Organisations need to adopt a smarter approach if they are looking to achieve a return on digital.
It's been well documented by commentators far more qualified than myself, that nearly four out of five large digital transformation projects fail to deliver the results required to justify the investment in them. With IDC predicting that DT global spend will reach a staggering $2trillion by 2020, if only a fifth of those produce a positive return, an eye-watering $1.6 trillion is set to be written off at some point in the near future.
If getting ROI in digital is so hard, why are so many still investing?
- The rewards for digitising a business, or disrupting a market, can be dazzling. A successful project can transform an organisation's market share and profitability and set them up for the foreseeable future;
- NOT doing it isn't an option for many: if they don't do it, their competitors will; and
- Companies appear blind to the true causes of failure and set out without a proper plan for success.
From our work across a number of DT projects, we've observed some crucial areas that can mean the difference between success and failure:
1. Measure what Matters
The old adage of "what gets measured gets done" is never truer than in DT initiatives. If the most measurable elements of your programme objectives are expressed as cost-savings, efficiency measures, or down-times then that's going to be the focus of most of the thinking and effort that goes into the design of the digital solutions.
How many DT projects have realistic, measurable, actionable metrics for customer satisfaction, quality of experience, level of staff engagement, shared vision? Not just within the programme's team but across the whole business?
DBS, Singapore's largest retail bank, is a great example. Lying in the bottom quartile of customer satisfaction rankings, the bank set out to digitally transform its main customer-facing processes in 2009. After extensive research, COO Paul Cobban, landed upon the idea of ‘The customer hour', because most of the customer criticism was rooted in slow processes. Once this focus was embraced by the company, 250 million hours of customer ‘wasted time' was removed, and DBS was the number one rated bank within a year.
If you want a return on your digital investment, set KPIs that are customer- and employee-focused: NPS scores, CSat, employee engagement scores and staff turnover are good options, but try softer measures too - collaboration indicators, ideas contributed, and qualitative insight.
2. Co-create experiences
Too often, companies view collaboration and speed as binary choices. Too little time to research with customers or engage all divisions within a business, and a poor understanding of agile methodologies, gives teams false comfort: "It doesn't matter if we don't get it right first time, we'll iterate in live".
Wrong. If a project doesn't root itself in genuine customer or employee needs - taking note of actual customer preferences, expectations and behavioural norms - then it'll prove nearly impossible to course-correct later on.
Successful digital initiatives embrace customer and staff input and involve them in designing and architecting solutions throughout the life of the project.
3. Transform the business, not just IT
If the starting focus point for DT is technology, it's probably not a good sign. The IT side of the business is often the agitator for change, but the focus of the project becomes what can the technology do, rather than what the business needs to do.
The best way to start is to consider what it feels like to be a customer and map out the current experience, across all touchpoints, channels and devices; then overlay what an ideal customer experience might look like, and identify the biggest gaps.
Where is the promise/expectation of a good experience the greatest? Where does the reality of delivery fall short? Then apply design thinking to create a joined-up and seamless experience for a customer. IT must facilitate a single one-to-one experience between the customer and business.
4. Reward outside-in thinking
A common reason why digital programmes fail to deliver ROI is that not enough attention is placed on changing company culture. Organisational silos, entrenched practices and lack of collaboration across business lines mean the full benefits of digital are never realised.
This is because it's hard for people inside a company to think like one of its customers. If you've worked in a mortgage business for five years, it's unlikely you'll be able to put yourself in a first-time-mortgage customer's shoes.
We have to find ways to encourage and reward thinking from outside the organisation. Teach teams to seek out insight from customers and other viewpoints external to the project team.
5. Make your way to strategy
This last point is an observation of something that many DT projects suffer from: a lack of a coherent customer experience strategy.
When business strategy arrives top-down into a project team, it's often expressed in general terms, or it's too internally-focused to be obviously applied to customer outcomes.
One way to tie that customer experience back to business strategy is to first make a digital product/service prototype, and evolve it until it works for intended customer perfectly.
Monzo's a great example: the business doesn't wait for top-down decisions on what features/functions are required in the next release of their banking app; they engage constantly with customers to find out what they need most, what additions they'd value, and how they'd expect them to work. They make beta versions, get customers to trial them and ask them how much they'd pay for enhanced features.
Effectively, Monzo is evolving its strategy out of having first made a working prototype and tested it with customers. The general direction was set, and sphere of operations known, but they have the confidence to let customers guide their priorities and their experience strategy.
Start thinking differently
Companies can save millions of wasted dollars by turning the focus of their DT initiatives towards customers and how their experience of interacting with the brand can be made better. With this shift in mindset, technology becomes the enabler, the end solution to a customer problem, rather than the starting point and sole justification for investing.
For companies seeking to realise the significant return of their digital investments, learning first how to bring their customers into the design process is the secret to their success.