The elements of digital transformation are, of course, interdependent and mutually reinforcing. A large, state-owned rail and logistics company took a three-tiered approach to digital transformation that illustrates the action space’s many interdependencies and points of overlap. (See Exhibit 2.) First, it redefined the customer experience and implemented new ways to launch and scale up initiatives. Second, it defined a target state of digital transformation ten years in the future. Third, it prepared its people, processes, and offerings for the double game. The company also sent executives on immersion tours to Silicon Valley, created a digital lab, and completed its first digital acquisition.
To redefine the customer experience, the company mapped out the passenger’s journey, from initial travel inspiration through the last mile of the trip and beyond, ending with sharing feedback and memories on social networks. The company also created detailed profiles of business, elderly, and commuter travelers based on its ethnographic interviews and market research. This exercise enabled the company to identify its passengers’ frustrations and unmet needs along the customer journey. Company executives then laid the groundwork for fixes and improvements by using the digital tools at their disposal. They identified more than 400 potential improvements and selected 50 to implement.
The executives recognized that they would have to embark on a huge change-management effort. To encourage managers and employees to become drivers of innovation, they selected five early prototype projects, in order to highlight the positive effects of implementing even small changes.
One prototype, a seat reservation app for commuter rail customers, constituted the company’s first direct digital relationship with these loyal patrons. The app addressed a common complaint of customers—their inability to reserve a seat in commuter trains—but it also opened the way for greater dialogue with the company’s customers. The railroad began field-testing the app 12 weeks after inception; because it relied on a public cloud, the app’s infrastructure costs were one-fifth what the IT department had anticipated.
To accelerate development, the prototype team had to convince traditionalists to waive burdensome company guidelines. In the course of developing the new app-based service, the team also identified structural deficits and inefficiencies in the company’s IT platforms that needed to be addressed.
To minimize the risk of engaging in a series of myopic short-term experiments, the company developed a comprehensive picture of the mobility landscape in 2025 and anticipated product offerings at that time. The exercise allowed the company to “retropolate” from that vision of the future back to the present. In developing this view of the future, executives analyzed the potential impact of self-driving cars, digital intermodal route planning, and other services. As a consequence, they launched a portfolio strategy around new modes of travel and around supplemental intermodal as well as digital services.
While it may be surprising that a state-owned company would undertake these innovations with such energy, it is even more remarkable when an arm of government does so. (See “Turning Digital in Saudi Arabia.”)