Digital transformation is something companies have been talking about for decades now. How to bring their company into the ‘digital’ age. With the world growing and evolving as quickly as it does today, and new technology being made available daily, how does a business keep up with the ‘transformation’?
I was lucky enough to discuss digital transformation with the one and only, Michael Krigsman. Michael has a unique view on the subject. He is not only recognized internationally as an expert analyst and advisor for CIOs and IT leadership, but he also has the opportunity to interview the smartest minds in business innovation, including CIOs, CMOs, and CDOs, on his show, CXOTalk.
To get to know Michael better, head over to his website. If you’re interested in corporate innovation, digital transformation, or getting an inside track into some of the largest companies in the world, check out CXO Talk. You can also reach Michael on Twitter.
The following interview has been lightly edited for ease of reading.
Digital transformation is a way of thinking about a company’s relationship with its customers
India: A lot of the fundamentals around ‘digital transformation’ are tied directly to the customer. What are some of the trends that you see in digital transformation as it relates to customer experience?
Michael: I’m hesitating at the term of ‘seeing trends’ because digital transformation is not a ‘thing.’ You can’t buy a digital transformation. It represents a way of thinking about a company’s relationship with its customers.
On the one hand, it’s very easy to think about digital transformation as strictly being a response to the internet. We put our products online, and that’s a digital transformation. It’s true, it is a response to digital, to the internet and to being digital but beyond that, it has to do with adopting a mindset of how are we are going to take into account the changes that have gone on in the world, meaning the technology changes. The fact that we are all connected online, that mobile devices are pervasive, that consumers are sophisticated users of technology. How are we going to take advantage of all of this to reestablish customers as the core reference point for how we run our business?
The linkage to customer experience is very direct because if you are looking at your business and looking at your processes and looking at your technology, in terms of what will be easiest and simplest and most straightforward for your customers. Of course, the customer experience and user experience is going be essential components of that.
You asked about trends and digital transformation, and I think the important trend is that companies more and more are recognizing that digital transformation is not simply a function of technology. That it is a function of that digital mindset which calls into play the culture of the company and the nature of the relationship that a company has with its customers. The important trend, therefore, is that more and more companies are recognizing this. Recognizing that digital transformation is not synonymous with a technology solution. There may be a technology solution involved, but it doesn’t begin with the technology, it begins with the customer.
The role of technology: enabling enhanced customer experience
India: A lot of the time, when we think digital transformation, we think technology. But what you are saying is that it plays a secondary role.
Michael: The technology enables capability. For example, when I spoke today to the CIO of Brooks Brothers, he was describing their goal, and it’s so directly relevant to this. The company was established in 1818. You can imagine that their business in two hundred years has evolved and changed many times. Otherwise, they wouldn’t still be in business. The core theme though is providing a high level of customer service. What he called, “White glove service.”
He was describing how they are using machine learning to better collect data about their customers. Things about the customer’s purchase history, customer’s location, customer store visits, customer’s online visits, etc. All kinds of data about the customer to provide better recommendations either in the store, (providing tools to people inside the physical stores) or providing tools to online shoppers in order to better meet the needs of those customers.
Historically what happened in the retail business, you go to a store in your town, and they would know who you are, and they would have a little black book, and it said, “India likes this particular kind of dress” or whatever it might be. They’d know who you were and there was this personal touch.
Technology now is taking the place of that because we’re all geographically mobile, so you’re not just going to the store that’s in your town, but when you’re in Miami, you might go to a store to buy something or wherever you might be. The store visits are being intermediated by technology and online shopping. Technology, like machine learning, is taking the place of that shop person’s little black book that describes what India likes or doesn’t like. That’s an example of technology enabling a certain kind of customer experience.
Don’t start with technology, start with a question
India: How do we get to that point? So Brooks is talking about providing that ‘white glove’ experience and personalization. How do you identify, in the heap of data that’s available today, what path you should take to get to a point where you are providing a better customer service?
Michael: You’ve got to begin sort of like a question. You don’t start with technology. That’s not where you begin. Where you begin is with an understanding of your customers. Again, the goal here is to place the customer in the center. What I mean by place the customer, we hear that phrase a lot but what it means is to understand what the customer wants in order for you to be able to give them that. Whether it’s a type of product or rapid shipping or whatever it is that the customer in your particular business cares about.
The Brooks Brothers CIO made an interesting point. He said, “Customers don’t care about channels. Stores care about channels. Stores care about the silos in the sense that a store cares why we’re selling online and then we have our physical store. Then we have distributors, then retailers. Those are all different channels. Historically there’s been a type of silo thinking associated with different channels and different ways of touching the customer. For example, the contact center was one department, and the support line was different from the order department. One may not have visibility into the other. From the customer point of view, a customer calls up and the store representative says, “Oh I have to transfer you to this department, to that department.” We’ve all had that experience of being transferred around inside a company because the company’s siloed and the data is not transferred. There’s no visibility from one side to the other side.
If you look at things from the customer point of view, then what happens is you realize the customer doesn’t care about our department. The customer doesn’t care how we as a company are organized and the fact that the financial system or the order entry system is not connected to the customer care system. The customer care system is not connected to the inventory system, so therefore even though we want to give them that information about where the product is, or what have you, we simply don’t have the ability to do that. Customers just want their questions to be handled easily.
When you start putting the customer in the center, it forces you then (and this is the real transformation part) to look then at your internal organization, how you are organized in your internal processes and your internal systems. It forces you to ask, “If we know what the customer wants from us, what must we do to give that to the customer?” That may require breaking down silos, having processes that cross multiple functions and create greater steering with information and visibility from one department to the next.
