What does ‘digital transformation’ really mean?
Businesses frequently use the term, but what does it actually entail and who should be responsible for its execution?
By Mindi Chahal 14 Apr 2016 10:34 am
The term ‘digital transformation’ has been used to describe anything from creating a fully responsive mobile website to developing a social media strategy, but in reality true transformation needs to involve much more than just the end product.
So what does this mean for brands? Whose responsibility should it be and what does a transformation project really involve? And what challenges do businesses face when adapting people and processes to new technology and shifting to a ‘digital first’ approach?
As digital now permeates every part of a business, many argue that it cannot be siloed. Marketing Week columnist Mark Ritson says as digital is indeed everywhere, “it’s impossible to find an Archimedean point where digital ends and so-called ‘traditional’ channels begin”. He also claims the death of ‘digital’ distinction is upon us, referencing Diageo’s CEO Ivan Menezes, who said: “It’s not about doing ‘digital marketing’, it’s about marketing effectively in a digital world.”
This casts doubt on the validity of having the word ‘digital’ in a job title because even though these professionals might take the lead on digital transformation projects, they should involve the entire business from the board to front-line staff.
“Digital transformation is another [term] for what I call business transformation,” says Thom Groot, digital director at car breakdown company The AA. “Digital is at the heart of businesses and in my view it’s a reflection of the fact that customer behaviour is changing. The digital age has accelerated that change and therefore businesses need to be fast at changing themselves to meet that customer behaviour.”
How to get the board on-board
As digital transformation projects require input from the entire business, it is vital they get buy in from senior leaders and the board in order to be a success.
For The AA, a brand that has been around for 110 years, getting sign off from the board for changes of this kind can be difficult. Groot says: “Typically in companies that have been around for a long time there is an internal challenge about buy-in [and] if you don’t get that, it becomes hard to make an impact.”
Vue has a three-year road map to improve cinemagoers’ experiences with digital products and upgrades
He adds: “You need a vision of where you are headed and you need others to buy into it and engage with it, otherwise you will not get anything changed.”
A report titled ‘Effective leadership in the digital age’ by Marketing Week sister brand Econsultancy, which offers digital transformation consulting and services, shows that the responsibility for digital projects lies with senior leaders.
The research is based on 15 in-depth interviews with a range of C-suite and senior management professionals and an online survey of 439 senior staff across a range of organisations and sectors.
Three-quarters of respondents agree that the strategic digital priorities and direction of companies are the responsibility of the senior management. In 2013 it was 69%.
The proportion of organisations that believe setting digital budgets and targets is the responsibility of senior management has similarly increased, from 60% in 2013 to 70% in 2015.
However, a separate piece of research by agency Organic, shown exclusively to Marketing Week, reveals that 62% of staff feel the biggest barrier to digital transformation is not having a leadership mandate.
The survey of 111 digital and marketing professionals finds that 58% agree the C-suite are among the most valuable stakeholders in digital transformation projects; the same percentage say this for vice-presidents or heads of departments, while 57% single out directors.
READ MORE: Telefónica bets on artificial intelligence for its digital transformation
While it may be challenging, as The AA’s Groot suggests, getting buy-in is vital, since 55% believe having no perceived need for change is the biggest barrier to digital transformation.
The approach and proposed benefits of any project, therefore, have to be tailored to senior leaders when trying to get buy-in. “Patience is a virtue, break it down to the language that the business is much more familiar with,” advises Dominic Rowell, commercial director at cinema chain Vue (see Top tips for digital transformation), who is working with digital agency TH_NK.
Vue is on a three-year road map to serve cinemagoers better through digital products and upgrades. Ahead of the release of the latest Star Wars film, for example, the cinema sold 10,000 tickets in the first 90 minutes of going on sale, so had to ensure the digital web experience met customers’ expectations.
Very.co.uk owner shop direct is investing in new partnerships to support innovation
The brand is in the foundation stages of the project but Rowell says breaking down the strategy into chunks helped sell the project to the business.
“It’s selling in strategic intent; a business plan that says ‘give me X and I’ll deliver Y’,” says Rowell. “When you are in an organisation where technology is full of unknowns, you don’t expect anybody to [ask for] millions in funding to [bet] on black and spin the wheel. Digital investment and transformation is how to break that vision down into digestible chunks [so] I can start to prove the business case.”
Vue can take this approach because digital is measurable, according to Rowell. He says the cinema chain can “keep learning and pushing towards short-term goals” that all contribute to its three-year plan.
Culture change required
Once senior leaders are on board, it is also important to ensure that any changes are shared with the rest of the company. Digital transformation is about adapting the culture of the business and the way it operates to work with new technology, rather than making the chosen technology stack fit.
The Organic research reveals that 30% of respondents believe transforming the culture of the organisation comes to mind when they think about digital transformation, while 24% say it refers to ‘ways of working’ compared to only 8% who believe the adoption of new IT is at the forefront of digital transformation.
