The Achilles' Heel of Digital Transformation

Achilles was one of the greatest warriors of ancient Greek mythology. His mother dipped him in the River Styx, which made him invulnerable. He was unstoppable on the battlefield. Unfortunately for Achille’s, he was not completely covered. One of his heels was exposed. That weak spot ultimately led to Achilles’ demise. When it comes to digital transformation, it is imperative that we carefully consider those weak spots, which could ultimately lead to the downfall of the many massive projects so many of us are pursuing.   

My name is Tim Tang. My role at Hughes is to understand how technology is changing industries like banking, retail, and restaurant. Over the past several years, I’ve attended over a hundred conferences that have discussed the digital transformation from a variety of perspectives. I’m particularly in the gaps in the technology strategy narrative. I’m particularly interested in those weak spots where everything could go wrong.

Unreasonable Customer Expectations

Ironically, when it comes to digital transformation, the first weak spot is not about technology but rather about people. I’m certain that most of us are aware and perhaps continually frustrated by the fact that customer expectations are escalating out of control. At a conference I attended only a few weeks ago, a speaker noted, “The customer has never been so unreasonable. The customer will never be this reasonable again.”

Any customer who has been fed a healthy diet of Amazon purchases, Uber/Lyft Rides, and Google searches, can only naturally conclude that they rightfully sit at the center of the universe. While escalating customer expectations may be a well-known phenomenon, it is remarkable that so many of our digital transformation initiatives do not seem to address these escalating customer expectations. While the customer is racing recklessly ahead with their insane expectations, as an industry, most of us are taking rather small, conservative steps. A branch remodel here, a mobile app enhancement over there, a technology test somewhere else. While these are the common tools of the trade, does anyone genuinely believe that such incremental adjustments will sufficiently bridge the gap between what the customer wants and what we have to offer to today? How do you satisfy a customer who would rather go to the dentist than visit their bank? How much longer can this continue?

Hypothesis of Pain

I have a hypothesis that I would like to propose. When it comes to digital transformation, the banking industry is a far better position than most other industries, such as retail and restaurant, that are undergoing similar transformations. Why do I say that? The reason is “pain.”

In the banking industry, the customer is in enormous pain. The customer is stressed about how to handle their finances. The customer knows that they don’t know how to properly handle their money. They are overwhelmed by college debt. They are living paycheck to paycheck. Half of all Americans are unprepared for an unexpected $400 crisis. They are still carrying childhood memories of growing up during the recession. With all of the current economic data pointing to the next impending recession, life is only going to becoming more challenging. People change when they are in pain. The banking customer is in enormous pain.

Bridging the Gap of Customer Expectation

So how do we bridge this enormous gap of escalating customer expectations? We fight people problems with people-oriented strategies. The only thing that keeps up with escalating customer expectations is escalating employee performance! 

But there is a problem, I routinely ask bankers, why aren’t banks taking the role of trusted financial advisor? People already trust you with their life savings, why aren’t you advising them on what to do with their money? After numerous inquiries, one banker finally gave me the insight I was looking for.  He shared, “We surveyed our employees, we asked them basic questions about their own personal finances. How much debt did they have?  How much did they make? Etc. We were shocked to find out they aren’t handle their own personal finances correctly.  We aren’t addressing financial literacy, because our employees, as a whole, aren’t qualified to play the role of the trust advisor.”

Now with regards to digital transformation, there are usually two conversations about employee engagement. We talk about the existing employee who shouldn’t be rudely replaced by tech but should be augmented by tech. If they don’t want to be augmented by tech, then we need to find another role for them to thrive. Or there is option B. We talk about hiring former Ritz Carlton, Disney employees, or bartenders because we know these people know how to take care of customers. These people can be taught banking. In today’s extremely tight labor market, I’m not sure that either approach will get the job done. 

If an employee isn’t interested in participating in the digital transformation of their role, the priority isn’t how do we keep them satisfied and productive in some other role, the priority is “how do we meet and escalating unreasonable customer expectation?” 

While option B, the Ritz Carlton, Disney, and bartender approach may be extremely appealing, it’s also problematic. In today’s experience-based economies, such employees are worth their weight in gold. They know it and so does everyone else. Bankers are not just competing with other bankers, they are competing with every other market depending on customer experience for competitive differentiation. Everyone is fighting for the same pool of customer service experts. Even if you get them, how many of these rock stars could your reasonably afford? For larger brands with hundreds, if not thousands of branches, how could you possible staff all of your locations to achieve a consistent experience?

When it comes to escalating customer expectations, the key is not to meet the needs of those who do not want to change or to hope to hire a very limited pool of skilled outsiders that everyone else also wants. The key is to unlock the “brand ambassador” within the mainstream of the current employee base! 

In order to meet escalating customer needs, you need escalating employee performance. If the employee defines 90% of the customer experience, you need that employing wanting to do their job, not being forced to do their job. You need a self-actualize employee. Think Maslow’s Hierarchy of needs. It’s a powerful paradigm for understanding the needs people. Herein lies another gap. A sense of identity is a higher-order behavior. Higher-order behavior may only be achieved when an employee’s lower order or basic needs are met. Employees need job security, they need higher pay, they need regular shift schedules, and they need more focused job responsibilities so they can excel in. Meeting employee needs is difficult to achieve when managers are often measured by their use of labor to revenue. So many fail to understand fair higher revenues are achievable with self-actualized employees. Instead, they penny-pinch with employee labor schedules, seeking maximum efficiency at the cost of employee life disruption. To achieve higher-order, self-actualized performance from mainstream population of employees, lower-order needs must be met first!

