THE IMPACT OF DIGITAL TRANSFORMATION
Rufus Leonard in the news This article was first published by My Customer on the 23rd August 2019. Written by Head of Strategy, Ross Timms.
When facing the prospect of a major digital transformation project in our business, what can we learn from The Guardian, Rolls-Royce and Netflix?
For many organisations, digital transformation is an immediate priority, of critical importance.
85% of enterprise decision-makers state they have a two-year period to make significant inroads into digital transformation or they will fall behind their competitors and suffer financially. $1.18 trillion is predicted to be spent globally on digital transformation technology and services in 2019, as a result.
The reality is that transformation is unique to each business and fraught with challenges. It’s expensive, time consuming, and changes may need to operate alongside existing legacy systems and BAU governance as they’re being introduced.
With less than one in six organisations delivering successful digital transformation programmes, it’s clear that many companies struggle to achieve what they set out to achieve.
To be successful, you need to know why you want to transform, and therefore what kind of transformation your business needs. Through 30 years of helping business leaders transform their organisations – from BT’s first website in 1994 to BBC’s future of voice strategy in 2019 – we've typically sene three distinct types of transformation, each with their own characteristics. In all three cases, there is one stand-out brand we believe has successfully navigated their version of digital transformation.
1. The Guardian - 'change how you do business'
'Change how you do business' is the form of digital transformation that involves responding to changing consumer demands, running the same fundamental business but delivering it in new ways, with new processes and through new technology.
The Guardian – whose brand stands for quality, independent reporting and commentary through outstanding, relevant and important journalism – implemented a wholesale digital transformation by building a new reader experience without changing their core offer.
A key pillar of their transformation was deepening reader relationships. They realised that their readers were key to their long-term sustainability so focused on improving the experience for all readers, across the globe. This means redesigning all touchpoints and focusing on a mobile-first design, focusing on impactful, important journalism, as well introducing more touchpoints, such as the flagship daily podcast, ‘Today in Focus’.
The result is more people than ever interacting with Guardian journalism, with record digital traffic averaging over 1.1 billion monthly page views. They are now the third largest newspaper (online) in the world, and have reduced their reliance on print revenues from 75% of overall revenues in 2012, to just 10% today.
2. Rolls Royce - 'change your business'
'Change your business' is the form of transformation that involves changing your business offering and responding to evolving needs and behaviours by solving problems in new ways.
Rolls Royce - fundamentally through their aerospace business - shifted from being an engineering, product-led organisation to a data, analytics organisation while still upholding their brand promise of “Pioneering the power that matters”.
They needed to use transformation to overhaul the organisation and become an agile, digital-first business. This meant transforming the culture. So they created a digital academy and selected digital-first champions across the business. This not only helped people to buy into the cultural shift but started to educate them on how they could adapt to deliver the transformation required.
3. Netflix - 'change your market'
'Change your market' means understanding how changing customer behaviours will create new markets and being there to meet that demand first.
Netflix is easily a world-leader in being at the forefront of this form of transformation. Their vision is to: become the best global entertainment distribution service; license entertainment content around the world; create markets that are accessible to filmmakers; help content creators around the world to find a global audience.
By aligning to that vision, they have grown revenues 8x since 2010, to $16.6bn in 2018. To achieve this, they have transformed from a DVD postal service to a data and analytics business, in the process investing $1.3bn in technology and development in 2018 alone.
Their drive to digital transformation needed to balance two things: the practical need and the requirement for a north star. The former was driven by pressure on profit and the need to move at the speed of the consumer. The latter was driven by their company’s mission, purpose or vision.
Find your single point of focus
Defining the purpose of your transformation programme is integral to measuring its impact and success. Once you’ve defined your ‘why?’ you can distil this into a single point of focus that explicitly meets top-line commercial objectives.
Looking back at our three brand examples, all of them can demonstrate this single point of focus. The Guardian aligned everything back to their ‘Break-even Strategy’. Rolls Royce decided that they’ve ‘got to be a technology company, not an engine company’. Netflix have always had a pinpoint focus on their vision.
That single point of focus gave each of these businesses a clear steer on how to define both growth and performance objectives.
Measuring the impact
Understanding this creates a clear platform to identify and helps align KPIs across the organisation. Do you need to increase brand value/equity or increase share price? Do you need to create channel shift through self-serve or improve customer satisfaction? Do you need to reduce employee churn or improve workforce utilisation? Or, finally, do you need to increase platform utilisation or ensure security of data and information?
This approach makes sure that a micro view on performance aligns back to the macro measurement of impact and progress. It gives the business the levers it needs to keep everyone on course over a multi-year programme of significant change. And, crucially, it provides a clear goal to galvanise everyone in the business, and as a result, is more likely to future-proof the relationship you have with your customers.