Digital transformation is a phrase that pops up in corporate mission statements and makes for interesting debates around the office coffee dispenser.
Yes, technology has helped us to do things faster and en masse. But today, technology must make our businesses friendlier and more personable than those of our competitors, because this is what customers are demanding.
To accomplish this requires a new set of core competencies across our organizations, things most of us are not good at today.
It reminds me of Alice’s encounter with the Cheshire Cat in Alice in Wonderland:
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where,” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
We do “much care where” we are going. Yet, aside from head nods and enthusiastic proclamations that we will make customers happy, do we really know what that will take? How will a company that optimizes customer experience day in and day out look different?
After studying hundreds of companies from near and far, I would like to share what I think are the three core competencies of this new type of company — one that gets ahead by competing on experience.
But, before I get to those, I want to frame the context of the shift. It will be critical for appreciating the massive change ahead.
Foundations in the Industrial Revolution
To set the stage for this, I want to draw parallels to the radical shifts that took place during the Industrial Revolution regarding how work is organized.
First, the move from decentralized production to centralized production. For example, textiles once made in individual homes became concentrated in large factories with machines that automated production.
Next, the inconsistent quality of home-created products was remedied by brand-enforced, predictable quality attained through the optimization of the manufacturing process.
Finally, the low production obtained using simple tools was replaced with mass production utilizing leading technologies of the day.
These changes brought on new transportation systems, to move both raw materials and finished goods, as well as new ways of capitalizing large businesses with investments in new equipment.
Technology was the catalyst for a complete transformation of how society produced goods and how wealth was created.
Progressing into the experience economy
Much of the way companies are structured today is a result of the mindset formed during the Industrial Revolution.
We have stretched, optimized, and streamlined. Ultimately, the end game has been in cranking out a widget – be it an item of clothing, a car, or a semiconductor part.
Mobile, cloud, and Big Data are the three catalysts enabling the experience economy — an economy in which production is decentralized, quality is a shared burden carried by the community, and mass uniformity is replaced with personalization.
We have technologies that are leading to decentralized design and shared production: for example, 3D printing and robotics. Robotics have become so intelligent that, to guide production, you don’t even have to be in the same location with them — you can control them with cloud-connected mobile devices and guidance through Big Data insights.
Through social media and sites such as Kickstarter, consumers are also voting on the types of products they want.
Customers now enforce quality through ratings and contribute to the quality of the brand experience.
For example, Uber doesn’t need supervisors in every car; drivers with poor ratings simply won’t get repeat business.
The popularity of live-sharing photos and videos during concerts and major events, as well as reaction videos of games and music videos, showcases the trend of communities co-creating experiences with brands.
As the machines become smarter, you’re able to shift from mass production to mass personalization. A good example of this is the Coca-Cola freestyle machine. It’s a soda machine that mixes the drinks on demand. Have you always dreamed of a concoction made up of 10% Cherry Coke and 90% Sprite? Done! Now, the drinks are produced on the spot and to each customer’s specifications.
The common pattern here is that the customer is involved in each step in the experience economy. To be customer-driven — instead of product-driven — companies will need a new set of core competencies, and I do think it will ultimately result in a shift in how companies are organized.
Putting it all together: mapping the destination
What are the three core competencies a business must possess to not only compete on customer experiences, but also in a world engulfed in digital?
1) Foundation for digital experiences
The first competency is the ability to deliver digital experiences across all functions that touch the customer.
Today, many of these systems are in silos across organizational boundaries of sales, marketing, and support — a result of how budgets and decisions are distributed. In the future, technology and employees will need to align to unify experiences across the customer journey.
Think about it: many bad experiences were results of disconnects between departments such as marketing and sales or sales and support.
For example, Chelsea, a leading football club, engages its fans digitally both at and away from the stadium. The digital platform they use blurs the lines between marketing, service, and sales — as it should.
2) Content velocity
The second competency is the ability to craft at scale and speed the key ingredient for great digital experiences — content. I call this content velocity.
The research that International Data Corporation (IDC) recently conducted concluded that 85 percent of companies are under pressure to create assets faster; and 76% attribute personalization to driving the need for more assets.
An example of an extra case is Tastemade, which engages with its fans on Snapchat. The content on Snapchat disappears in 24 hours. Companies like Tastemade go through a complete cycle of content generation and distribution each day.
The speed at which companies are able to source engaging digital experiences will require new technologies and processes.
3) Connected experiences
The third competency is the ability to connect the customer journey across digital interactions on websites, apps, and other connected devices.
Research is showing that Gen Z will have, on average, five devices. Companies that are able to persist and move forward with conversations and relationships across these points will garner loyalty.
This type of ability built on data insights, combined with the ability to link devices, will result in customer convenience — as well as deepen intimacy, as customers will feel as if the brand really knows them.
Although achieving these competencies will take more than technology — similar to the Industrial Revolution — technology will be a catalyst. Appreciating the scale of change that is before us, and investing in these core capabilities within your organization, will move you ahead in the experience economy.
For much more detail on the retail customer journey, download our brand new ClickZ Intelligence Report, The Future of Customer Journey.
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