Digital transformation is “the realignment or new investment in technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle” according to Brian Solis.”
87% of companies think that digital transformation is a competitive advantage (Capgemini Consulting)
85% say they have a digital transformation time frame of two years or they will suffer financially and fall behind their competitors (Business2Community)
67% of the CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy by 2018 (Forbes)
62% say their organization is in denial about the need to transform digitally (Progress)
Only 27% of companies say that their executives possess the skills necessary for digital transformation (Verndale)
Last week, I gave a webinar on digital transformation case studies. Digital transformation case studies examined include Amazon, Burberry, General Motors, McDonald’s, P&G and Starbucks.
Here are the stories for these companies in 10 inspiring case studies of digital transformation.
Do this case studies help you understand digital transformation? Are you looking to accomplish a digital transformation at your company?
Successful digital companies are organizations that use technology as a competitive advantage in its internal and external operations.
Many definitions abound but, in a nutshell, this is what makes them successful. Like any major achievement, success doesn’t occur unless the transformation changes the company culture as much as is does the company.
In this article, we study common characteristics. Here are 10 terrific traits of successful digital companies with examples.
ARE UNREASONABLY ASPIRATIONS: Being “unreasonable” is a way to jar an organization into seeing digital as a business that creates value, not as a channel that drives activities. However the vision is described, if you aren’t making the majority of your company feel nervous, you probably aren’t aiming high enough. Burberry, in 2006, was a stalled business whose brand had become tarnished. A series of groundbreaking initiatives, including a website (ArtoftheTrench.Burberry.com) that featured customers as models, more robust e-commerce catalog that matched the company’s in-store inventory, and the digitization of retail stores through features such as radio-frequency identification tags leaped frog Burberry over competitors and tripled revenues.
ARE CUSTOMER OBSESSED: Knowing what the customer wants has always been the key to successful digital companies. Advances in technology and data science make it possible to analyze the complete history of customer transactions and identify individual shopping habits, patterns and motives that drive behavior. 86% of consumers say they were willing to pay more for a better customer experience. And 89% begin doing business with a competitor following a poor customer experience. This mind-set is what enables companies to go beyond what’s normal and into the extraordinary. If online retailer Zappos is out of stock on a product, it will help you find the item from a competitor. While it might seem heretical to buy from competitors, it’s worth it for Zappos because 75% of its orders come from repeat customers.
KNOW CUSTOMER LIFETIME VALUE (CLV): It is 6-7 times more expensive to acquire a new customer than it is to keep a current one. Successful digital companies recognize that, while customer acquisition is always important, there is often more to be gained be exploring ways to increase the Customer Lifetime Value (CLV) of current customers. According to a 2013 study by the Consumer Intelligence Research Partners, Amazon Prime members spend $1,340 annually. And that was 3 year ago. More important, Consumer Intelligence Research Partners estimates that Amazon Kindle owners spend approximately $1,233 per year buying stuff from Amazon, compared to $790 per year for other customers.
ARE SOCIAL MEDIA ADEPT: If your company is customer obsessed, then you’re constantly listening to what your customers have to say about your brand, your competitor and your industry. Successful digital companies not only listen, they are adept at doing something with this data. McDonald’s decision to serve All Day Breakfast may have been a surprise to some customers, but shows how the massive company is trying to move nimbly and take some risks with its messaging. “Customers were saying to us ‘Hey, McDonald’s, this is the next big thing. This is what we want from you,'” said McDonald’s USA Chief Marketing Officer Deborah Wahl. With help from Twitter and Sprinklr, McDonald’s found 334,000 tweets mentioning All Day Breakfast at McDonald’s and found the most “engageable” accounts to send customized messages.
ARE QUICK AND DATA-DRIVEN: Rapid decision making that is data-driven is critical in a dynamic digital environment. A cycle of continuous delivery, experimentation and improvement, adopting methods such as agile development and “live beta,” supported by big data analytics, are characteristics of successful digital companies. U.S. Xpress, a US transportation company, collects data in real time from tens of thousands of sources, including in-vehicle sensors and geospatial systems. Using Apache Hadoop, an open-source tool set for data analysis, and real-time business-intelligence tools, U.S. Xpress has been able to extract game-changing insights about its fleet operations. Data on the fuel consumption of idling vehicles led to changes that saved $20 million in fuel consumption in a year.
PREPARE THEIR INFRASTRUCTURE: To take advantage of all that a digital world has to offer, successful digital companies have to be willing to invest in digital-ready infrastructures that will accelerate their digital strategies and the digital experiences of their customers, employees or citizens. As part of its three-year IT overhaul following a brush with bankruptcy, General Motors closed 23 of its data centers worldwide and moved most of that capacity into two new data center in Michigan. Reducing the distance for data to travel was a huge financial motivator for the company to not only saves on networking costs but improved responsiveness. New data centers are ‘private-cloud-meets-mainframe’ operations that run cloud-ready apps.