 It won’t be easy. It will be quite painful, but it will also be quite powerful. For more information, I would refer you to the GoodJobsInstitute.org. They studied organizations such as Costco, Aldi’s, and Quik Trip, who have routinely succeeded in elevating their employee performance to meet escalating customer expectations. Based on this research, the Good Jobs Institute provides a comprehensive model for not only understanding the problem but also how to solve it.

Changing the Culture

Once a foundation for eliciting the brand ambassador has been set, then and only then, do you have an opportunity to shape the brand’s culture to not only meet but exceed the customer’s expectation. In sociology, culture is a matter of artifacts and symbols. In business, by far the most effective artifact and symbol you have is video. There is no faster way to train employees. In today’s social media-dominated society, there is no more effective way to change human behavior than though high-frequency exposure to short-form video content. I urge you to respect the magnitude of the task at hand. We are talking about changing human behavior. 

All of us know how difficult it is to lose weight. We all want to do it, yet most of us will routinely fail. Imagine for a moment, if your business success were dependent upon the vast majority of your company‘s employee losing 10 lbs. in one month? How many of you would succeed in leading your employees through such an objective?  It is hard to change human behavior. It is hard to change an organization’s culture. You need feed your entire employee base with a continual stream of engaging content so that everyone knows what is required and is routinely reminded to elevate their game.

For example, I’m currently using a mobile leadership app called LeadX, which touches on all kinds of topics from employee engagement to personal productivity. You know how you can lose hours watching YouTube videos? The same thing happens with LeadX. I can lose hours watching 3 minute, 5 minute, or longer videos. I’m binge-watching to improve my leadership skills!

Technology as a Differentiator

Where the first Achille’s heel focused on people, the next concerns technology. It has been said over and over again, in one form or another, “in this 4th industrial revolution, technology is a differentiator. It is the key to a competitive advantage. It is essential to commercial success. Every business is a technology company. You are not a restaurant. You are a tech company that happens to deliver pizza.”

The tech stack at the branch can be a powerful differentiator. For example, take something as simple as an internet connection. You can have two banks who order the same type of internet connection. Yet with the right tech stack, one site will be able to successfully support Guest and Employee Wi-Fi, VoIP, all of their cloud applications, security surveillance, and employee training, while the other branch will barely be able to support basic core applications. At this second site, employees will refuse to do their training because the video quality is so bad, and customer satisfaction scores will drop because the employee can’t understand what the customer is saying. Why? Because technology does make a difference. It can unlock your employee’s full potential. It can increase the efficiencies of your retail operations. It can enhance your customer experience.

But what happens when technology is not accessible? One of my favorite questions to ask CIOs is how do they filter though the immense wave of technology options that just never ceases to stop. Usually, the answers are very similar; “I start with business problems that I need to fix. Then I look at available solutions. See what fits the budget and then set my priorities.”

However, there was one CIO who gave me a different answer, that sent me in a different direction. His response was quite simply, “I look at my current tech stack and 90% of the stuff out there won’t work with what I have. So I just focus on the remaining 10% that is relevant.”

There are many, many ways of thinking about your tech stack. Sure there are those companies with immense internal resources and the ability to create whatever they want. For them, I would agree that the tech stack represents a powerful opportunity to create unique competitive advantages. However, there are businesses, where most of the IT staffing is focused on keeping the lights on. In such cases, how do you effectively create a technology stack in market dependent on technology with no available resources? One answer to consider: When you can’t build your tech stack, you buy your tech stack.

When IT resources are insufficient to build technology solutions, then buy the required solution and leverage your internal talent to manage these 3rd party resources. If you examine the digital transformation of other industries, it is striking how similar the approaches are. When Amazon emerged, threatened retailers ran to digital to redefine the customer’s brick and mortar experience. Application standards became an important mechanism to facilitate the integration of disparate applications. In the c-store industry, standards play a critical role in facilitating new loyalty integration with POS solutions. Most recently, the hospitality and restaurant industry are creating standards to foster interoperability. I fully expect that as the banking industry matures in its use of technology that a similar standards body will emerge. For those with unlimited resources, they will always have the option to innovate their own solutions. For everyone else, the competitive edge will be found in the operational execution of common technology-as-a-service solution.

Artificial Intelligence is one place to start. In the global geopolitical arena, China has been quite public and bold about their intentions to dominate in AI. They will spend over $70B in AI next year. Furthermore, in that country, consumers and businesses alike are expected to turn over all of their data to the government.  With more money and more data, China will have an enormous AI advantage. Globally, when it comes to AI/ML, there will be the “haves” and the “have nots.”  Commercially, there are also the “haves” and the “have nots.”

Every business is impacted by AI. As a managed network service provider, Hughes is correlating across streams of data anticipate outages and inefficiencies in the network. We want to get the point where we can fix problems before they occur. “What are you doing with AI? Perhaps more importantly, what is your competition doing with AI?”

And finally, I would like to offer the most critical Achille’s heel in digital transformation, network security. While network security is completely a technology issue, at a recent banking conference, it wasn’t a VP of IT or a CIO that spoke to the issue, but rather a CMO. She was talking about the impact of a breach on their brand. 

One of the fundamental tenets of digital transformation in any industry is the need for open system architectures. Digital transformation in industry demands the ability to integrate compelling customer experiences. Such collaboration is only possible with connectivity. And therein lies the problem. In an age where the network security threats are growing in intensity and sophistication, businesses are opening their networks. They are becoming less secure while facing even greater threats.

Most executives suffer from an extremely high level of network security illiteracy. And while this is understandable, it is not appropriate. Data breaches are potentially business-ending events. Business executives must develop a competent understanding of network security to make informed decisions on how to protect the integrity of the company.

So these are a few of the Achilles’ Heels that I see in digital transformation. What do you think? Where are the weak spots in digital transformation today? 

Please share your thoughts in the comment field. There is so much we can learn from each other.

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