It would seem to be a foregone conclusion that the CMO and CIO must be key collaborators for many digital initiatives to be successful. Or is it? Long before the COVID-19 pandemic, the engagement, or lack thereof, between a firm’s marketing and technology organizations could largely influence the outcome of a client-facing digital initiative. Together, these two organizations are often tasked with driving a digital agenda, clearly communicating goals, creating accountability, and having the right people and processes in place that can affect holistic organizational change. But does this really happen?

“INSIDE-OUT”, QUICK WIN APPROACHES LOSE SIGHT OF THE CUSTOMER EXPERIENCE

While digital is increasingly table-stakes at many firms, research suggests that crucial business-technology collaboration doesn’t always happen the way it should and contributes to the fail rate of many digital projects. In fact, according to a 2019 McKinsey study, over 70% of large-scale, complex digital transformation projects ultimately fail1. In large part, this is often due to poor or non-existent cross-functional collaboration, and not placing the customer experience at the center of a digital strategy.

Meaningful digital transformation is not a quick win, even though milestones can be delivered incrementally. It requires visionary leadership, a long-term commitment, the willingness to cannibalize legacy practices, and investment. Perhaps, most importantly, it requires a client-first mindset and a clear focus on the end-to-end user experience and journey.

It’s also important to recognize that digital transformation isn’t a technology project, per se, but rather a reimagining and re-engineering of business and operating models. As such, any perception of digital as the sole province of IT requires a meaningful change in thinking. Digital initiatives that are entirely driven by technology, for example, may seek to improve performance, reduce risk or reduce cost, but may also offer little more than a digital façade on top of a legacy business platform. While such IT-driven initiatives can indeed deliver benefits, they’re also largely undifferentiated from traditional IT tasks that existed in a pre-digital world. Further, when performed in isolation, business uptake of more transformational change is likely to be limited.

Too often, we’ve seen myopic and tactical approaches applied to change agendas that simply miss the mark. Cost savings, alone, should also not be the centerpiece of a digital strategy. The danger with such thinking is that it loses sight of the customer experience and ultimately risks the broader growth of the business. We refer to this approach as “inside-out”, since it is often focused internally, rather than externally or client-focused. Moreover, such an approach can promote a defensive posture, leading organizations to protect legacy practices instead of reimagining and potentially cannibalizing them. This prohibits meaningful transformation and falls short of improving the customer experience. Accordingly, firms that do not place the customer experience at the center of their digital strategy are apt to struggle with such initiatives and, ultimately, fail.

HOW CAN FIRMS TACKLE DIGITAL PROJECTS AND AVOID BECOMING A STATISTIC IN THE FAILURE RATE?

For real transformation to happen, leadership must embrace the idea of holistic change across the full value chain, including front, middle and back office functions. Leaders must also articulate a vision and effectively communicate the goals, strategy and purpose that guide the future-state roadmap. This is easier said than done. Executives often focus their teams on more siloed business-line initiatives, rather than on how the business, as a whole, needs to adapt. The behavior is often rooted in management and incentive plans that disproportionately promote individual contributions or seek to drive broader enterprise objectives without actually empowering staff to have an impact.

At Fintova, we believe a few critical items are required to ensure digital initiatives are on the right track:

  1. Clearly define what “digital transformation” means to you and your company and set clear goals across teams from the start.

Transformation means different things to different people. For a marketer, it might mean using digital marketing technology to enable turnkey delivery of targeted content, delivered at the right time to the right customer. To an IT practitioner, it might mean sunsetting an outdated or unsupported architecture and migrating systems to the cloud. Importantly, any digital strategy should incorporate a clear understanding of your customers and the experiences that you seek to create on their behalf. It will also be important to conduct an evaluation of your current capabilities (people, process, technology) and your ability to achieve the target end state. Be prepared to answer the “What”, “Why”, “Who”, “How” and “When” questions. Finally, it will be crucial to develop a transformation strategy that includes a roadmap with clear objectives and performance goals for how you plan to manage and implement a series of initiatives along the way. This will ensure that decisions are made accurately and will help to keep your transformation on course.

  1. Treat data as a critical asset.

At its core, the efficacy of any digital strategy is a byproduct of the curation, accessibility, governance and integration of data. Without a coherent data strategy and architecture, there is no digital strategy. While the tools and facilities to capture, store, manage, secure and access data may be the province of IT, the data itself should be owned by business stakeholders.