KNOW THEIR METRICS: Metrics are a proxy for what matters most to senior management. But the measurements of success varies widely between marketing, tech management, and business unit leaders. This can creates conflict and confusion unless your company is clear about outcomes being measured. P&G created a single analytics portal, called the Decision Cockpit, which provides up-to-date sales data across brands, products, and regions to more than 50,000 employees globally. The portal, which emphasizes projections over historical data, lets teams quickly identify issues, such as declining market share, and take steps to address the problems in measurement the company considers critical to success.
OPERATE IN A DIGITAL ECOSYSTEM: A digital ecosystem is the detailed visual of how all digital and social assets of a brand interconnect and interact. When managing multiple platforms, it’s important to understand how they will all work together to achieve the brand’s goal. Starbucks offers the largest and most robust mobile ecosystem of any retailer in the world, with more than 12 million Starbucks Rewards™ members (up 18% year on year), 8,000,000 mobile paying customers with one out of three now using Mobile Order & Pay, and more than $6 billion loaded onto prepaid Starbucks Cards in North America during the past year alone. Starbucks digital flywheel has also continued to gain momentum with the launch of true one-to-one personalization.
PUT THE RIGHT LEADERS IN PLACE: The fast-moving digital world is exposing gaps in digital leadership, especially with regard to front office disciplines (those related to the customer experience) and head-office disciplines (those related to enterprise strategy). According to Gartner, three types of digital business leader have emerged to fill these leadership gaps: 1) Digital strategist, 2) digital marketing leader and 3) digital business unit leader. “A lot of our digital talent is home grown – mavericks who have their own businesses and have adapted their business in entrepreneurial ways. It is important to find these people and leverage their skills,” says David Crowley, Chief Commercial Officer, British Airways.
SHOW ME THE MONEY: Many organizations focus their digital investments on customer-facing solutions. But they can extract just as much value, if not more, from investing in back-office functions that drive operational efficiencies. Successful digital companies know the value of reducing the costs of doing business. One-third of the digital innovation projects at Starbuck are devoted to improving efficiency and productivity away from the retail stores, and one-third focused on improving resilience and security. In manufacturing, P&G collaborated with the Los Alamos National Laboratory to create statistical methods to streamline processes and increase uptime at its factories, saving more than $1 billion a year.
Are these traits you associate with successful digital companies? Any there others you would add? Is your company interested in developing the capabilities of successful digital companies?
Digital transformation is “the realignment or new investment in technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle” according to Brian Solis.”
It’s important because the idea is to accelerate business in a strategic and prioritized way. Digital transformation serves as a major, maybe the ultimate, demonstration of change management.
Regardless of the definition and the desired results, digital transforming takes time (2 years by most estimates, planning and testing along the way. Plus, it requires a significant investment. What should you know to guide the journey?
Here are 50 digital transformation facts to manage company change.
90% of US consumers feel that organizations are disjointed in their digital connection, forcing them, for example, to repeat steps and information. (Verndale)
88% of companies report they are undergoing digital transformation (Altimeter)
88% cited customer experience (CX) as the driver for change. (Aria)
87% of companies think that digital transformation is a competitive opportunity. (Capgemini Consulting)
86% of organizations believe their organization should execute a business transformation initiative regularly just to stay competitive and relevant. (Verndale)
85% of enterprise decision makers feel they have a timeframe of two years to make significant inroads on their digital transformation before suffering financially and/or falling behind their competitors. (PWC)
82% of companies say that responsibility for overall leadership of digital transformation has been formally assigned to someone within the organization. (Apigee)
81% of companies cite their have digital department (Altimeter)
81% cite innovation is at the top of the digital transformation agenda. Right behind it is the need to modernize the IT infrastructure with increased agility, flexibility, management, and security (80%). (Aria)
80% of top managers view digital change as crucial for future business models (PWC)
76% of marketers think marketing has changed more in the past two years than the past 50. (Adobe)
71% of those responsible for digital transformation cite understanding behavior or impact of the new customer as the primary catalyst for change. (Altimeter)
71% of leaders said understanding behavior of connected customers is a top challenge they face. (Altimeter)
71% of digitally maturing companies say they attract new talent based on their digital vision, (versus 10% of early-stage companies. (MITSloan)
70% of change management programs fail to meet their goals, often due to a lack of planning for what happens post-launch (Verndale)
70% of executives have started the digital transformation of their supply chains. (Capgemini Consulting)
62% say their organization is in denial about the need to transform digitally. (Progress)
59% are worried its already too late (Progress)
55% of companies without an existing digital transformation program say the timeframe to adopt one is a year or less. (Progress)
Only 54% of have completely mapped out the customer journey. (Altimeter)
53% of companies cite “growth opportunities in new markets” as a driver to not only reach existing customers in better ways, but also expand markets. (Altimeter)
52% of senior executives cite a lack of familiarity with technology to be a barrier to digital transformation. (Sant ku)
51% of executives cited support from leadership as the top reason for success of a business transformation initiative. (Verndale)
51% of senior executives believe it critical to implement digital transformation in the next 12 months. (Sant ku)
50% of organizations surveyed do not have a well-established process for managing change to organizational structures and business processes based on new BI functionality. (Verndale)
Only 48% say they feel highly proficient in digital marketing. (Adobe)
48% of companies are not prepared to execute business transformation. (Verndale)
48% of respondents say their companies don’t have the necessary capabilities to ensure that change is sustained. (Verndale)
45% of executives expect digital to grow their revenue, and 25% of executives expect digital to create better customer experiences. (PWC)
45% of companies trust third-party vendors to support its digital transformation initiative to provide a better customer experience. 43% choose to do so to reduce burden on internal resources, and 40% do so to reduce liability and risk. (Verndale)
41% of leaders surveyed said they’ve witnessed an increase in market share due to digital transformation efforts, and 37% cite a positive impact on employee morale.
