Success begins with a vision for digital transformationand dedicated leadership to guide companies andchange agents (those pushing for or driving change)in new, unpaved directions. Leadership can comefrom the top or from anywhere in the organization.

Together, leadership, executives, and other changeagents must take action even in the absence of acomplete customer picture. Start by getting a clearview of existing and emerging trends compared toyour current roadmap in order to create a relevantand compelling customer experience.

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PEOPLE: UNDERSTAND DIGITAL CUSTOMER

VALUES, EXPECTATIONS,AND BEHAVIORSBehaviors, trends, expectations, and values reveal newopportunities to earn relevance in every moment oftruth throughout the customer journey. By walking thepath of digital customers, strategists uncover ways to

eliminate existing friction while introducing innovationin the customer journey.

Begin by mapping the customer journey and alsoidentifying missing touchpoints. Then, design a DCX/CXstrategy that capitalizes on the existing journey but alsoinnovates based on research, data and technology/behavioral trends. Interviews, research and data, journeymapping, and observation allow strategists to betterunderstand and empathize with digital customers touncover and guide meaningful investments in a newcustomer experience.

This work must consider customers’ initial intentions,desired outcomes, and eventual behaviors at eachtouchpoint on all devices. More importantly,touchpoints should seamlessly combine to deliver aholistic, and desired, experience throughout everystep in the customer lifecycle.

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Studying andengaging your digital

customers will improvenot only the DCX, but also

the overall journey andexperience for

all audiences.


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PROCESSES: ASSESS OPERATIONAL INFRASTRUCTURE AND UPDATE NEW TECHNOLOGIESPROCESSES, AND POLICIES TO SUPPORT TRANSFORMATION

In this stage, new business models, organizational charts, and supporting processes, systems, and policies are written tostreamline digital transformation.

Change agents perform an audit of processes and policies to identify roadblocks. Models, processes, and policies are theneither amended or rewritten to support new direction and scale. In our research, we found that change agents drivetransformation to the point of scale, at which point governance work is required to standardize and manage new processes.

This work is eventually managed by a cross-functional workgroup supported by executive sponsors. Over time, the group’s

collaboration and planning leads to the development of interim infrastructures to support pilots and the modi cation ofexisting teams and departments.

New models are created to scale and continually enhance the journey and the digital customer experience. This agilityformalizes as each of the next steps unfold.


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OBJECTIVES: DEFINE THE PURPOSE OF

DIGITAL TRANSFORMATION,ALIGNING STAKEHOLDERS ANDSHAREHOLDERS AROUND THENEW ROADMAPDe ne the goal for digital transformation and whythe digital customer experience is instrumental indelivering value to stakeholders and shareholders.Align objectives with key short- and long-termmilestones at all levels relevant to the DCX. Initiativesat every step of the journey must map back toover-arching goals, and every group responsible fortransformation should be accountable. Determininghow progress will be measured is critical in this phase.

Articulate what success ultimately looks like and thesteps to get there. Document transformation in intervalsranging from six months to ve years ahead. Doing sohelps stakeholders grasp what they’re working towardand how they’ll translate the accomplishment ofimportant objectives into additional resources andbudgetary support.

This work eventually becomes a formal strategy processin the following steps.8


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STRUCTURE: FORM A DIGITAL CUSTOMER EXPERIENCE

TEAM WITH RESPONSIBILITIESCLEARLY DEFINEDWith a digital transformation workgroup in place via step three, workexpands in step ve to include other teams responsible for the DCX.Though customer experience is the sum of all engagements, you’ll

nd that touchpoints are viewed disparately and are rarely managedcollaboratively. The formation of a DCX team unites key stakeholdersin multiple groups and roles around a universal understanding of thedigital customer.

The digital transformation workgroup and DCX team serve differentpurposes, though they regularly collaborate. The digital transformationworkgroup manages transformation at the executive level, while aDCX team is formed to manage the efforts in customer experiencethroughout relevant departments. One of the biggest challenges indigital transformation is ownership, and having these two groupsworking in concert helps alleviate those pains.

Successful organizations assign speci c roles within each group toef ciently drive change and avoid confusion. These are often basedon the RA(S)CI process model:

• RESPONSIBLE • ACCOUNTABLE • CONSULTED• SUPPORTED • INFORMED

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INSIGHTS AND INTENT: GATHER DATA AND APPLY INSIGHTS TOWARDSTRATEGY TO GUIDE DIGITAL EVOLUTIONGathering data helps businesses develop a digitally native strategy that invests in and optimizes touchpoints and engagement forconnected, mobile customers. Companies must continually adapt to technology and consumer trends, behaviors, expectations,and values to perpetually iterate on, and optimize the customer experience. Insights must inform ongoing digital transformationin every group while simultaneously introducing new areas of necessary expertise.

Data and research are important throughout the entire process of digital transformation and DCX work in order to reshape theevolving customer journey. However, it’s of limited use until someone translates it into actionable insights. Transactional data isof little value without understanding context, device, behavior and intent. Additional questions include: Why did this transactionoccur? What were the customer’s motivations? Which device was used? And what is the cascading series of events that will result

from it?

These behavioral insights will inform strategies that grow engagement and build relationships throughout the customer journey.The group that houses data and analysts must be empowered to deliver insights to stakeholders and decision makers. This alsoplays out in RA(S)CI charts.

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TECHNOLOGY:RE-EVALUATE FRONT AND

BACK-END SYSTEMS FOR SEAMLESSOMNICHANNEL EXPERIENCEWorking in concert with IT is a must, as the OPPOSITEapproach requires strategists to think about technology’s rolein the customer journey. But, technology is not an end-allsolution. It is an enabler for a larger digital transformationpurpose and vision as it facilitates intuitive, frictionless,cross-channel and personalized customer engagement.

