The Digital Chicken or Egg

Should you get on the digital bandwagon? Well if you haven’t already, you and more importantly your company is probably a step behind your competitor. The good news is that there is no shortage of digital whiz-bang stuff waiting in the wings ready to help enable whatever it is that you decide to do. As with most things in business, it’s usually not a good idea to do things because everyone else is doing it but if you have decided to pull the trigger, which comes first, the proverbial chicken or egg? That is, should a company figure out how they can exploit a particular digital capability or should an over-arching company strategy drive the digital agenda? I believe at a philosophical level that it should generally be the latter, but perhaps for digital this need not always be the case.

First, let’s look at a more classic ‘goal -> strategy -> execution’ flow. Your company has a goal to reduce customer churn by 10%. You put together a team to tackle the challenge and they begin to define areas of opportunity by function/interaction point and the accompanying processes. At the same time they categorize the various solutions by enablers or methods that might include things like process improvement, changes in offers and the go-to-market, and so on. In this case, the team begins to narrow their focus on the customer support process and determine that there is a lot of negative feedback in this area which leads to churn. It’s not the only source of issue, but it appears to be one of the key drivers. The team continues to analyse and draws up a list of potential fixes including:

• Policy change: Alterations to the ‘when’ and ‘how’ a customer is served may have a large impact on their level of satisfaction. This might involve changing various thresholds for when a customer might speak to a live representative vs. a machine or something very different along the lines of how quickly they might receive discounts or refunds.
• New support offers and programs: Perhaps the analysis revealed that there was a particular area in the product portfolio that had more problems, so the creation of programs to deal specifically with these issues may stem some of the losses.
• Improved communications: In the absence of knowledge, customers made assumptions about the future of the product, usually incorrectly, leading them to abandon your offering completely.

While each of the above represents a different category of solution, digital can clearly play a role in all. The problem statement around churn is focused, and when narrowed to potential fixes yields relatively specific digital possibilities. In some cases, an add-on capability to an existing platform might be the best bet, or the firm may choose to consider a broader shift to accommodate other requirements that might have been conceived by a parallel, prior or planned effort to meet a different goal.

If the objective is more expansive like reducing overall operating cost by 10%, then it is likely that the analysis will take place in a number of different tracks, each representing a key corporate function like customer service, or a major process that involves a number of the firm’s departments like order to cash. The requirements from each of the tracks when combined will begin to paint a picture of the scale of the digital need and opportunities.

Whether the target is relatively focused or more far-reaching, the process of unpacking a significant company ambition and developing a response will likely result in a set of digital requirements. These needs can then be set against a backdrop of the business’ current technology landscape. What to do from there is the topic of a number of different articles, if not a few chapters of a book, but in summary the team in charge needs to determine whether it will add new digital capabilities, or respond with an overhaul of parts or all of the firm’s digital strategy.

So how might it work in reverse, and when should a firm subscribe to the concept of a hammer looking for a nail? When is it appropriate to start with a goal like ‘we need to do something with xyz technology’ where xyz can be something like RPA, ML, AI, Cloud, IoT, Blockchain, or Big Data? Or maybe the hammer statement might be something big like ‘we need to do digital transformation.’ For the latter, I believe that digital should be considered alongside and as a part of other strategies in achieving an organization’s or line of business’ overall vision and mission (see my article on Strategy and the Digital Opportunity).

But what do you do when you’ve been asked to figure out what to do with one of the above xyz technologies and need to run around looking for a nail to begin pounding? When does it make sense to start with a new digital capability in mind to see if it might solve for a challenge that your company may or may not face? While I am not a huge fan of working backwards from an answer, I do believe in different approaches to challenging the status quo. Trying to figure out how to unlock the potential of a new technology or concept may just be one of the lightning rods that a firm needs to kick-start a transformative effort.

So how do you get started? Here are a few ideas and some things to watch out for:

• Search for case studies by technology, looking for scenarios that match – or are similar to – your industry. If these are actual examples and not theoretical, look for outcome metrics to see whether the results are close to sufficient for your firm to begin some research. Just like the stock market, ‘past performance is not a guarantee for future results,’ so don’t assume that you will achieve the same outcomes but don’t assume that you cannot do better either. The great thing about actual case studies is that it generally shows that something is doable.
• In the technology examples above, there is no shortage of companies that are prepared to beat a path to your door to pitch their wares. Ask them for case studies as well and see if they might be able to take you to a live customer to see something like IoT in action, or give you the opportunity to speak to a customer about their implementation experience and real-world results.
• In many situations, new technologies can ‘plug into’ existing platforms so don’t assume that the new stuff requires you to start from scratch. In fact, many are more powerful when integrated into current capabilities. Predictive analytics can be a very potent tool but can be supercharged when presented through an interactive platform that serves customers or perhaps used to dynamically and proactively modify parts of a company’s supply chain.
• Many emerging capabilities and their use cases have prerequisites that you will need to acquire or may not yet have for the technology to be productive in your organization. As you review the possibilities, have a closer look at how the end solution is architected and whether your firm has the capacity to move forward. For example, a Big Data scenario may require that your firm collect a specific type of data from your customer dealings. If you do not, what will it take and what are the benefits of the solution if you cannot.
• Unless you have some budget to explore at length with potentially no result, be careful not to extrapolate the potential use of a product too far. There is no doubt that the possibilities for most of these new technologies are immense but firms still need to be pragmatic and remind themselves of what can be done in the near term.
• Don’t forget ROI. Even the latest and greatest needs to yield returns. Technology for the sake of technology does not usually lead to a happy ending.
• Be willing to modify business processes. Bringing bad processes to the digital age is generally not a good idea. If you’re bringing in a new platform to run a significant process, be ready to simplify and adapt to what is defined by the solution as much as you can as significant modifications will be costly to implement and maintain. Major changes will not only likely reduce your ROI but you may be diminishing the value of the product.

As I’ve written in other articles, digital is not new nor is the transformation it can enable. Some of the recent developments are newer generations of past inventions, but better, faster and more intuitive. This all said, some innovations are truly new and the pace of evolution of past capabilities is accelerating at a phenomenal pace, and enabling today what was impossible only the year before. So whether you start with the chicken or the egg it’s best that you map out your company’s digital agenda before you find yourself wallowing somewhere in between and falling further behind your competition.

About the author: David Tom is Managing Director at the Inthink Group and has created, architected and implemented numerous digital innovation and transformation programs. In this article David explores two different approaches to starting or continuing a company’s digital journey. 

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