39% say their digital transformation efforts have helped them make strong progress in enabling real-time transactions. (Accenture)
39% of marketers plan to increase their digital budgets without increasing overall marketing spend, essentially reallocating existing budgets into digital channels. (CMO Council)
Only 36% of CMOs have quantitatively proved the short-term impact of marketing spending; for demonstrating long-term impact, that figure drops to 29%. (Convince and Convert)
33% say that their digital transformation efforts have helped them make strong progress in creating new sales channels; 25% say it has helped them make strong progress in accelerating product development. (Accenture)
33% of organizations see digital transformation as a huge challenge. (Sant ku)
32% say it has helped them make strong progress in improving the efficiency of operations. (Accenture)
Only 29% feel that implementing digital metrics and measurements was a critical component to enabling digital business. (Verndale)
Just 29% of companies have a multi-year roadmap to guide to digital transformation evolution. (Altimeter)
28% say it has helped them acquire new customers. (Accenture)
27% of senior executives rate digital transformation as now being “a matter of survival.” (Capgemini Consulting)
Only 27% of companies say that their executives possess the skills necessary for digital transformation. (Verndale)
Only 26% of managers at large global enterprises agreed that their analytics program had met or exceeded their expected business outcomes, and only 31% felt their digital initiatives did the same. (Verndale)
25% of companies have a clear understanding of new and underperforming digital touchpoints (Altimeter)
Only 22% of those surveyed cited having a content strategy in place that addresses customer needs at all journey stages. (Altimeter)
Mere 20% of leaders are studying the mobile customer journey/behavior. (Altimeter)
Only 5% of executives surveyed were able to claim they have a seamless customer experience across channels today. (Verndale)
$100 billion is wasted each year on digital and analytic business transformations that do not deliver what they promise. (Verndale)
Do these digital transformation facts guide your company’s journey. Does your company need help with digital transformation?
88% of companies report they are undergoing digital transformation (source: Altimeter Group)
85% of enterprise decision makers say they have a time frame of two years to make significant inroads into digital transformation or they will suffer financially and fall behind their competitors (source: PWC)
25% of companies have a clear understanding of new and underperforming digital touchpoints (source: Altimeter Group)
In other words, many companies report they are undergoing digital transformation even though most don’t know how to go about it.
Digital transformation is profound change in business activities, processes, competencies and models to fully leverage customers at every touchpoint in the customer experience.
Successful digital transformation achieve these results:
CUSTOMER: Harness customer networks and reinvent the path to purchase in line with their real behaviors
COMPETITION: Rethink the competition and build platforms that deliver competitive advantage
DATA: Turn data into assets that prove results in real time
INNOVATION: Innovate by rapid experimentation
VALUE: Judge change by how digital transformation helps create the next business
Since digital transformation doesn’t happen overnight, it also doesn’t hurt to show short term wins along the way.
Need some examples? Here are 11 inspiring case studies of digital transformation.
AMAZON BUSINESS: Served as an example of ‘digital customer’ expectations transitioning to the B2B world. Features include: free two-day shipping on orders of $49 or more, exclusive price discounts, hundreds of millions of products, purchasing system integration, tax-exempt purchasing for qualified customers, shared payment methods, order approval workflows, and enhanced order reporting among others. Amazon Business launched in April 2015, with over 250 million products and a more holistic marketplace for B2B companies.
AUDI: Changed the way in which companies sell vehicles, with the introduction of an innovative showroom concept launched in 2012 named Audi City. Audi City provided a unique brand experience and allows visitors to explore the entire catalogue of Audi’s model range hands-on in stores located in city centers, where large showrooms are not a possibility. At Audi City London sales went up 60% from the traditional Audi showroom that previously occupied the site. Moreover, they only stock four cars, reducing the cost of having to hold a large volume of stock that often does not match a customer’s criteria.
