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Brent Lupton
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July 14, 2021

INSIGHTS ARTICLE: Datisan - Brent Lupton: Why digital transformation is failing

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The rapidly shifting landscape of consumer expectation around how brands are meeting their needs continues to be a challenge for Brands and this has only been accelerated by the situation with the global pandemic.
 
Brands have been investing heavily in Digital Transformation programs in order to meet the gap between consumer expectations and reality head on, however, despite the investment, the gap is widening at an accelerated pace.
 
The ability to meet the expectations of consumers and deliver an optimal experience is key for Brands to increase share of wallet and new customer acquisition and of course retain customers and build brand loyalty. Without clarity on how to close the gap, despite heavy investment, digital transformation programs will continue to fail.
 
Why are Digital Transformation programs failing
 
The top 3 areas where Digital Transformation programs have been failing.
 
Number 1 - Digital Replacement is not Digital Transformation
 
The most common failure point that I’ve observed over the last five years with transformation programs is brands taking the approach of investing heavily in new or replacement platforms without a clear strategic view of what they need out of their Martech and Adtech ecosystems in order to surface a single view of their customers. This Digital replacement approach is expensive, time and resource intensive and ultimately leads to wasted investment.
 
Number 2 - Digital Transformation is much more than Digital.
 
One of the other failure points in delivering a digital transformation program is siloed business units. This is where the term digital can be misleading. Even though the strategy and workload may be focussed on a digital ecosystem, in order to successfully operationalize the outcomes of the program it needs to be sponsored at an executive level, with the value and impacts to each business unit mapped, timelined and coordinated across the business. Every consumer touch point (offline and online) needs to be planned for in order to ensure that consumers receive a consistent and frictionless experience.
 
Digital Transformation, is in essence, organisational transformation and needs executive sponsorship, both in budget and support. Your board or C-suite will need a clearly thought out and planned out strategy, budget, timeline and value proposition before they will commit resource and investment against a large scale program.
 
Number 3 - The destination is too far away
 
Quite often with a Digital Transformation program, the journey from a Nascent Digital Maturity business to a fully mature, Multi Moment business navigating through the four stages of Digital Maturity can seem like a long and expensive journey. This is where many programs fail before they really start to realise any value against the investment.
 
Over the course of a 3, 4 or 5 year program of work, team members change, even the executives sponsoring the program may leave the business. Market forces can shift bringing the investment into question. Ultimately without a roadmap in place, that clearly articulates smaller, tactical initiatives, which realise tangible value quickly along the way, but still mapped to the longer term vision and strategy, the longer vision and, more importantly the goals that you are looking to achieve will likely fail.
 
The shifting sands of Privacy
 
As consumers understand more regarding the volume of data being captured around their everyday lives, coupled with a number of very public, less than ethical approaches to use of consumer data, expectations around how data is handled and leveraged is rapidly changing, both in terms of the consumers themselves and privacy legislation such as GDPR.
 
The evolution of privacy laws, including deprecation of 3rd party cookies is an additional pillar of complexity that impacts how brands have traditionally reached new audiences via digital marketing channels and need to be a high priority initiative for any CMO as they contribute to Digital Transformation programs (short term) goals.
 
The keys to Success
 
With clear planning, a strategic vision and mindset and being able to clearly answer the key 5 questions, your brand should be well positioned to execute a successful digital transformation program.
 
What and Why
 
Like any program of work, no matter how large or small, ensuring that you are clear on the objectives and how you will measure success of these objectives is where success starts.
 
What are you seeking to achieve? Some of your objectives may be;
 
- Identify who your High Value customers,
- How this segment will typically engage with your brand,
- What are the roadblocks that these customers face when engaging with your brand?
- What are the purchase habits for this segment, i.e. do they research online and buy offline? Do they compare on mobile while in store? Are they typically a member of your loyalty program?
- What is the current average basket size for this group?
- What is the Average Lifetime Value of this segment?
 
Why would you want / need to be able to answer these questions?
 
- We are seeking to increase the share of wallet with this segment?
- How can we remove the path to purchase roadblocks?
- How can we ensure consistency of service and increase customer experience, regardless of channel for our customers in order to improve retention, drive advocacy and increase Lifetime Value.
- We want to increase our percentage of High Value customers by 5%
- We want to ensure that all service points within our business are armed with the most up to date information regarding our customer and how they are engaging with our brand in real time.
 
Identify some of the current roadblocks that are preventing your business from achieving these objectives (forms the scope outline of a program of work).
 
- Our customer information is siloed across our ecosystem (adtech, martech, POS systems, Call Centre logs, CRM, shopping cart data, etc). We don’t have a single view of our customers.
- Our analytics data is impacted by sampling constraints and we are unable to get a detailed insight of how are brands are engaging our with our digital assets
- We are impacted by either capacity or capability constraints with our team members in accessing / connecting / connecting the data.
- Our business units are siloed and we need a unified plan on how to operationalise new capability across the business in order to recognise the full value of the program and deliver a unified and frictionless customer experience.
- Some of our key platforms don’t meet the functional needs of our business objectives.
 
How will you execute against your objectives
 
Understanding how you will successfully execute against your goals and objectives starts with an introspective view of your current business in terms of readiness, maturity and capability.
 
Do you have executive sponsorship? As raised previously this is key. Not just in terms of funding but support and leadership actively supporting and driving these initiatives as a business priority.
 
Do you have the right team members that are able to manage the workload while still managing BAU assignments? Does your team have all the necessary skills and experiences in order to tackle all or part of the objectives of the program or do you need to partner with another business that brings some or all of the necessary skills needed to achieve your goals. Having the ability to understand the skill sets and capacity required to execute against your plan / roadmap will provide your answer to the key question of who will help you and the business achieve your objectives.
 
Do you have a clear understanding of your starting point as a business? Where does your business sit in the Digital Maturity Lifecycle? Ensuring that you have a clear understanding on where you need to start alongside a clear vision of the end goal will help paint the pathway o roadmap on how to get there.
 
How will you plan your roadmap to ensure that not only do you have a clear path to your goals (People, Process, technology requirements mapped) but you also have mapped milestones of value along the way, i.e. what are the small wins that you can achieve each week, month, quarter as you progress along your roadmap. What is the value proposition to either (or both) your business or the customer. Your roadmap will also give you insight into when you realise the full and complete benefits of the program investment.
 
Digital Transformation can create sustainable competitive advantage
 
No matter what stage or age or size of your business, Digital Transformation can be delivered successfully to reinvent, re-engage, grow and create new sustainable competitive advantage in the market.
While many digital transformation programs have failed there are a number of Brands that have re-invented the way they engage the market and grown market share with Digital Transformation programs. Some of the Brands include.
 
Lego
On the verge of Bankruptcy in 2004, Lego embarked on a significant transformation program diversifying their go to market strategy and revenue streams and engaging new audiences with an open source approach to product design.
 
Their shift in strategy resulted in growth across EBITDA and revenue (20% annual growth rate).
 
Audi
Shifted the way auto companies showcase their vehicles with the introduction of Audi cities. Audi City is an experience space where customers can discover, trial and purchase different Audi models during the day.
 
Nike
In response to the COVOD-19 pandemic, Nike boosted its digital strategy and adapted its message to the “new normal’. Nike innovated through creative digital spaces for customers to interact with the brand’s big influencers: the high-performance athletes.
 

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