We’ve witnessed too many organizations that assume data integrity and quality remain the purview of IT, simply because it passes through IT plumbing. Similarly, we’ve seen organizations pursue sizeable technology initiatives without first considering a prerequisite data strategy and architecture. Both are colossal mistakes that can undermine the future of any digital strategy.

An effective data architecture will promote data lineage and sharing across functional boundaries, pushing data access and analysis directly to business users, rather than requiring IT as an intermediary for all use cases. Such a platform enables the discovery of new data insights that may have been previously encumbered by an abundance of stove-piped, application-specific data repositories. At Fintova, we refer to this target rich end-state as the Virtuous Data Feedback Loop™.

  1. Avoid working in silos.

Firms cannot afford to merely install a shiny new piece of technology kit, unaccompanied by any meaningful business change. We’ve seen firms invest considerable capital in new technology platforms that are treated as drop-in replacements for the legacy applications they are replacing. In fact, firms often go out of their way to customize new technology installations to match legacy business processes and workflows. In short, this is an expensive way to simply maintain parity.

The broad reach of digital transformation requires stakeholder engagement across the firm, including distribution, manufacturing, operations, HR and IT functions. Of course, let us also not forget the need for customer engagement. This cross-section of stakeholders is uniquely positioned to help define an aspirational target end-state to ensure organizational buy-in, and to flag and help mitigate potential roadblocks. When working in silos, these critical elements can be missed, potentially undermining the success of any transformational initiative. Instead, organizations should focus on clear and open pathways for communication with a cross-functional team in place.

For example, we’re currently working with a client who’s focused on creating a self-service call center to improve efficiencies. While the IT department is ready to integrate AI and natural language processing systems, the Marketing and Operations teams are at the table to map the customer journey. Customer feedback shows us that many are frustrated by the existing IVR (Interactive Voice Response) experience. However, if the new self-service call center is poorly implemented, the customer is likely to be frustrated by that experience, as well.

Since many CMOs own the initial customer experience, they are likely to have insights into what the customer sees and needs. In this case, we’ve organized the team to include strong Marketing representation to help ensure the voice of the customer is present and at the table. We’ve also created a customer advisory board to work with us as we test the new platform and to provide ongoing feedback. The more the CMO is involved, the more likely it is that customer needs are incorporated, and implementations go smoothly. Here, Marketing, Operations, and IT are all working together to create this process and to carefully consider the customer experience, throughout.

  1. Remain nimble.

A future-state vision is important, as it sets a north star to which an organization can align its mission, goals and roadmap. Still, organizations that seek to boil the ocean or do too much, too soon, are likely to falter. Consider the trajectory of most consumer-grade applications: they often start with a minimally viable product (MVP) and, over a series of quick iterations, introduce new capabilities that enhance the user experience. Key to this method of delivery are agile and DevTestOps concepts, but equally important is the active flow of customer feedback that helps drive product evolution, sometimes even in ways that may not have been originally anticipated.

Ultimately, digital transformation is an enduring journey that’s not defined by a single initiative and must be responsive to a dynamic business landscape and customer demands. This is not well suited to a series of traditional waterfall projects, and organizations must be prepared to fail and course-correct, quickly. To be most effective, all business stakeholders and partners need to collaborate on the journey and adapt a certain cadence.

Follow the 80:20 rule and start with a project that makes a significant impact in a short amount of time. Review how the cross-functional team can best monitor and track progress. Metrics in the form of KPIs and KPTs can be useful, but may also be less applicable when charting an entirely new course. Don’t get so caught up in process and numbers that you stifle any meaningful chance for innovation. With an early success, your digital agenda is apt to gain momentum and further buy-in, allowing for more use cases to be incorporated.

CONCLUSION

While digital has been at the forefront of other industries prior to the recent pandemic, we believe that COVID-19 will serve as a meaningful catalyst for those industries and companies that have lagged adoption. Moreover, we expect that digital channels and the expectation of a rich customer experience will be mainstays well after the virus cedes. As a result, how firms enhance the end-to-end customer experience must factor into the planning and execution of any sound digital strategy.

Finally, companies should focus on use cases that drive real world results, setting a clear path for not only operational efficiencies and cost-savings, but also for what it means to customers, employees, and overall business growth. Ensuring broad and active engagement of business and customer stakeholders is critical for a successful digital journey. Value your data as an asset, since this is the lifeblood of any digital strategy. Be responsive and pursue a series of quick, iterative wins, rather than a long, drawn-out monolithic project. Most importantly, recognize digital transformation as a re-invention or re-engineering of legacy business and operating models, and not simply as yet another technology project.

  1. *McKinsey: “The How of Transformation”, May 2019