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What is digital transformation? There is a lot of talk at the moment about this process, where an organisation overhauls its capabilities in order to reach digital enlightenment.
This is a large-scale change that typically takes years and cuts across strategies, people, processes and technology.
While there are internal elements to this, such as new social collaboration tools for employees and adopting more agile ways of working, much of the desired transformation relates to customer-facing activities, especially sales, customer service and marketing.
But what do we really mean when we talk about 'digital' anyway? What is a 'digital organisation'? Clearly we have gone beyond using just ‘online’ or ‘internet’ because those words do not adequately encompass mobile or other channels and media that are increasingly digital.
But I think ‘digital’ actually stands for more even than this...
For me, an organisation is digital if it exhibits two things:
- First, it focuses on the customer experience irrespective of channel.
- Second, it has a digital culture.
If you have read Marketing Week and Econsultancy's Modern Marketing Manifesto, you will know that customer experience is a very important part of what we believe marketing to be. In this regard, ‘digital’, as defined by a focus on customer experience, is very much the domain of marketing.
Many quintessentially digital businesses show this focus on customer experience although not necessarily through digital media.
Luxury retailer Net-a-Porter focuses a lot of effort on customer service, personal shoppers and packaging; Amazon now impresses more through its delivery and fulfilment than its digital properties; and the Gov.uk strapline for its digital transformation program is ‘digital services so good people prefer to use them’, showing their commitment to customer experience.
So, to the second point, what is a ‘digital culture’? Over the years, by talking to organisations who are sophisticated at digital marketing and ecommerce, and from doing a lot of primary research, I have seen a number of recurring characteristics of a ‘digital’ culture or mind set. And - no surprise - these correlate very highly with what we have defined as modern marketing.
A digital culture is commercially-minded, irrespective of specific job functions. Decisions are data-driven. This does not mean there is no instinct or creativity but that ideas are tested and decisions are based on the resulting evidence. A digital culture is customer-centric.
It is transparent, with data, including commercial performance, widely shared. It is collaborative, with multi-disciplinary teams that often change by project.
A digital culture is empowered with the ‘permission to fail’ and ‘ideas can come from anywhere’ mentality. It is hungry to learn, embraces change, and is agile in its working practices. There is an entrepreneurial ‘growth hacker’ mindset where technology and marketing are closely aligned: the marketers tend to be tech savvy and the techies are marketing savvy.
The working environment, both physical and virtual, is also very important. If you look at the office spaces within a digital culture, they are open plan with spaces to huddle.
Look at images of Google’s offices or the new BBC offices in Salford for examples. The organisational language used is subtly different: you tend not to hear about ‘departments’ but ‘teams’. The working tools tend to be cloud-based and collaborative.
Many larger organisations who are creating digital, or interactive, teams are creating new office environments which are very different to the corporate HQ, specifically to nurture this digital culture.
One long-established brand is a good example of how digital transformation can be done. Back in 2006, Burberry was significantly underperforming compared to its peers. Angela Ahrendts took over and instigated a transformation program, focusing in large part on customer experience and driven by digital technologies.
Digital has been a catalyst for everything in the company and, when we got everyone on board with this concept, they were clamouring to become even more connected.”
Burberry is now doing very well. It experienced an 18% jump in sales in its first quarter this year, and Ahrendts is to move next year to Apple, arguably one of the finest exponents of customer experience in the world, as senior vice president for retail and online stores.
In the end, as demonstrated by Burberry, the real opportunity for what we’ve called digital transformation is actually the transformation of the entire business, its culture and its financial results.