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There is not room for good luck in business: Reviewing some famous “digital” transformation initiatives

Jaime Jimenez | May 16, 2017 68 views No Comments

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Honestly, I don’t think business could be success due good luck. We can talk a little bit of faith, but mainly the success factor is hard work (and in this case we can talk about justice. You did an excellent job, you deserve the success!)

In previous post I talked about Digital transformation importance. This is a very trendy word nowadays, and it is almost impossible no see it in corporate presentations. However I think this should not be taken as a oneshot project. Instead I strongly recommend think about it as a corporate management style. The market and the customers, evolve much faster than we can do as organization. It is important to have an agile management of change mechanism. This will allow the company realign and reorganize the company as well as execute as fast as possible. There is a new currency in business called “time-to-market”. Just to be in the same page, let me give a brief definition: Time to bring, from the idea to the market, a new product or service. Although it could be used too if we need to tweak or adjust the strategy or the direction our company took toward new goals or mission. All of us know that the competitors (in any industry) are very prepare, and very eager to overtake us. So we have to be prepare to transform ourself in order to meet our goals.

Not all the companies had this on top of their mind when needed, with horrible consequences like bankrupt and closing them down. Let me put it this way, not all the companies understood their customer needs, and even act upfront to offer best solutions possible. This could be the proof that the business transformation (or as we call it now “digital transformation”) is not a new concept, or at less results were not the expected ones. Going back years, even centuries ago, the companies faced up different challenges as industrial revolution, new competitors, new consumers behaviors or crisis.

I would like to share some examples. All of them are well know, but good to review them again, as they explain very well what the digital transformation means nowadays for us. The cases of this organization shared some common factors. All of them were leaders in their industries, but they didn’t know how to move forward and transform themselves. Maybe social media was not an available tool or adoption was not as high as they are now. But customer and consumer claimed their needs in a clear way. However, these companies kept their Status Quo, and other competitors (or even new players in the market) raised their positions and won the competition.

Kodak

It is not needed introduce this company. But I will quick do it, just in case some of the more youngest readers of this article may not know what a photo film is. Kodak was a leader company in the photography space ( both professionals and amateurs). The portfolio of products included photo cameras and consumables as photo films or paper. The customer experience was completely different. For instance, I’ll always remember the feeling to shot without know the results just after this moment and we can not react to the blur, unfocus or other photo defect. The photo processing or developing was the moment of the true. In my case, that moment was in september, after the holdays when I went to the shop with all the films, and some days after I picked them up to share with family and friends the best moment.

However, the paradigm changed with the new digital technology arrival. Check the result of the shoot in the same moment you take it become the more important factor and attribute in the model, so digital cameras hit strongly in the market. Kodak’s resistance to re-shape its business model and devices was very strong, so digital was only a new fashion with no impact. Kodak continue pushing hard for their customer experience based on photo films and paper. As we already know, digital products disrupted not only this industry, but the whole word, but this historic company can not deploy a correct digital transformation with the result all we already know.

It is also good to say that Kodak was one of the first companies in design and sell digital photo cameras (so they feel they should try). But the resilience and strong belive in the traditional consumable business (films and paper) was harder.

Nokia

Some of you would have in mind, when reading this piece, one of the more iconic mobile devices such as Nokia 3310 (in fact it was one of the best model ever). It was very resistent and durable ( I never saw a broken screen), batery lasted days or even a week, and was very weird to get an error.

Nokia was the leader in mobile devices some time ago, just before iPhone appeared in 2007. This finnish company’s devices were known by the consumers as symbol as quality, durability, high-technology and overall were the representation of mobile telephony (with more than 100 millions of devices sold). They introduced some of pioneer characteristics in these kind of devices as interchangeable frames, online games (with an almost infinite “the snake”game), a central navigation button, calculator and SMS mode 3 times more extend that the standard at that time. It seems to be the ultimate and unbeatable model. However, as in other examples, new technologies and markets new streams, hit strongly this basis and foundation. The famous smartphones (with Internet connection and other functionalities only available in laptops or PCs unseat Nokia in less than 3 years (Microsoft acquired nokia some time later)
It is very well known that technology industry is dynamic, fast and disruptive. Nokia could not foresee/react this transformation, didn’t understand the market or could not deploy the correct its “digital transformation”.

