How to Jump-Start a Digital Transformation

How to Jump-Start a Digital Transformation

          
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How to Jump-Start a Digital Transformation

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    Securing Quick Wins at the Outset

    Companies seeking to pursue digital often proceed from very different starting points, with different capabilities, circumstances, and degrees of ambition. Some will require a full transformation of their operations, processes, and business model in order to fully leverage digital technology and drive revenue. Others may only need to increase efficiency by reengineering their existing business and operating models.

    Regardless of how ambitious their digital effort, companies should start with quick wins in at least one of several areas: improving the customer experience, offering new digital products and services, and digitizing internal processes.

    To improve the customer experience, some energy companies are starting to offer mobile apps that allow customers to check bills and obtain meter data. More advanced offerings from retail chains allow customers to keep track of shopping lists and order out-of-stock items through an e-commerce portal on their smartphone. (See “A Retail Player Quickly Rolls Out a Mobile App.”) Similarly, some travel sites send flight status updates, departure gates, seat assignments, rental car confirmations, hotel directions, and other trip-related information to customers’ phones—all sequenced to arrive at precisely the right time. And automakers are improving sales by using digital channels to send vehicle information and specs to potential customers at critical junctures in the purchasing process.

    The second source of quick wins is new data-driven offerings and services that complement the company’s existing assets and business model. These offerings don’t merely improve the value proposition for customers; they transcend it and help the company expand into new areas of the value chain. For example, many banks are moving beyond the processing of payment transactions into services such as shopping, product comparisons, discounts, and post-transaction ratings. Similarly, telecom companies are starting to provide streaming-video and e-commerce services for their customers, in addition to basic voice and data. (See “A Telecom Company Evolves from Network Operator to Digital Service Provider.”) In the industrial goods industry, many companies are now using embedded sensors in capital equipment to warn users of maintenance issues, allowing them to make less expensive repairs early on and prevent larger problems.

    The third option is to use digital to improve internal processes and functions, such as finance or HR. This approach is particularly relevant for B2B companies, which place less emphasis on the customer experience. The use of digital can improve the efficiency and accuracy of internal processes, reduce costs, and allow the company to use data-driven analytics to improve performance over time.

    Whether a company begins its digital transformation by improving the customer experience, developing new products and services, or improving internal processes (or a combination of all three), speed is critical. Instead of taking the traditional, linear approach to rolling out new initiatives, companies should quickly bring new ideas to market, gather customer feedback, and refine the concept iteratively. Many accomplish this by means of the minimum viable product (MVP) process of prototyping.

    The MVP process is based on the idea of the “good enough” product. Rather than trying to perfect new products or services internally during the development stage, the company instead aims to get them to market quickly, with just enough features included to make them functional. That allows the company to minimize its investment, test the new products and services in the real world (instead of in artificial settings such as focus groups), and refine them using customer feedback. For example, the initial versions of apps and online stores are often quite basic, with new features and functions added over time, depending on how the products are used by customers.