- November 5, 2019
- Posted by: Ramkumar
- Category: Digital Transformation
Digital at Scale
Digital companies that are successful have a revenue growth that is five times more than their peers.Inspite of this success, many of these companies are still figuring out on how to achieve digital at scale.It is imperative that companies are able to deploy digital at scale else there is every chance of getting disrupted by the competition.
Companies need to identify a transformation path that suits their company in longer term.Once companies are able to identify the biggest potential for their business which would unlock value and generate revenues then it needs to free up cash for investments in data, talent and technology.They should act with agility and be prepared to adapt their strategy as the market evolves.
Cracking the Digital growth code to achieve digital at scale
Companies that have managed to crack the Digital code and were able to unlock digital growth potential have executed the following practices:
- Modernize core commercial processes like sales and pricing with data and analytics to improve performance
- Redesign the customer journey in order to make it convenient for customers
- Disrupt the channel to expand the margin pool.For instance establishing a web presence to access new customer segments.
- Build tomorrow’s businesses to secure growth beyond the core business
In order to invest in the right capabilities, companies need to develop a clear understanding of current and future economics of the business.They need to address the following questions.
- Where does the companies generate it’s current cashflows?
- Where will the cashflows come from in the future?
- What is the degree of digital maturity of core commercial domains from sales management to pricing and marketing?
Once the company finds an answer to the above questions, they need to decide on which opportunity would they need to focus their resources and funds.A company can also identify more than one opportunity and choose to invest their funds on them consecutively.
Let us evaluate each approach and the key success factors.
Modernize core commercial business processes
- Companies use state of the art analytics to optimize commercial functions and achieve sustainable sales growth.Data driven pricing is accomplished by modernizing commercial sales and marketing functions.
- Firms can modernize their pricing solutions by creating an end to end stack to compare prices and drive recommendations for thousands of product configurations.Key features can include configuration based price benchmarking, price trend analysis and using prescriptive analytics to generate competitive pricing recommendations across multiple channels.
- The key success factors would be to invest in training and support once the new approach is rolled out.Many times data driven pricing is met with reluctance from senior leaders because most of them rely on experience and gut feeling rather than data and analytics.
Redesign the Customer journey
- Companies need to realize that their customers demand a different kind of service from them.The customers expect the same kind of convenience, speed, flexibility and transparency they are used from shopping on popular platforms like Amazon.
- Hence companies need to transform the customer experience, improve satisfaction, prevent churn and reduce the costs to serve.For instance, companies can set up an agile studio with a cross functional team that includes customer experts, user experience designers, data scientists and IT architects. They can use agile methodology and design thinking to reinvent the customer journey.
- The key success factors would be to leverage internal and external data sources to create a 360 degree view of the customers and then discover unmet needs of the customers that can guide the digitization of the customer journey.In addition, companies can use different channels to serve different types of customers. For instance, for customers of lower budget like SMB, companies can leverage its online channel to manage its entire sales process.For SMBs this would make purchasing process hassle free and orders can be tracked easily through the app.
Disrupt the channel
- Companies that have previously relied on intermediaries to conduct their businesses can take advantage of digital channels to build direct relationships with end customers.By eliminating the middle men, companies can capture additional profits. Hence firms see digitization as an opportunity to restructure the value chain especially when it comes to distribution.
- The key success factors in this case would be to manage potential conflicts between the old and new channels. An online platform can offer substantial reach but at the same time can also cannibalize sales that come through other potentially more profitable channels.In some cases, the platform operator can charge high commission fees or insists on exclusive distribution rights.In that case, companies should think of launching their own platforms for direct distribution to end customers.
Build New Business models
- Companies can leverage their own understanding and expertise of their industry to develop new ventures to disrupt their existing business models and unlock new revenues streams.This strategy is generally pursued parallely with existing business operations strategy and are undertaken only when companies have sufficient funds and resources.
- To come up with new businesses, companies need to act as Venture capitalists by prioritizing opportunities according to their potential value.They need to develop a venture portfolio.
- The new businesses needs to be closely aligned to the parent company to benefit from its legacy while at the same time need to be structured separately from the corporate hierarchy in order to foster the entrepreneurial spirit of a startup company.
- The key success factors here would be that corporate ventures need to be free to hire the relevant talent and be free from any financial pressure to deliver a higher ROI as startups focus more on growth than profitability.
The key enablers to deliver digital at scale
- Companies need to have the right talent, agility, technology and data to create strategic advantages, debottle digital transformations and deliver impact at scale.
- Companies need to attract and develop best in class digital talent to overcome organizational inertia and foster innovation that goes beyond the existing business.
- Firms need to use agile teams for technology delivery to accelerate digital transformation. They need to take advantage of more flexible adaptive models in which resources are deployed more on value creation opportunities rather than protocols.
- Companies need to pursue an approach where platforms for new digital solutions are decoupled from slower legacy systems.This allows companies to develop MVPs more quickly and add new use cases as opportunities arise.
- Digital leaders capture data beyond the most common sources such as customer and transaction data.They leverage product related data, sales force performance indicators, communication metadata from external sources like social media, market reports and competitors offerings.
To achieve digital at scale, firms need to reinvent the way they serve their customers by redesigning the customer experience or establishing a direct channel.The existing organizational structures needs to be aligned based on the digitization strategy they choose to pursue.