FORD: Was structured, in early 2006, as a loose confederacy of regional business centers and IT silos. From 2006 on, they moved forward with clear goals: simplifying the company’s product line, focusing in on quantitative data and quality vehicles, and unifying the company as a whole. On the IT front, Ford slashed the budget by a massive 30 percent. Their goal, however, was not to reduce expenses, but to take resources that were tied up in maintaining fragmented and complex legacy systems and free them for use in expansion and innovation. It was all of these measures together that gave Ford the agility and capital to invest in ground-breaking projects such as the much-lauded Ford SYNC and MyFord Touch.
GENERAL ELECTRIC: GE’s Digital Wind Farm is an adaptable wind energy ecosystem that pairs turbines with the digital infrastructure for the wind energy industry. GE’s previous solution, Wind PowerUp technology, had already been installed in 4,000 units, and improved turbine efficiency by up to 5%, which translates to up to a 20% improvement in profitability for each turbine; the new Digital Windfarm technology promised 20% efficiency improvements, which could help generate up to an estimated $50 billion of value for the energy industry.
GLASSDOOR: Covered more than 450,000+ companies in over 190 countries and territories. More than 3,000 companies pay to use the company’s branding and recruiting tools (55,000+ free employer accounts). Glassdoor used its data for labor market research in the US; a portfolio of Fortune’s “Best Companies to Work For” companies outperformed the S&P 500 by 84.2%, while a similar portfolio of Glassdoor’s “Best Places to Work” outperformed the overall market by 115.6%.
LEGO: After a period of expansion (1970-1991) LEGO suffered a steady decline (1992-2004) and by 2004 LEGO was close to bankruptcy. Reaching a tipping point, LEGO started restructuring and digital transformation focused on new revenue sources coming from movies, mobile games and mobile applications. LEGO achieved an EBITDA margin of 37.1% in 2014, an increase of 15% since 2007. In 2014, the first LEGO movie achieved revenues of approximately $468 million with a production budget of only $60 million.
MCCORMICK & COMPANY: Launched FlavorPrint, an online flavor recommendation tool that visually represents consumer’s tastes. Consumers start with a 20 question quiz about eating habits and food likes and dislikes. FlavorPrint takes this data and generates personalized suggestions about recipes using algorithms. It has been dubbed “the Netflix for food” for its ability to suggest recipes based on individual’s tastes. FlavorPrint has been such a success that McCormick spun off into its own technology company called Vivanda
MCDONALD’S: Recognized a massive shift in consumer behavior. For example, in 2015, McDonald’s began installing kiosks where customers can quickly customize their hamburgers. One of their more recent undertakings was for the 2015 Super Bowl football championship. McDonald’s used social media to give away products related to the commercials they aired throughout the game. It was important for McDonald’s to have the ability to respond immediately to consumers and actively monitor social media trends in real time. The effort was a success and drew over 1.2 million retweets including high-profile celebrities such as Taylor Swift.
NETSPRESSO: Had the desire with its digital transformation to win new customers, gain a deeper understanding of its customers, and manage complex buying processes. But it was guided by the company’s clear goal: To provide customer’s with the perfect coffee experience. Netspresso’s initiatives are supported by a modern customer engagement solution based in the cloud, complete with network capability. Its cloud solution serves as an innovation platform with a full-fledged sales solution capable of handling the entire buying cycle: pricing, quotes, and orders. Nespresso’s digital initiatives have proven fruitful. Benefits include greater penetration into new markets, higher sales and user adoption, better sales productivity, and better visibility across the entire engagement cycle.
STARBUCKS: COO Kevin Johnson perhaps sums it up best: “Where others are attempting to build a mobile app, Starbucks has built an end-to-end consumer platform anchored around loyalty.” The company’s main innovation is their Mobile Order and Pay app. This is fundamentally a customer-first strategy, as it addresses the basic wants of the consumer: convenience, line avoidance, and so forth. Coupled with their extensive loyalty program, the app gives Starbucks the perfect venue to up-sell and market to consumers. Furthermore, the app funnels back massive amounts of user data to the company, allowing them to better understand their customers’ habits and desires.
UNDER ARMOUR: Wanted to become much more than an athletic apparel company when they introduced “connected fitness”— a platform to track, analyze and share personal health data right to customers’ phones. This new application provides a stream of information to UA that enables them to immediately identify fitness and health trends. For example, Under Armour, which is based in Baltimore, was able to immediately recognize a walking trend that started in Australia. This allowed them to deploy localized marketing and distribution efforts way before their competitors knew what was happening.
Does this help explain digital transformation to you? Do these case studies relate to your business? Does your business need help with a digital transformation roadmap?