Excellent report by @altimetergroup’s @charleneli @briansolis @jaimy_marie on digital transformation in business

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I’ve just read a really useful report on why and how some of the best companies in the world are transforming themselves digitally. Authored by the Altimeter Group, it’s a fascinating look at how redesigning around the digital customer experience is giving a number of brands a competitive advantage, based on interviews with many top executives. A customer experience oriented in digital is important because of the shift in consumer behaviour, more than merely the prevalence of devices.

I had a number of thoughts as I read the report that I wanted to explore.

First, their definition of digital transformation as the outcome of ‘businesses seeking to adapt to this onslaught of disruptive technologies affecting customer and employee behaviour’ (emphasis mine).

A lot of companies talk about marketing innovation in a vacuum. I haven’t heard clients often say that they are embarking on an internal transformation as much as they are their external marketing processes (I wrote about this not too long ago). The best clients however are doing just that. Where earlier digital sat in a separate silo, it is now being brought into the communications or marketing team as a founding principle. That’s how it should be. Agency-side, planners and strategists need to evolve into digital strategists if they aren’t already because they should be thinking about the ‘end-to-end customer journey’ and the customer doesn’t see channels, they see a brand. A quotable quote:

‘Companies must re-prioritise their investments in traditional media in light of the evolving customer journey. We found that businesses often bolt on mobile, social and digital functionality to an aging online/offline infrastructure that is counter-intuitive to customer behaviour.’

Further, as the report says, ‘strategists with broader digital experience are needed to align technology and business strategies across departments and teams’ (emphasis mine). Strategists need to think digitally because their businesses are changing – not just because the market is.

Second, the importance of many small experiments even as a much larger transformational platform is being worked on. Sephora and P&G are mentioned in the article as a couple of brands that are re-doing their entire CRM platforms to better tie together marketing, e-commerce, customer service and internal communications. But equally the small experiments are important. Mondelez had the Oreo 3D-printing machine and a WeChat vending machine in SXSW but lots of people missed the point. Bonin Bough, their VP of Global Media and Consumer Engagement is trying to create a cultural change in the business as much as he is trying to engage in a media experiment. Believe me you cannot underestimate the importance of the former. The Altimeter report also mentions Pete Blackshaw, Nestle’s Global Head of Digital and Social as doing a similar thing. This sentence summed it up best for me:

‘as such technology investments are expressions of experimentation.’

Third, the importance of strengthening the CMO/CIO link. At Adweek a couple of weeks ago, I was at a panel that had 5 CMOs who all said that if they wanted to achieve business goals quicker, they needed to be in sync with IT, finance and procurement. It actually applies across the business but is especially true when marketing and IT don’t work together. Even assuming marketing does want to do something interesting, IT probably has a mandate that includes blocking certain social media sites or installing certain apps at work, for example, and bingo, marketing innovation runs aground. Or marketing may want to enter into a partnership that requires some budget to be shifted around, and you need the finance director to be on your side. None of this can be achieved when the customer experience isn’t at the centre of the business and when the entire team isn’t working together. The report echoed this: ‘when individual agendas conflict with the company agenda, theirs wins out every time.’ Sephora is getting through this really well; IT apparently participates in every marketing meeting to understand goals and objectives to provide ‘realistic solutions, timelines and costs.’ That’s the kind of brand I’d like to work for.

Fourth, the importance of change agents. I felt vindicated to read that from all the interviews Altimeter did, in very few cases did change happen from the top down. In most cases, they said, a change agent rises to the challenge. That change agent, usually a strategist, ‘makes the case and creates a sense of urgency to gain executive sponsorship and support’ and crucially articulates the vision and its value to customers and employees. It’s something I try to do in my role and I’m sure a lot of others out there will recognise this too.

(As a side note, I loved the emphasis on employees throughout the report as part of the process rather than passive bystanders).

The last bit I wanted to pick out from the report is how brands like Starbucks recognise the importance of intrapreneurship (again something I’ve gone on about in the past). I saw Greg Gunn, VP of Business Development at Hootsuite, speak at SXSW this year about the importance of allowing employees to hack your product to give you an advantage (think Google’s 20% project) so that you can cannibalize your business yourself instead of allowing competitors to. From an agency POV I agree it’s very difficult when you have multiple teams working on separate client businesses but you need a cross-functional team plugging away at how to become market leaders too – and that’s even more important for brands. At PHD we are trying to do exactly this.

Anyhow, enough from me. Go and download the report here.

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