In our first blog on Implementing a Digital Strategy, we changed course. From a mission impossible we went to understanding the Age of the Customer and realized the importance of being a customer-first company. Now, we will address the organizational challenges you will encounter on your way to Customer Orientation. Where should you start? And how do you change to a culture of innovation?
Again, we’ll start with a board member who is given the task to speed up the company’s journey towards digital transformation. You know why digital matters and why customer-centricity should be in your company’s DNA: to stay in business the day after tomorrow. But, reinventing yourself isn’t easy. To keep your eyes on the customer you’ll need support and buy in from the other board members. And that’s where you’ll run into organizational challenges. Because going digital has a different impact for each department. Before you’ll get ready to discuss new responsibilities and teams, let’s start from the basis.
Going Digital: Organize for Innovation
For digital transformation, you’ll require an organizational setup that enables you to make tough decisions fast, speed up the pace and mobilize people. You’ll want to take down or improve slow corporate governance, silo mentality and time-consuming processes. This calls for mavericks and new teams that can function across and connect with various departments. And wherever your company makes progress, more people, partners and processes need to follow fast to scale up. All these internal issues may sound trivial. Isn’t digital about placing the customer centric in everything you do? Yes, but you need to organize first.
At the core, implementing a digital strategy is all about placing innovation in your company. As the market changes and goes more digital, your company has to adapt with new products and services. And to do that successfully, your company will need to get better, more profitable ideas into its pipeline. Research by McKinsey shows that innovation in companies has two main components:
- Strategic and Creative – setting and prioritizing terms and conditions for innovation
- Delivery and Organization – essentials to contribute to the company performance.
In this digital Age of the Customer, change is moving at the speed of light. Companies must get these creative, executional and organizational factors right to drive innovation. In practice, several organizational models may be required to create different business opportunities. In each of these models, a value chain is build that connects innovation to long term business. According to McKinsey, the key factors for success are C-level support and integrating innovation into the corporate strategy.
Start With the C-Level
True change doesn’t happen without top-down sponsorship. To become a customer-centric company, you must become an innovation-first company. Changing the focus from quarter to the coming years requires real leadership and strategic vision. That’s why C-level support is the key factor to innovation success.
The best thing to happen to a company on route to implementing a digital strategy is to have a CEO that understands digital and innovation. If your CEO is not yet up to speed, connect him to other CEO’s who are already digitally mature or get him linked to a university celebrity that educates industry leaders about digital transformation. Once your CEO understands the role of innovation, he can embed it in the organization. Ideally, the innovation functions report directly to the CEO and interact formally with C-level leaders. This will help with tackling the biggest organizational challenge to innovation: competing with short-term priorities and integrating innovation objectives with the rest of the business.
Collaborate for Success
Once the CEO is behind your plan, you‘ll get access to funding and capacity. With this, you can make a team of digital champions with the ambition to make it happen. Now your digital journey comes to an operational level. This is where you’ll need digital talents. An important point to consider is how you’ll attract a continuous stream of new talents. You may consider partnering with a university or starting an employee development program that supports digital change.
Make sure that your CIO, your Head of Sales, Head of Operations and Customer Service are working as a team focusing on creating customer value. Agree on common goals and metrics and then your transformation into digital can take off. Success depends on the efforts coming from most, if not all, parts of the organization. Collaboration, learning and experimentation are necessary. Sharing ideas and knowledge by mixed teams is an important part of the process. And it helps to capture lessons learned and recognize them for what they are: innovation efforts that push the company forward.
DevOps: Combining Product Development with IT Operations
Going digital, customer-centricity, innovation and rapid time to market. These are buzz phrases that will excite any visionary CEO. But they’ll also discourage those tasked with running, controlling and safeguarding their organizations. Uniting these two extremes is DevOps, a combined word from “development” and “operations”. DevOps fosters a high degree of collaboration across the full IT value chain, spanning business, development, operations and IT infrastructure. As an organizational model, it creates an environment and culture where building, testing, and releasing happens rapidly, frequently and more reliable.
DevOps is most often used by technology companies but sees rapid adoption by many others. In the wake of DevOps, traditional hierarchies disappear, office spaces are set up more efficient and teams are empowered to make informed decisions. That increases your organization’s ability to deliver new, qualified ideas in its pipeline. And the strong focus on testing will result in a better match with the customer experience and lower business risks. This way, DevOps supports continuous learning and clear decision paths. It also creates an environment where professionals thrive and will want to work.
From Creating to Delivering Value
When you started reading this blog, you may have expected to read about logistical challenges, the new role of IT or the increased importance of data. Instead, I described the challenge of placing innovation in your company, the role of the CEO and DevOps as a new organizational model. To win, serve and retain customers in the Age of the Customer, your company needs to do things differently. That also means using new digital technologies to create customer value.
As your company takes the journey towards digital transformation, you’ll need to deal with legacy application architecture. To provide the customer experience that differentiates your company, customer facing applications need to be agile, connected and personal. Your outdated finance and logistics platforms that you need to work around, will mean nothing to the well-informed, time-starving and high-demanding customer of today. In the third and final part of this blog series about Implementing a Digital Strategy, we’ll provide guidelines on how to get the process started, find the right partners and create tangible results as an outcome.