Companies that allow technology to drive their digital transformation are making a big mistake, according to a new Altimeter Group study, "Digital Transformation." Instead, digital transformation should be driven by the expectations of digital customers.
The Altimeter report defines digital transformation as new models, team structures, and customer-centered philosophies. However, a one-size-fits-all approach to digital transformation doesn't exist, said Altimeter Group principal Brian Solis.
“A lot of times, people are looking for the prescription,” Solis told CMO.com. “But unfortunately there isn’t one.”
The report is qualitative research and analysis based on interviews with digital strategists and executives at organizations currently undergoing digital transformation efforts. From September 2013 through February 2014, Altimeter interviewed 20 executives and social strategists at 14 companies about their experiences in adapting to the new digital customer experience. Companies represented include Starbucks, Sephora, Nestlé, P&G, Discover, Ford, Intuit, Fidelity, GM, among others regarded for their work in digital.
“There are a lot of moving parts that cause marketers to move into the direction of a digital transformation,” Solis said. “CMOs are getting more budget than CIOs, digital marketing is becoming a big priority for companies, brands are increasingly upping their budgets for mobile, social, and automation, and the role of the CMO is more important and strategic to a company’s success than ever before.”
As a result, Solis explained, more brands are moving toward the future of marketing and customer experience. Unfortunately, the Altimeter study shows that the catalysts for digital transformation have been technology-driven, not customer-driven. That means many businesses are embarking on a digital transformation only to find themselves not aligned with their digital customers’ expectations.
“If we focus on technology, we will miss the human factors disrupting and making changes,” Solis said. “We got in touch with brands to talk about how they are transforming for digital, and the key finding is that if a company goes with a technology-first approach, without studying digital customer behavior, then the customer experience that results is all based on an assumption. Everything about the strategy, metrics, and impact becomes difficult to measure. Companies need to have a customer-centric approach to their digital transformation.”
Altimeter set out to understand what’s driving companies to become more digitally fit, and what they are learning. The biggest implication for chief marketers, specifically, is their role as change agent within the organization is more important than ever before.
According to Solis, until recently brands thought if they have many digital strategies and just put their money toward where eyeballs are moving, then they were omnichannel. But that can’t be further from the truth, he said. A 360-degree digital experience is imperative, but that doesn’t make a company omnichannel unless the various elements are integrated. Many businesses are still operating in a funnel model, Solis said, with someone responsible for the Web, another for email marketing, and a third person for social media. But these three individuals don’t interact--and they certainly don’t collaborate.
Again, the role for CMOs is to lead the organization away from today’s broken models and rebuild the organization for a new generation of digital consumers, Solis said. For some companies, that could mean moving people together, and for others it means moving them apart.
“With this research what we looked for are common practices of all businesses embarking on a digital transformation,” Solis said. “None would say they’ve accomplished the digital transformation. They all believe it is a journey just getting under way, and they also all believe that they are forging the business models of the future.”
The companies that Altimeter spoke to had three commonalities. The first is they have someone leading the charge—a CMO—who can articulate what this transformation is and how it’s going to be different. Companies need a “digital leader,” Solis explained. While concepts such as “social business” helps executives move past traditional hierarchies by empowering employees to connect, communicate, and collaborate across traditional boundaries, someone still needs to set a vision for how to compete in connected markets and how to create value for a digital customer.
The second parallel among the companies is they study what their digital customers want and expect, so that decisions are based on data and insight. According to Altimeter’s report, the leading companies put people at the center of change. The top companies understand, through data, that the customer journey has changed, and they’re able to optimize for the new journey.
Last, all companies going through this change have built out a “digital transformation team,” which is a cross-functional business unit—often called a center of excellence—that is dedicated to digital customer experience. According to the report, Motorola, for example, formed an MIT group, combining marketing and IT. Starbucks and Sephora built cross-functional teams as well, all in the name of uniting the customer journey to integrate more meaningful, seamless customer experiences.
“Aside from this research, we have heard that when companies really get deep down into [the digital transformation], they learn the values and expectations of digital customers are different than those of their traditional customers,” Solis told CMO.com. “And I won’t sugar coat it: That’s when things get hard. Everyone said that this [digital transformation] is like a marathon. You’re asking people to see the world differently and to change. That induces fear and self-preservation.”
To get a full copy of Altimeter's "Digital Transformation" report, click here.