People’s behaviour is changing because they can see there are better ways to organise their personal lives, their culture and work, says James Moffat, executive director at Organic. “In that respect, technology doesn’t drive change, it provides the opportunity to do things better.”
Moffat says a “people-centred approach” is best in digital transformation projects because the technology continuously evolves and “will be there today and gone tomorrow”.
READ MORE: Digital transformation is about more than new technology
Science-led biopharmaceutical company AstraZeneca needed to engage staff in digital upgrades as their input was a key element of the project. The aim of the initiative, which was done with agency DigitasLBi, was to make digital channels work harder for the company’s partnership efforts and prospects, as the strategy is based on open innovation and partnering with the external world in science. This included a new corporate website and social media strategy.
“New websites and platforms are great but content is king,” says project director Roeland van der Heiden. This presented a challenge, as its content is created by the scientists themselves.
Van der Heiden says: “To build deep content means that you have to interfere with the scientists who are very busy. Getting everyone aligned to realign and produce the right content, and [getting] people to realise what the end result would be, that was the most challenging [thing].” He adds: “It’s building pride and belonging within the company. It gets easier and now everyone wants to be featured in the story.”
AstraZeneca’s digital strategy is based on open innovation and partnering with the external world in science
Creating a new internal way of working and communicating is part of the process. For example, oil company Shell wanted to introduce digital experiences to move from talking about what it sells – fuel – to focusing on customer passion points, such as driving, cars and motor sports.
The brand focused on its 60-year technical innovation partnership with Ferrari. Working with agency Iris, Shell created the Scuderia Ferrari Uncovered experience, which allows visitors to the site to digitally explore Ferrari’s Formula 1 garage via Google’s Street View.
Fiona Low, global head of digital marketing at Shell, says: “We want to tell the story of the science and innovation work we do with the Ferrari team [and how that] goes into the formulation that is available to you and I when we fill up [our cars] at the pump.”
She adds: “It took our teams out of their comfort zone because we weren’t directly talking about the products that we sell.”
Put customer needs first
Technology changes and develops simultaneously with customer behaviour so a vital piece of any transformation project is constantly checking if it serves a real customer need.
As The AA’s Groot says: “You have to start the process with what is going to be useful and valuable for customers and the business, as technology enables you to deliver what the customer wants.” But he warns: “Unless customers really want it and engage with it, you are not driving impact.”
Retail group Shop Direct needed to overhaul its operations to meet changing customer behaviour. Three years ago, 72% of the brand’s sales came from catalogue customers but now Shop Direct brands, such as Littlewoods.com and Very.co.uk, are 100% online and 63% of sales come from mobile devices.
“We have fundamentally changed our business,” says Gareth Jones, deputy CEO and retail and strategy director at Shop Direct. “We have focused more on our customers’ online journey through user experience, data analytics and personalisation. There is still work to do but we believe we’re well on the way.”
The business is also investing in new partnerships to support innovation. Working with omnichannel personalisation agency RichRelevance, for example, helps the brand offer customers a personalised and curated experience across its sites by delivering personalised product recommendations and offers.
READ MORE: Rise of the machines – Are robots after your job?
Another example is a recent ￡50m investment programme in partnership with IBM, which will offer financial services products tailored to customers.
“New websites and platforms are great but content is king”
Roeland van der Heiden, AstraZeneca
A continuous journey
Many of these projects will have a set time frame, such as Vue’s three-year road map, but many will have no completion date because of the speed of development in digital technology and changing customer behaviour.
Therefore, there does not necessarily need to be a ‘big reveal’. Groot says: “There is a common misconception that you [do] a big project, deliver it [and say] ‘great, we are now transformed’, and it’s done. It’s never done.
“The long-term view should change, and should change often, because customer behaviour changes often.”
Van der Heiden echoes this sentiment. He concludes: “It is a continuous process, there is no one-off thinking. It’s not a project that will ever stop, so if you decide to be engaging in digital and social, there is a start but it doesn’t have an end.”
The AA, from 60 apps to one
As part of its digital transformation, The AA is looking at its apps. It used to have more than 60 versions ranging from breakdown reporting to pub guides and aids to help learner drivers.
The apps were not unified and 74% of customers did not use an app again after download. Working with agency Rufus Leonard, The AA launched an app that tied up activities and services based on consumer needs.
Digital director Thom Groot says: “It has made a massive difference to the service we offer to customers. [There’s a] focus on making life easier for customers so they can call out [breakdown services] via the app, but also other services such as the nearest petrol station, the cheapest petrol, car registration, when you need an MOT or when your tax is due.”
The app development also led to teams working together and as the app develops, more is learned and incorporated. Groot adds: “You need different technology as a company to enable you to change faster, [and achieve a] faster speed to market.”
The project increased The AA’s app store rating from 2.5 to 4 stars, achieved a 37% increase in app visits and a 33% rise in unique users. It also generated a 113% increase in visits to its fuel price data section and doubled the number of people registering to use the app each week.