Whatever the sector, the rate of digital transformation is accelerating. Despite their resources, legacy organisations have a harder time keeping pace with transformation than start-ups due to a variety of reasons including the inertia of changing internal culture, difficulty in getting buy-in for new technology from senior leaders, or misunderstanding the needs of ever more connected consumers.
In order to for organisations to prevent disruptors disrupting their businesses, they must be constantly innovating. Starting that change tomorrow might already be too late to prevent disruption.
A roundtable of senior marketers, organised by The Drum in association with IBMiX at The Drum Arms, set out to examine what ‘digital transformation’ means for and how constant innovation can be fostered to prevent disruption.
The panel began by attempting to define what ‘digital transformation’ means, since it has implications for businesses and their consumers alike. For Microsoft consumer marketing director, Paul Davies: “For us, digital transformation is about people, making sure that people have the right tools to work productively, to work safely, in the digital sphere. [That’s] the internal people side of it, but we have an operational side of it as well, which is about us as a business saving money, being more efficient.
“Then there's a product development pitch as well... using technology to develop products. The last piece is service delivery, it's whether we can then deliver those products to our customers in the way that they're demanding.”
Tech is only a starting point
Technology is the catalyst for much digital transformation, particularly when it comes to developing products. The panel, however, was keen to point out that innovation or tech for its own sake delivers no benefits. Marketing director at YO! Sushi, Luisa Fernandez argues that it requires careful consideration of what change can mean for consumers: “What we've tried to do at Yo! is take it first and foremost through the eyes of the customer, because we are a service business. Most of our digital interactions come from other platforms, not our own – Deliveroo from a delivery perspective, Just Eat from a collection perspective – so we're very fortunate in a sense that we can start from a blank piece of paper and start to think about what the future would look like.
“Whether that's creating a single customer view, looking at technology in the restaurant and joining that up, or whether that's ensuring we're working with multiple platforms like reputation.com to pull in all our reviews for TripAdvisor, Google and Facebook.”
Tanya Joseph, director of campaigns for Nationwide Building Society, pointed out that the modern consumer is habituated to technology improving their lives to the extent that any failure in the system is not tolerated.
“Remember the days when a cheque could take four days to clear? Now you can pay immediately over your phone and people's tolerance for systems being down... they expect everything to be working. All of those systems are based on cheques clearing and physically being passed around the system, so you have to rebuild all that technology and you have to do it in the background.”
Taking a cue from Jurassic Park, the panel was keen to point out that because you can do something with technology doesn’t necessarily mean that you should. Often the strengths of an established brand lie in the personal relationships they offer. Joseph pointed out that while chatbots are great for certain interactions, they are not always a replacement for significant events like signing up for a first mortgage.
Creating cultural change
Similarly, the role of creating digital transformation within organisations is often a human problem. The roundtable agreed that while there is an imperative for businesses to invest in new ideas and new ways of interacting with the consumers of future, it is critical that businesses focus not just on tech transformation but also human and cultural transformation.
Nomad Foods group chief marketing officer Steve Axe argued that there is a simple formula for encouraging digital transformation within a business. “We've seen that the way of driving cultural change is 'what's in it for me?' If you can convince people that either 'my job's easier, I'm faster, I'm going to sell more', the individual element of that is what drives the cultural change. It's constantly grounding that to each individual, whether it's the digital marketing manager in Sweden or me as a CMO to get excited about it, it's the same principle.”
Even when there is a clear business case for making a change, it is often extremely difficult to make the entire business understand that transformation is everybody’s responsibility. Sebastian Micozzi, the newly named SVP digital in transformation for Bacardi Global Brands, noted that even having ‘digital’ in his job title meant that all responsibility for anything remotely digital automatically landed on his lap, when it should really be a shared responsibility.
Debbie Vavangas, the UK lead for IBM iX, agreed, saying: “The challenges that IBM face are absolutely like that, in terms of making that blend of legacy and new. You've got to have the sponsorship for any change from the top down; you need the groundswell from the bottom to support it. It's the sticky middle that's always difficult.”
It’s understandable why getting buy-in across a whole company is difficult, and why smaller organisations sometimes have the advantage in leveraging new technology: Every employee, from senior management down, is also at risk of being disrupted as the aims and practices of the business change. Lindsey Herbert, IX innovation leader for IBMiX, pointed out that often getting buy-in is easy, while maintaining the enthusiasm for digital transformation is difficult as the drive to innovate clashes with legacy KPIs. “In a similar respect, that sticky middle management layer is motivated by something, and if that senior sponsorship that's saying 'we need to innovate' doesn't align with the incentives of those middle managers then you're going to have everyone enthusiastic at the beginning of the quarter, but by the end of the quarter they're not so keen on the innovation any more, they're just trying to put in their numbers.”
Fernandez agreed, noting that conflict between internal targets and the need to deliver transformation extends from the top down to consumer-facing roles in sales: “If you've got people who have sales targets, they're always conflicting against that experience with the customer.”
Reacting to external transformation
The reality of business in 2019 is that, while businesses can feel pressure to change as competitors and disruptors go on the attack, regulation around tech threatens to tear up the playing field entirely. The panel noted that with all the uncertainty surrounding Brexit and other far-reaching events, businesses are by necessity reactive to any changes that are forced upon them.
The question, then, is whether legacy businesses genuinely feel they can change and adapt quickly enough. Vavangas pointed out that the question of transformation is only going to become more acute in the near future:
Ash Tailor, global category director for soft drinks, Britvic, noted that ultimately flexibility is paramount. He argued that while his global group has plans through to 2025, those plans allow for different teams within the business to affect the change in the ways that are best for them: “For instance, you might think of Brazil as being one market, but the reality is so different. It’s like talking about European markets in the same breath. No wonder companies that don’t see that don't survive.” For Tailor, anyone who understands the potential of digital technology understands that what is happening is less of a digital transformation and more of a fundamental rethink of the old ways of working.
The panel also acknowledged that, for marketers, knowing which horse to back in terms of digital and tech is an increasingly difficult task. Consequently, an added layer of difficulty is knowing when to innovate ahead of the pack and when being a fast follower is the best course of action.
Digital transformation, then, offers businesses certain advantages in terms of staying ahead of disruption and reaching consumers in the manner to which they have become accustomed. But as the roundtable of marketers explained, it means making some occasionally risky bets on what technology to deploy and when. With their holistic approach to communications with consumers and within the company, often it falls to marketers alone to convince their entire team to make those bets.