Developing a digital mindset and going where the customers are
India: Putting your customer first or your audience first, requires knowing and understanding who they are and what they care about most. Today, people are unique and very different. There are so many different types of consumers, and their interests and needs are transforming faster than ever. Ways that we used to understand them are irrelevant, or just don’t exist anymore. For instance, ad blocking. All of a sudden we can’t reach a large group of consumers with online ads. Not only are ads blocked, but we can also no longer track their online activity. How are we learning more about consumers today to be able to make those really informed decisions around what path to take with transformation?
Michael: Well isn’t that such an interesting question? Because the market is evolving, because technology and capabilities are evolving and the market is evolving and the various types of channels through which we reach our customer is changing on an ongoing basis. The question that I’m asking is how do we, in essence, stay in touch on a continuous basis with our customer? Then the second question that you’re asking is how do you sort of deal with the channels? The answer to both of those is part of developing this digital mindset and going where the customers are.
That means keeping abreast of what’s happening within our particular market. If your customers are migrating to Snapchat, maybe you should be in Snapchat. On the other hand, if your customers are senior citizens chances are they’re not migrating to Snapchat and care about other things. Whereas if your customers are aging, they likely care about larger font sizes. Those are two very different things. Snapchat or larger type on your website, but in both cases, it comes from understanding, from keeping abreast of your customers. Staying in touch with your customers, listening to your customers. Getting feedback from your customers and then responding to it. So you don’t want to be a black hole.
Apple CEO demonstrates how he leads the charge with customer experience
India: When we’re talking about this transformation in culture and putting your customer first, who’s leading the charge with this?
Michael: Let’s just start with who should lead the charge? That’s the CEO of the company. If the CEO is delegating customer satisfaction than that means the CEO is not focused on one the core things that he or she should be focused on. In practice, it ends up having to be divided up. This is the interesting part of that digital transformation. People do tend to think of it as just marketing. In fact, the real transformation takes place in marketing in terms of reaching out. Marketing is the one that directly touches the customers like on social media or interact with them. What about product development? What about making sure that when you’re designing your product in the first place, that you’re getting customer feedback into those products so that your meeting, whatever the customer’s expectations are, whatever they want?
Then, what about your supply chains? If you are offering the ability to have quick turnaround, like in the case of Brooks Brothers, how are you managing your inventory and how are you managing your relationships with the suppliers? How’s that all happening and what may have to change? It really does involve change through many different parts of the organization. That’s why I say it’s ultimately the CEO’s job.
India: You mentioned that it should be the CEO’s role, are you seeing something different?
Michael: It depends on the company. I’ll just give you an example. My parents are elderly. They went to an Apple store and they were extremely unhelpful, and my mother made the comment that it was a young kid that doesn’t understand the needs of seniors. They were very unhappy. I sent an email to Tim Cook. Within two days, somebody from the local level got in touch with me saying, “Tell me what happened with your parents. We want to fix it. We’re going reach out to them and blah blah blah.”
Michael: Think of that for a second. I sent an unsolicited email to the CEO of one of the most valuable companies in the world, if not the most valuable company. Within two days, the wheels were in motion at the local level. Think about how the information traveled. First of all, how many emails does Tim Cook get? I mean who knows, but it’s a lot. That he was able to immobilize people in White Plaines, New York, which is where this Apple store was, to respond to an individual complaint from an individual email sent to the CEO of the company in two days? I think it was less than forty-eight hours.
India: That’s really impressive! When we talk about the power of the consumer, we have a lot of choice and just that one simple thing (and maybe it wasn’t simple, maybe it’s really complicated on the back end) can change brand perception. When you’re thinking about how this happened in the eyes of the customer, you emailed the CEO, probably didn’t expect to hear back, but then within a very short time period are getting top line customer service saying, “We’re concerned about your concern and we want to solve that.” Then that’s how you make customers for life, right?*
Michael: Yes. But it also has to do with the point you made around “It may have been complicated on the back end.” This is exactly the point that developing the customer mindset requires rethinking your prophecies across many different parts of the company. That’s exactly the point. That digital transformation is not just skin deep.
India: It takes a lot of organization and technology to be able to do something like Apple did for your parents. Every year, more and more technology is available to brands. Scott Brinker releases his lumascape that is increasingly larger each year, and that is just MarTech. How are technology needs assessments conducted? It must be a full-time job assessing all of the new tech.
Michael: It’s like anything else, you break it down into pieces. You don’t begin by saying, “We’re going to do a digital transformation.” You start with business needs, not with the technology. You prioritize, “What do we have to do?” What’s going on with our customers? What do we want? Where do we begin? Maybe it has to do with our website being faster? It’s a very small piece, but maybe customers are jumping from our website. So we need to think about digital performance. Maybe they want greater selection because we have competitors who are offering certain types of customizations. You’ve got to start someplace. You can start small. It’s a lifestyle change; it’s not going to happen overnight. What you’re doing is you’re changing your lifestyle as a company, as an organization.
India: That’s such a great point. It’s sort of like if you’ve made the decision to make a change towards a healthy lifestyle, you can’t change your entire life tomorrow. You start doing it piece by piece and move towards that healthy lifestyle, so stop eating french fries today!
India: You’ve had a lot of conversations with the smartest minds in digital transformation, what is the one overarching lesson that you have learned or discovered?
Michael: The smartest people I know recognize that culture is the root of digital transformation.
This article originally appeared on the Affinio blog.