Are boards the biggest barrier to going digital?

Most UK CEOs and boards have no understanding of what customers want according to research published by The Institute of Customer Service. The report entitled Leading by example also reveals that many boards ignore the views of customer facing staff and do not set a good example when it comes to exhibiting the skills that front-line employees believe to be vital to delivering good customer service.

The study, which is based on responses from 650 staff and line managers, also found that only 51% of respondents think their CEO and board are interested in customer insight and the same proportion also felt that their board puts profits before the delivery of a great customer experience. In addition, only 36% of line managers think their senior executives actively listen to customers.

It is certainly true that not all staff view their CEO and board in a totally positive way and so any survey that asks employees for their opinion about the performance and strengths of senior executives has the potential to suffer from a degree of bias. Having said that, however, this is a reasonably large survey and even allowing for some bias, the results can only be viewed as worrying for UK businesses.

Companies cannot exist without customers. So how can so many boards ignore their needs, expectations and preferences? And how can they hope to lead their organisation in the right direction if they do not listen to its customers, take an interest in customer insights or even listen to what their own staff are telling them about the customer experience their organisation provides?

Ignoring customer needs has always had the potential to damage a business. But as digital continues to gain momentum across every industry the risk of damage has increased significantly. Digital has given power to customers; they are in control. Customers have more choice than ever before and, in some cases, they can move to an alternative supplier in the time it takes to download an app. They can access information about new products and services, the best prices and deals, good experiences and poor service through social media, comparison sites and reviews from other customers enabling them to make informed decisions about purchases without having to engage directly with a business.

Digital customers have higher expectations about how and when they can interact with a business and the level of service they receive. They expect a more personalised experience, and the ability to interact via any channel and at any time, they want to be able to track their order and get regular updates and, if they want to contact a business directly, they expect real-time communication.

And they also compare their experiences across markets, products and services. It is not enough for a business to be as good as its competitors; the experience it provides has to compare well with the experience provided by any other business its customers interact with. That could mean an organisation’s customer experience being compared with companies like Amazon, Uber and Google even if it operates in totally unrelated markets. And, if an offering does not meet the customer’s expectations, they can easily let other people know using the same tools they used to learn about that product in the first place.

Blockbuster is a classic case of a business that did not understand what its customers wanted. The company viewed itself as a retailer so its board focused on driving up the value of each customer visit to its stores. But customer needs had shifted. They wanted the convenience of not having to leave home, being able to choose from a wide range of titles and genres, never finding that a DVD is out of stock and not having to return a physical item once they had viewed its content. Their core need was entertainment and they wanted their experience to be as effortless as possible. Netflix on the other hand understood its customers. It realised it was an entertainment business and focused on meeting these needs while Blockbuster was focusing on selling other items to customers when they came to its stores. But customers stopped going into Blockbuster’s stores as they longer served their entertainment needs. Blockbuster’s board did not listen to its customers or understand their needs, and the business paid the ultimate price as a result.

If the findings about lack of interest and understanding about customer needs at board level are correct we could see many more organisations follow Blockbuster into the corporate graveyard.

But this is not the first piece of research about boards that has implications for how organisations will cope with the challenges and opportunities of digital. A recent study published by the Global Center for Digital Business Transformation revealed that despite being aware of digital and its potential to disrupt their business, 45% of organisations did not consider it to be a board-level issue. In the same survey business leaders said they expected four out of the top ten players in their industry to be displaced by digital disruption and that they believed this disruption would occur within three years. Yet in almost half of the companies covered by the research, the board was not even discussing digital on a regular basis, if at all.

The importance of having an engaged and supportive senior team is a recurring theme in research about digital transformation. Strong leadership is a key requirement for any transformation programme to be successful. And, as in digital, when that transformation spans the entire organisation and involves reinventing how the business works then this leadership has to come from the top.

Digital has put the customer in charge. Boards that do not understand this and that do not consider customer needs and the broader digital agenda as one their main priorities are blocking their organisation’s digital transformation – a transformation that is essential to its long-term future. And, if they continue to be a barrier to digital, then they are putting their organisations at risk of being the next victim of disruption.

To succeed in the digital age, boards have to lead the digital transformation of their organisation, they have to place customers at the core of everything their business does and use customer needs to drive the direction of the company.

If your organisation wants to improve its senior team’s awareness and understanding of digital, develop a vision and strategy for its digital transformation, or reinvent its business model for digital then please contact me or visit my website, axin.co.uk.

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