Other unknown players at that time ate their piece of the cake. This reveal the importance to continuously listen and understand the consumer and the market (include competitors), while we continue running our business, launching new products and lead innovation. It is key provide solutions (with real added-value) to the customers and consumers. One of the learnt lesson is that it is irrelevant the market-share or position we have in the current market as we could lose it in a very short time frame. It is key to listen and understand the market, analyze the consumer and react upfront, as much as possible based in all our observations.

This was not the first big transformation for Nokia. The origin of this Finnish company was in the forest, managing and transforming natural resources as wood. They understood how important is diversify the business, so Nokia landed in the electronic industry and with a brilliant I+D activity they became the leader of the market.


And now, What?


All the industries are susceptible to be disrupted and transformed
. Consumer’s habits are changed constantly and every day pop up new companies (startup for instance). There are new drivers and triggers, and even though the market knowledge is key could be a burden in our success (if it is not cleverly managed). In some cases, companies are in their comfort zone and don’t want to adjust themselves to adopt new trends. Seasoned and experienced companies could lose their position very quickly. New companies (start ups or unknown players) with less capital and resources are showing how powerful they could be, transforming industries or whole market (offering new customer experience based in innovator business models). Everyday we watch on TV or read on newspapers how these new companies are not only solving customer’s problem providing adding value solutions, but also with very efficient business models and re-shape customer experience. Airbnb could be one of these cases. They disrupted the hospitality experience and all companies in this industry are losing customers. Customer experience is the true differentiation, but as not all customers looks for the same, we should search for those ones matching better with our proposal.
Above is only one example, but other industries will follow. Banks and insurance companies are next ones. Fin-tech startups are playing the “change agent” model, challenging the current system and streamline new services (mobile payments or alternatives to traditional banks with peer-to-peer platforms). Even in a very closed environment such the insurance, some changes are more than needed. New company arrivals as CartoGo (rent a car per minutes) show up the need of new needs: a insure for certain object with a very short time period of time (minutes or hours).

Automotive companies are also understanding the importance of the innovation and adoption of consumer’s request. In addition to the connected cars (IoT – Internet of things) and self drive cars, they need to cope with some more challenges. Due a consumer habit changes, all the companies are focus their effort in more compact models. Some brands as BMW, Audi or Mercedes are working hard in spruce up the branding perception (usually based on big and family cars). Consumer are requesting small and compact cars to be use in the city. And also some SUVs (sport urban vehicle) with high level performance. This spruce-up activities are signal that companies understand the consumers and they need to work in the branding perception, new models design and ensure these companies are on top of the customer’s mind during buying process. Despite all these changes, there is another one: new propulsion technologies (such as electric engines). Tesla is the leader in this, but some companies understand these challenge and are working in electric or hybrid models (BMW i3, Toyota Prius,…)

I am sure the list of innovative companies and sectors to be disrupted is huge, but I would like to mention as last example the Health Care. This industry face up one of the biggest transformation. Not only adoption new technologies and adoption existing ones (IOT, Video, Voice IP,..) but also a radical business model and role changing transformation. So, healthtech companies are looking for the new range of product to work with, in addition to the role they would play in the new model. Insurance companies, hospitals, product/services providers are working in the new model. The traditional doctor-patient relationship and event the Physician consultation will change. The telehealth, hospital to home, virtual reality/augmented are other solutions will bring us new customer experience and better healthcare services.
All these changes, we could name it as digital transformation, try to adjust companies to a new situation. Although it is more than than, it is a new way or running business via continuous improvement and changes getting a better customer understanding and data-driven decision taken (does the agile methodologies ring a bell?) the companies

The digital transformation is a pretty trendy concept nowadays, but as it was explained in this and other articles it is not just matter to create social media accounts or deploy top edge technology. It is about stop working in silos (look always for the big picture), understand the customer, and make substantial changes to run the business in a efficient way covering current and future customer needs (it is not about product or services it is about the customer experience we offer). Customer service was focus only in the call centers, but it will be the next focus area. It is the one of the main source and touch point of customer interaction with the brands. Any transformation is about customer services and customer is the more important and valuable asset in any company

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