Digital Dash

The digital era calls for business transformation that would focus on adding value to customer experience
S. Raghunath   Delhi     Print Edition: November 5, 2017
Digital Dash
Illustration by Raj Verma

In the digital era, successful companies are not merely delivering products or services. They are delivering experiences, built around their products and services, while quality, cost and functionality remain a 'given' set of considerations. The differentiator, therefore, is the experience delivered. The all-pervading digital drive is the foundation for this change, and artificial intelligence is the game changer.

Let us take the case of KONE to understand how things are changing. We know that KONE manufactures escalators, elevators and automatic doors for buildings. But so do several other companies in this space. Traditionally, elevators happen to be a commodity business. What differentiates KONE today is its 'people flow intelligence' solutions that ensure people moving around in tall buildings do so quickly, avoiding crowding and long queues, and also do so comfortably with a heightened level of security and access control.

So, what is new here? Products, which were set to work and deliver predetermined functionalities, are now made to emit data and respond to requirement changes.

We are all aware of Kimberly-Clark, a well-known global brand that has been in the business of producing personal hygiene products. Now the company is doing way more and deploys a smart restroom management system by leveraging the Internet of Things. It has a patented system called the Onvation Technology that identifies and solves restroom issues before users could feel any discomfort and start complaining. To achieve this, connected sensors are embedded into proprietary towels, tissues and soap dispensers. The data is then collected and sent to the cloud via a secure network for being analysed. Next, automatic messages are sent to building managers on product and battery usage and overall restroom traffic. Notifications are also generated remotely when an issue is resolved. The system enables managers to assign staff to the areas that need any specific service instead of treating all restrooms equally. Clearly, the business of products and services has become the business of data aggregation, analysis, and prediction of the nature of demand and the speed of response required.

In India, Maharashtra-based Chitale Dairy has transformed the breeding potential of cows by remotely managing 200,000 bovines in the state. The company's 'Cows to Cloud' concept enables farmers to get detailed information about every cow by accessing the cloud. The initiative has improved the average yield per cow through genetic profiling, selective breeding, health monitoring and lifecycle management of the cows and also via farm automation.

As data is the new oil, the engines that consume that oil are companies reinventing value for customers. What will sell and how much will sell are different from what we have managed to sell so far.

If a company can sell what the customer wants and reduce a customer's lifecycle cost and the cost of serving him/her, it can easily re-engineer its business model in sync with the digital era. Understandably, such transformation will be enabled by Big Data analytics that include not only diagnostic analytics but also predictive and prescriptive analytics. Earlier, all data analytics helped with hindsight and insight; now these can be used to generate foresight.

Focus on the Right Strategy

A company can grow by exploiting the digital opportunity if it can counter the threats from new entrants who are largely digital, address customer demands across digital channels and enable regional groups without increasing its physical footprint.

The digital transformation strategy requires companies to reorganise technology and operations, redesign customer experience and incubate technology-driven innovation. There are several essential changes relating to structure, process and people, which must be addressed.

At the outset, the chief information officer should become a member of the senior executive team and should directly report to the chief executive. The technology function and the operations function will have to be merged as well to create complete alignment among all business divisions and geographical markets. In fact, a company will need a new head of process transformation. To ensure digitally enabled customisation, the firm will have to create a separate customer experience counsel and introduce a head of customer experience. Some process steps must be implemented as well, including IT investment prioritisation, enterprise governance and technology road mapping workshops.

From the technology perspective we need to do the following:

  • Creating a unified communication platform

  • Developing an enterprise portal

  • Setting up cloud-based infrastructure

  • Modernising legacy systems and enterprise application integration system

  • Developing social media as a customer engagement platform and initiating data-driven customer analytics

 People-related aspects include:

  • Digital thinking among executives

  •  Transforming employees from digital novices to digitally savvy people

  •  Continuous process improvement and lean thinking

  •  Focus on total customer experience and innovative, entrepreneur-like thinking

 For digital transformation to succeed, technology has to be assimilated into the core business. The quantum change that has to come is about organisations rethinking the role of IT strategy. It must change from a functional level strategy aligned with but always subservient to the business strategy to one that melds well with the business strategy. Success in the business transformation journey requires a happy mix of business and IT strategies where thinking is to be done on which part of the digital business strategy should be executed in-house and which part should be based on collaborations with strategic partners.

In summary, digital technology is changing the business architecture to help it provide optimum customer experience. Simple and reliable process digitisation changes the entire experience - from the first contact to completion of product/service usage. Therefore, companies, which are customer experience leaders, outperform the broader market, according to Watermark analysis based on Forrester Research Report relating to Customer Experience Index. However, strategic clarity requires constant environmental scanning and experimental learning to understand how likely and how fast the waves of digital disruption will hit the industry.

The writer is Professor, Corporate Strategy and Policy, at IIM Bangalore

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