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Why digital transformation starts with being human

Why digital CX and marketing will help businesses survive digital Darwinism

 

Digital transformation is one of those terms that’s both overused and widely misunderstood. But you wouldn’t know that if you’re following all the hype. Suddenly, every company around the world is going through some form of digital transformation. You’ll see headlines everywhere that tell the stories of how digital transformation will help companies survive the digital apocalypse, or how it will miraculously make companies more relevant and desirable among connected customers and employees. While these should be among the reasons for investing in digital transformation, that’s not what’s actually happening in many cases in the real world. So, let’s talk about how to cut through the noise and focus on what’s important to your company right now.

Every business in every industry is facing the latest industrial revolution, in this case a global shift as a result of digital Darwinism—the incessant and sweeping evolution of technology and society. Digital Darwinism shapes and reshapes markets as times, tastes, behaviors, customs, norms, values, et al., change further away from “business as usual.”

What makes this particular industrial revolution so significant is that people and the core of what drives them (and why) is fundamentally different than what’s driven most businesses over the last century. Said another way, the “digital” in digital Darwinism and digital transformation isn’t just about technology: It’s about how people are changing and how organizations need to make digital investments to become more human to a new generation of customers and employees.

There is a new normal. The normal that sets the foundation for how we work and the value we create is moving away from our current centers of reference and measurements of success.

 

What is digital transformation?

While seemingly trendy, digital transformation reflects an important turning point. In its most basic sense, it means that companies are modernizing technology infrastructures to more effectively and efficiently compete, as customers and employees become more and more connected. After years of studying the subject, I introduced a more comprehensive definition to help leaders see the bigger opportunity:

The investment in, and development of, new technologies, new mindsets, and business and operational models, all designed to improve work and competitiveness, and deliver new and relevant value for customers and employees in an ever-evolving digital economy.

The key to digital transformation is the understanding of how technology has changed people. Only then can you invest not only in disruptive technology, but also in the disruption in management, including market and operational perspectives, models, processes, standards and measurements of success.

 

The irony of digital transformation

Perhaps having digital transformation as the banner for change is a misnomer. What we’re really talking about is how to survive and thrive in an economy that’s changing because of how digital is changing people, what they want, what they value, how they see themselves today and tomorrow, and what they seek to achieve now and in the future. Believe it or not, however, businesses are out of touch with the very people who are disrupting industries and, in large part, either don’t realize it or don’t care to even look.

Each year, at Altimeter, I lead a study that tracks “the state of digital transformation.” Every year, the number one catalyst for taking on transformation is customer experience and some variant of better “understanding digital customers and employees.” And every year, we uncover a troubling reality that businesses aren’t actually trying to understand evolving generations of customers and employees. For example, this year, “evolving customer behaviors and preferences” was ranked as the top driver of digital transformation. But, fewer than half of the companies we surveyed invest in understanding digital customers (42%). That’s a problem.

That 42% of companies attempting to understand digital customers is a start, but it’s not nearly enough. At the same time, we found that only 34.8% of businesses report having completely mapped out the customer journey within the last year. This process helps surface digital behaviors and the reasons behind how and why people are doing things differently. So, it’s a surprise that this number is so low. This number also reflects a significant drop from our 2016 report, in which 54% of companies said they had completely mapped out, or were in the process of mapping out, the customer journey within the last year. Yet every day, roadmaps are developed and investments in customer experience are made without completely understanding how customers discover, make decisions, and prefer to engage digitally.

If you’re leading the digital transformation of any customer-facing initiative such as CX, marketing, service, sales, support, et al., your work cannot be truly human-centered without actually placing people, their differences and reasons, their interests and aspirations, their preferences and values, and who they are at the center of everything.

In an era of digital Darwinism, change may be hindered by legacy mindsets and perspectives. There are a lot of people in organizations today who do not want to believe they need to change, or even see the need for change. Almost one-quarter of companies cited human barriers such as ego, politics, fear or sabotage stood in the way of progress. And, 20% claim that there’s no sense of urgency to evolve.

Executives don’t know what they don’t know. Their purview is focused on shareholders and/or stakeholders. Evolving customers (and employees) are so radically different that there isn’t standard protocol for response. As a result, most companies are experimenting with digital transformation initiatives based on outdated assumptions. These legacy perceptions put companies behind the curve of evolution, not in pace or ahead of these unavoidable shifts.

Without a clear understanding of the behavior and expectations of people using the latest digital and mobile technologies, so-called digital-transformation investments, by design, are limited in effectiveness and relevance. However well-intentioned, these efforts are not shaped by actual digital customers, and their results will likely sail off course.

As consumer behaviors, preferences, expectations and aspirations shift, companies must change how they work, sell and serve. Value propositions and brand purpose must now be rooted in the new and evolving “normal” to stay relevant and in demand. Effective change (and ultimately, true innovation) starts with understanding people and making the investments, digital and human, to close the gap between what is, what will be, and what was.

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