The price of failure has gone up exponentially in the past month.
In the new reality of coronavirus - with millions of people retreating to the safety of the online world for their news, information, shopping, education, entertainment and remote working - the imperative of enterprise digital transformation has gone from important to urgent. The ability to develop and rapidly deploy workable strategies and tools for connecting with customers and employees in the virtual marketplace will likely be the difference between success and failure for many companies in the new normal.
I spoke with Brian Levine, VP strategy and analytics at Mobiquity, a mobile technology firm that provides digital consulting services to some of the world’s most prominent B2B and B2C brands. Levine reiterated the need for all companies to accelerate their efforts:
Many enterprises undertaking digital transformation efforts understand the importance, but have been taking their time. Until now, follower organizations have not necessarily been hurt by taking a measured approach. Their transformation efforts have often focused on getting slightly ahead of the curve or moving with it, learning from the mistakes of others while tackling their late majority customers instead of focusing on the early adopters.
In the wake of coronavirus, we see a convergence of consumer needs - early adopters and late majority customers almost becoming one and the same. This will usher in a permanent change to business fundamentals. While the first-movers have the advantage today, companies that acknowledge digital business is here to stay can still potentially come out winners if they begin to focus on innovating their models for the changed world. Those who choose not to invest in digital transformation, even in the face of this new knowledge, are likely to experience the highest cost of failure--they will cease to exist.
Unfortunately, past performance is not encouraging. An Everest Group report released in 2018 found that 78% of enterprises said their digital transformation efforts have not produced sustained returns. That is a stunningly high failure rate.
Based on his extensive experience Levine has some ideas about why some many digital transformation projects fail. Here are two of them.
Trying to do too much too quickly. Many companies come up with a vision, draw up elaborate plans, spend hours bringing teams to together to “build alignment” only to find a few months down the line that the original vision is unworkable or the results are not what they expected or customers have moved on to something else. Said Levine:
There are so many companies that have launched projects that get completely changed after they've launched. You have to have the flexibility to pivot and I think that typically happens with something small rather than with something big. The companies that are able to continuously build and transform one area at a time rather than going for total digital transformation all at once, have the best chances of success.
As an example of how starting small can lead to big rewards, Levine points to retailer 7-Eleven, a case that didn’t involve Mobiquity, but which he calls “fascinating:”
They didn’t start out thinking that we’re going to totally transform their customer experience. They didn’t decide to do everything at once and change their whole back end system. They started instead by moving their loyalty program online and promoting the heck out of it and giving away a lot of free stuff. They said we’re going to focus on making this one aspect work and get closer to our customers. That was really the only goal and they expanded from 9 million members to 27 million over the course of a little over two years. Along the way, they increased the footprint and started personalizing the loyalty items. Only when they had gotten customers accustomed to using the app did they move on to the commerce side and now they have a Mobile Checkout feature that allows customers to check out with going to the register.
Focusing on internal priorities rather than those of customers.Too many companies begin ambitious digital transformation projects based on what various internal departments and functions believe will most serve their needs without enough regard to knowing what customers might want and need.Said Levine:
An insurance company wanted to launch an app that would allow them to connect with customers online and decided to start with one that would allow them to manage and track their claims. Obviously, claims are a very big and important part of the insurance companies.But, we did some researchon the 15 biggest companies in the insurance space and their apps - some of them with a million reviews online - that customers were using and we discovered that managing claims was number 10 on a list of things that customers were using them for. The majority of people use insurance apps them to pay their bills online. So, you want to start with what most customers are going to use, figure out how they use it, and then learn from that and add extra features.
Levine said the big problem stems from companies putting too many expectations onto a program and when they launch it big, and it fails, they abandon it. His best advice?
Start small and smart, be prepared to pivot when the need arises, focus on getting one aspect at a time right, and continuously improving the process as you add more connections.
At this point, nobody really knows what the long-term consequences of this pandemic will be. It seems reasonable to assume that if it drags on for months, COVID-19 impacts will have a permanent effect on virtually every aspect of human life. The virtual world will play a significantly larger role in all human activities than it does today. The next few months will be, as the old Chinese curse goes, one of “interesting times.” One thing I think we can say with certainty is that the cost of digital transformation failure has gone up exponentially.
In the meantime, while Levine's responses seem reasonable in 'normal' times, we are currently faced with a world that is chaotic. Starting small may be rational, but priorities will quickly determine which elements in the transformation panoply make the most sense. It will test leadership's ability to recognize priorities but equally, it will also test leaders' people skills long before digital kicks in.