Almost every company – across every industry – is currently exploring a future that involves the digital transformation of their business model. If that sounds too bold or dramatic, just look around at the companies you know personally. Banks, insurers, retailers, publishers – all of them are facing a dramatic change to the business model that kept their business running for many years.
But although the need for digital transformation is at the top of the CEO agenda, very few companies have really achieved anything close to their strategic ambition. In fact, these ambitions are often very far from a reality where they can detect a need to change, but have no firm direction in which to proceed.
A recent white paper from the management consulting group Qvartz explored this issue (in the Nordic region specifically) with potential steps forward so executives can start taking control of the gap between reality and ambition.
The first step is to understand this new era of business. Digital transformation is about genuine business model transformation, not just a continuation of what you have always done – with new technology. In the white paper a representative of Danske Banks says: “Currently 50% of our development projects use a lean startup approach. Two years from now, I expect it will be 70-80%. It needs to be.”
That final sentence is the important point here. Under the old rules you could be doing everything right, but you can still watch your market share disappear as rival companies get closer to the customer and transform your industry. Your current rivals may not even be the companies that change your industry. Apple only started selling phones a decade ago. Instagram has changed how people take and share photos, yet when they launched in 2010 Kodak thought they were still a major player in photography.
It is important for big companies to appreciate the need for change and transformation, but also to appreciate the value of their heritage and brand. Take retail banking as a good example. The industry is being turned upside down by FinTech companies launching new financial services online and via the iPhone and Android app store. The FinTech brands are fresh, new, offer better value, and their services are designed around the customer.
But most people still use a traditional bank. Banks have a large customer base and a reputation for looking after customer investments. Customers will switch to the new world eventually and there is likely to be an acceleration once more customers know a friend who has switched. However, the adjustment in this case will not be overnight. The banks have time to become customer-centric, but only if they take the right decisions on how to approach this new competition. To say “we still have customers today” and ignore the changing market conditions would be extremely foolish. Major brands we all know today will become the next Kodak if they think that they can rely on their brand alone.
All corporate executives need to focus on building companies that are digital-first and customer-centric. This could be achieved by acquiring a startup or if could be achieved from the ground up, but it will never be achieved if you just follow the same rules of business.
Use your brand to attract the best talent then give them the scope to create something truly original. This innovation requires an ability for managers to make mistakes – not every idea will become a successful new business – but if you can switch the design process to a focus on customers and the strategic decision-making to focus on digital transformation then you will make a great start on the journey to how your business will look in future.
Teleperformance operates in 74 different countries so we have experience of focusing on the customer experience in many different markets and industries. Leave a comment here if you have any thoughts on digital transformation or if you want to speak to me directly, do get in touch via my LinkedIn here.