Digital transformation has been around for many years. Yet most companies have failed to grasp the extent of what it means. We need to show our management teams there is more to do.
There is an apocryphal tale about the adoption of electricity in business. According to this tale, factories were some of the first to embrace electricity. They removed their water wheels and steam power to replace it with electric. In doing so, they reasoned, they had ‘electrically transformed’. That was known as Electrification.
In truth, these companies had not understood the impact of electricity. Many were still building by the water over a decade later, despite not needing the water for power. They were still stuck in their old ways of doing things.
It was those who realised they could now build by the railways that gained the true advantage of electricity.
How true the story is I am not sure. But, it does mirror what we see today. We see companies claiming to embrace digital transformation and yet miss the point.
The Obvious Steps in Digital Transformation
Generally speaking companies have focused their efforts on two areas.
Introduce Digital Marketing Channels
First, they have replaced old-school marketing techniques with modern digital equivalents.
- Instead of advertising on TV, they now advertise on YouTube, Instagram or Facebook.
- Instead of sending press releases they have blogger engagement campaigns.
- Instead of printed brochures, they have websites and Facebook pages.
They have done the equivalent as the factories of old. They have ripped out the old technology and replaced it with the new.
Use Digital to Work More Efficiently
Then there are those who have used digital to improve efficiency and profitability. These companies have introduced customer relationship management systems. They have added stock management systems or content management systems. They have improved internal communication using intranets or email.
Do not misunderstand me. Both efficiencies and improved marketing techniques are valuable steps in digital transformation. But, they are not the end of the road.
Often, companies ignore the most significant area of digital transformation. That is the impact of digital on customer behaviour and by extension the products they offer.
Adapting Your Underlying Product in the Light of Digital
What customers want from companies has shifted over the last two decades. Digital has transformed customer expectations, and yet most companies have failed to adapt.
But digital has also allowed us to meet those needs in ways that would have been impossible before.
Take for example the famous story of Uber. Uber looked at the experience of using a taxi and realised that digital could improve things. They used digital tools to enhance a current offering.
Others have followed this example with mixed results. For example, Samsung has tried to ‘digitise’ its fridges by adding a screen. But that is to misunderstand digital transformation. You cannot slap a digital component onto an existing product and call it digital.
Address the User’s Pain Points With Digital
What made Uber work is that it found customer pain points and addressed those with digital. They removed the pain points of hailing a cab, getting a receipt, and payment. All these changes enhanced the experience.
HP have understood this with their latest printer the HP Tango.
Other printer manufacturers were allowing users to print from anywhere. But this was a solution to a problem people didn't actually have.
Meanwhile, HP identified the real painful pain points of owning a printer. They understand that running out of ink and then having to order more is annoying.
HP use their connected printers to check ink levels and send out new ink when you are running low.
Not only does this solve a user’s real problem, but it also improving the revenue stream from selling HP branded ink.
This shows that digital offers potential for expanding business and increasing customer satisfaction. But, this only happens if we solve the right problem for users. That means we need to understand how the problem of users has changed with the arrival of digital.
Unfortunately, all too many companies seem to continue with business as usual. Sure they make minor tweaks to crowbar digital into existing operations. But that is it.
For example, high street music retailer HMV has gone into administration yet again. Once again they have failed to address the fact that the consumer has changed how they access music. The fundamental product is no longer needed and so the company must change.
Once we accept that our products or services have to change, the next step is to work out how. We cannot merely look at what digital is capable of delivering. Unfortunately this seems to be the approach adopted by most companies. That way lies speaking fridges! Instead, we need to look at our user pain points and ask whether digital can address those.
So I leave you with this question; how well do you know your users? Do you know what they hate about your offering? Do you understand the related issues that your product does not solve? Until you can answer yes, you cannot take the next step in digital transformation because you will not be able to convince management the existing offering is failing.