As the end of the school year approaches, Ted Schadler has given most businesses a failing grade in digital transformation (DX).
Schadler is a VP and principal analyst at Forrester Research, which recently surveyed 1,600 businesses in North America and Europe about their DX journey so far. How disappointing were the findings, in Schadler’s opinion? Well, he wrote a blog post about them titled The Sorry State of Digital Transformation in 2018.
His despair stems from the fact that most businesses still aren’t very far along in their DX journey:
- just over half (56 per cent) say DX is currently underway
- 15 per cent are still investigating DX (haven’t started yet)
- 7 per cent say they’re “improving things” but not actually doing DX (haven’t started yet and may not bother at all)
- 21 per cent say their DX journey is “completed”
It was the last group that really rankled Schadler. “Twenty-one per cent think their transformation is done and dusted,” he wrote, seemingly flabbergasted. “Really? Done?” Schadler argues DX can’t ever be “done” because it’s a constant, ongoing process.
“You will never be transformed. You will always be transforming,” he wrote to businesses in his blog post. “The 21 per cent of respondents that think they are finished are confused about that.”
Schadler’s Forrester colleague Nigel Fenwick expanded on that theme during a webinar they co-presented.
“A lot of companies think … we’ve done a mobile app, we’ve done a new website and we’re done — we’re going on to the next project,” said Fenwick, who’s also a VP and principal analyst at Forrester. “The challenge is that [even] when you do that, your customers’ expectations keep evolving.”
According to Schadler and Fenwick, your company may believe it’s totally nailed DX at some point, but your customers’ expectations will continue to rise higher. The longer you rest on your DX completion laurels, the wider the gap grows between what your customers expect and what you’re actually giving them.
“If you deliver an experience one day but don’t keep evolving it, then your perceived value to the customer goes down,” said Fenwick.
Rather than just silently handing businesses a DX report card riddled with ‘F’ grades, Schadler and Fenwick have some advice to help organizations adopt a digital transformation strategy that is forever evolving, not finite.
Focus on customers, not competitors
“Forget the competition,” Schadler said during the webinar. “You have to think about customers or else you’ll be disrupted.”
In order to have “a true understanding of what digital business is,” Fenwick said organizations must “truly understand what it is the customer is going to value. What outcome are they trying to get to, and how can we use emerging technology to help the customer get to that outcome in a new way?”
Both cited a quote from Amazon founder Jeff Bezos: “Customers are always dissatisfied and they always want more. If you’re competitor obsessed and you’re a leader, you see everyone behind you and you slow down a bit. But customers pull you along.”
In other words, keeping your customer at the forefront fosters innovation.
Use tech to enable, not just save
To be digital innovators, organizations must view digital products and services as enablers that generate new top-line growth, not simply as sharp tools to cut costs from the bottom line.
Schadler is encouraged by the fact that a growing number of CEOs have shifted from “seeing technology as an expense that has to be reduced or as a means to drive out efficiency in the business, to now seeing technology as an accelerator of revenue growth.” Once CEOs adopt that mindset, he said, they approach digital “as a sort of strategic asset that has to be invested in or managed more from a revenue growth perspective as opposed to cost reduction.”
Digitize your entire business
It’s not enough to transform front-line customer-facing areas like marketing and support while hanging onto old-school thinking in other corners like finance or inventory management. Fenwick said the most successful DX adopters focus on driving agility across all sections of their operations to keep up with customer expectations.
“You don’t create a digital strategy; you digitize your business strategy,” he said.
Added Schadler: “You can only go so far in improving customer experience without changing the back end of the organization.” Instead of solely front-end loading DX, he said enterprises must reinvent their entire business model with technology at the core.
Since finding the time, people and resources to do that can be a tall order within your own organization, Fenwick and Schadler advocate tapping into DX partner ecosystems to fill in the gaps. Those may include public cloud or SaaS providers, Schadler said.
“Utilize business partners that can provide huge swaths of capability — not just [of] technology but also business services like assessing risk or fulfilling product,” Schadler suggested. “I do think the business ecosystems are going to be — and are — very important, starting in technology and then moving up the stack into business capability.”
And so, DX pupils, before going back to the grindstone, don’t forget Mr. Schadler’s main lesson about digital transformation: you may graduate to the next level of DX but the continuing education never stops.
“I don’t know that there’s going to be an end,” he said. “I think this is a journey we’re going to be on for at least the foreseeable future because everything’s evolving at such a fast pace.”