Note that IT departments are also moving through theirown technology roadmaps to modernize infrastructure. It isimportant to consider legacy investments, plans and howthey can and cannot play a role in transformation.They mustbe updated so that roadmaps align with digital transformationand DCX initiatives.

Consider legacy investments and their role in digitaltransformation, but be wary of outdated or misaligned legacytechnology that impedes progress. This includes internalcollaboration and external engagement tools. At the sametime, strategists must ght “shiny object syndrome,” whichmeans gravitating toward the newest systems and platformssimply because of their novelty. Rather, select technology

solutions that solve problems and create opportunities basedon every step in the OPPOSITE framework.11


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EXECUTION: IMPLEMENT, LEARN, AND ADAPT

TO STEER ONGOING DIGITALTRANSFORMATION ANDCUSTOMER EXPERIENCE WORK

Detailed execution is as important as the vision that guidesit. The digital transformation roadmap relies on key leadersand practitioners to drive and learn from pilots, programs,and larger initiatives. All implementation feeds best practicesand contributes to the OPPOSITE feedback loop.

As digital transformation requires heavy investments of timeand resources, execution must be broken into tangible stepswith associated metrics and key performance indicators tocommunicate progress and reinforce or validate work. Usethe OPPOSITE framework and RA(S)CI de nitions as

your guide.

Even the smallest pilots have the potential to trigger bigimpacts, moving companies along the path of digitaltransformation maturity. Execution begets learning, andlearning fosters best practices. This new knowledge shouldlive in a central repository and become part of a recurringcross-functional assembly where insights are shared and

questions are asked and answered. With each step, newroles, departments, processes, and metrics are implemented.

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Even the

smallest pilotshave the potential

to trigger big impacts,moving companies along

the path of digitaltransformation

maturity.


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An OPPOSITE

approach is the beginningof innovation.

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The OPPOSITE framework visualizes yourwork building toward digital transformationand shaping the DCX. It’s also part of a largermovement in the modernization and, in somecases complete innovation in businessdynamics and models.

How you manage these dynamics during thenext few years will de ne the future of yourbusiness and also the arc of your career. Thinka decade ahead, to when people will ask twoquestions: Did you see this technology-basedsea change coming? Were you able to capturethe commercial opportunity?

Consider how you’ll answer. Through thiswork, your organization becomes not onlytechnologically savvy, but also people-centric.As such, the company becomes agile and setsthe stage for even greater innovation.

New understanding of technology, data, andpeople is re ected in the operational capabilityto continually anticipate, rather than merelyreact to customers. Human-centered approachinforms your digital transformation strategy inways not otherwise possible. And, it is thisdigital transformation that will carry profoundimplications for your market, your employees,your customer relationships, and your partners.Basically, everything and everyone relatedto your business.

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METHODOLOGY

Over the past three years, Altimeter conducted a series of qualitative interviews with executives that informed this research,among other reports. We interviewed digital strategists and executives at organizations undergoing digital transformation effortsabout their journey in adapting to the new digital customer experience.

This report includes input from 32 industry stakeholders from large organizations in the following industries: Academia,Automotive, CPG, Energy, Financial Services, Food and Beverage, Healthcare and Pharmaceutical, Hospitality, Nonpro t,Real Estate, Restaurant, Retail, Technology, and Telecommunications.


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BRIAN SOLISBrian Solis is a digital analyst, anthropologist, and also a futurist. Solis studies the effects of disruptivetechnology on business and society. More so, he humanizes these impacts to help people see peopledifferently and understand what to do about it. He is an award-winning author and avid keynotespeaker who is globally recognized as one of the most prominent thought leaders in digitaltransformation and innovation.

Brian has authored several best-selling books including What’s the Future of Business (WTF), The Endof Business as Usual and Engage!. His latest book “X,” explores the intersection of where businessmeets design to create engaging and meaningful experiences.

JAIMY SZYMANSKIJaimy Szymanski is an industry analyst, focusing on how organizations adapt their digital strategiesand core business models to serve the new “connected customer.” She has authored multiple researchreports and artifacts on the topics of digital transformation, the autonomous world, consumer mobile,customer experience, and the Internet of Things. Jaimy provides independent research and advisoryservices to companies in varied industries that are affected by emerging technologies.

ABOUT ALTIMETERAltimeter, a Prophet company, is a research and strategy consulting rm that helps companies understandand take advantage of digital disruption. In 2015, Prophet acquired Altimeter Group to bring forward-thinkingdigital research and strategy consulting together under one umbrella, and to help clients unlock the powerof digital transformation. Altimeter, founded in 2008 by best-selling author Charlene Li, focuses on researchin digital transformation, social business and governance, customer experience, big data, and content strategy.

Strategy Consulting. Altimeter creates strategies and plans to help companies act on business andtechnology trends, including ethical and strategic data use and communications. Our team of analystsand consultants work with global organizations on needs assessments, strategy roadmaps, and pragmaticrecommendations to address a range of strategic challenges and opportunities.

Education and Workshops. Engage an Altimeter speaker to help make the business case to executivesor arm practitioners with new knowledge and skills.

Advisory. Retain Altimeter for ongoing research-based advisory: conduct an ad-hoc session to addressan immediate challenge; or gain deeper access to research and strategy counsel.

To learn more about Altimeter’s offerings, contact [email protected].

Altimeter, A Prophet Company1 Bush StreetSan Francisco, CA94104Tel: 415 699 7612

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Altimeter Group - The Eight Success Factors of Digital Transformation