Technology
Digital Transformation 2.0 — After the Lockdown
By Raj Chakraborty, Senior Managing Director, Publicis Sapient
During the past fifteen years, we have had the chance to study numerous companies that have tried to transform themselves using Digital. The bad news is that 80% of these initiatives have failed to achieve the results they set out to. This, despite the tremendous amount of resources and talent that were poured into the efforts.
During the past few months, the global lockdowns have driven digital innovation faster than ever. However, it’s clear that these changes have been tactical – to cope with immediate issues related to COVID-19.
True strategic digital transformation has been elusive. However, studying successful digital transformations — and contrasting them with ones that have failed — yield some very intriguing insights.
In the post lockdown era, banks can use these insights to structure their next wave of Digital change — the wave that will last, and one that will drive them to sustained success as they compete in the digital era.
The key issues
Financial institutions that have failed in their digital transformation actually just failed to translate existing fundamental management principles into their effort to change the company. They simply…
- Never addressed the actual decision-making process and governance required to truly achieve the customer-centric goals they were setting,
- Didn’t have a clear methodology for the new strategy and funding model required to support the goals, and
- Fell victim to the lack of accountability created by the sexy and flexible “new ways of working” that, reportedly, all startups use.
Now that old behaviors and habits have been unfrozen by recent events, banks have the opportunity to establish new ones that will enable successful transformation. As it turns out, the chances of success or failure of a digital transformation can be predicted right from the start.
The Differentiating Lens — Customer Obsession
At this point, every banking leader recognizes that a focus on customer-centricity is critical to drive continued relevance and growth. Traditional channels are already, or in danger of losing share to digital players who single-mindedly obsess about the customer. This means collapsing margins and depleted growth for distribution, as well as loss of control and disappearing relevance for manufacturers of financial products.
The days of only obsessing over the features of a specific financial product are gone. Banks must understand their customers deeply, and they must deliver experiences that meet those customers’ needs in a lightweight, seamless, ethical, and engaging way.
Iterative approaches that make improvements continuously to optimize the customer’s experience are proving far superior to the traditional method of long-term planning and annual/quarterly changes. The old way assumes that we know what the customer is going to want a year from now, and given the pace of change, that is practically impossible to guess.
However, the truth of the matter is that few banks understand how to instrument their Digital initiatives with core metrics to actually understand whether they are iterating successfully. They rely on a loose mantra of “fail fast” or “agile” without real leading or lagging indicators of progress. Banks who are successful in their digital transformations install structures and procedures — balancing creativity and customer centricity with measurement and controls.
Three fundamental areas to get right
The transition to the new approach doesn’t have to be difficult — prior successes and failures from digital transformation programs have provided clear patterns that have to be in place. The same management principles that today’s successful incumbents have historically used are still important. The challenge is in adapting them to the iterative and customer-centric approach required to succeed in the new environment.
- Governance & Leadership: Decision-making models are not set up to drive customer-centricity and iterative execution. In most banks, leaders have built careers using a traditional management philosophy and style that have served them well. These governance models, decision rights, and metrics are often unable to meet the demands of what is required in a strategic digital transformation.
- Strategy & Funding: Annual strategic planning processes don’t deliver real prioritization of business lines, resources, and value. Digital transformation initiatives can’t be driven as “projects”; they require a long-term product orientation — in the way technology companies build their products. The digital assets in most companies are seldom viewed as products that must be continually enhanced with new sources of value.
- Execution Approach: The ways in which people work today don’t adequately support the iterative and customer-centric approach. The customer is not engaged early in the process. Team structures are too siloed and don’t have the authority to make decisions. There is limited transparency into the activity, and focus on true impact and value is often lacking. Agile is a commonly used buzzword and method that is seldom used properly.
The Solution: Enabling the Iterative Approach
At the end of the day, banks have an opportunity to drive true strategic digital transformation as we come out of this lockdown. They must start behaving differently if they want to put the customer at the center and drive integrated personalized relationships that bring real value. However, this doesn’t have to be gut-wrenching and difficult.
The good news is that the banks who succeed in the iterative approach do not do anything revolutionary — unlike the “transformation story” all the books, consultants, and talking heads would have us believe. They simply execute based on solid time-tested management principles, and they just add this new iterative, customer-obsessed lens.
-
Business3 days ago
docStribute appoints ex-Group CIO of Newcastle Building Society as Non-Executive Director
-
Technology3 days ago
How to Use AI to Optimize Customer Relationships
-
Business3 days ago
What Every Small Nonprofit Needs to Know About Form 990-N
-
Finance3 days ago
stc Bahrain and Aleph Zero Partner to Advance Blockchain DePIN Across the Gulf Region