Are We There Yet? A Snapshot Look at the Digital Transformation of Businesses

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Customer Experience
Companies have made significant progress in adapting to a digital economy but as a new Altimeter report shows, many still have a long way to go.

We may live in a world where self-driving cabs are on the road and information can be shared across the world instantly, but for the most part, companies are still struggling to operate in a digital economy. I’m reminded of this fact every time a customer service agent tells me department A isn’t connected to department B or a company doesn’t accept online payments (it still happens!).

Brian Solis, principal analyst at Altimeter Group, a Prophet company, spoke with me about the progress businesses have made in adapting to the demands of digital-first consumers and the remaining challenges, which he explores in greater detail in a new report, “The 2016 State of Digital Transformation.”  Here are excerpts from our conversation, which was edited for clarity.    

In your 2014 report, pushing past existing culture was the top challenge facing digital transformation. In 2016, understanding connected consumer behavior tops the list. Have companies become better at creating a culture that supports innovation or has the issue just been overshadowed by the rise of devices?

I believe culture is still an uncharted challenge but it’s been eclipsed by efforts to connect the customer behavior and understand it. Because if you have that insight, regardless of whether you have a culture of innovation and agility, at least you have evidence that you can move forward. I have a feeling though, that culture will eventually come back to the top of the list.

Of the six stages of digital transformation that you outlined in the report, where are most companies right now?

The data shows people are starting to do the right thing such as using customer journey maps and trying to understand the connected customer. These things show companies want to learn and change. But it’s still nascent. Most companies are still in the second or third stage, although some are beginning to spread their wings to reach the fourth or fifth stage like Sephora and Starbucks. But at the end of the day, there’s still much to learn in the organization especially around customer experience.

The report also found that only 20 percent of digital transformation leaders are studying the mobile customer journey and/or designing for real-time “micro moments.” Aren’t mobile experiences table stakes by now?

You would think it’s table stakes but it isn’t. Mobile is like social media or any new platform—it’s bolted on to existing strategies. For example, in the research I’ve done around micro moments, we found that a lot of companies haven’t studied how mobile devices have changed customer behavior, decision-making, and attention spans. To get it right, companies have to embrace mobile as a new philosophy and that’s hard to do.

So what would an ideal road map for creating mobile experiences look like and will we ever get to an IoT road map?

Just mobilizing content so it can work on a mobile phone is one thing. If companies understand the customer behavior and design the customer journey to make it intuitive to how consumers have been changed by mobile, then you’ll start to see mobile-first journeys and to some extent mobile-only customer journeys. Think of companies like Uber and Gilt and others companies that cater to the idea that a mobile device is always near me.

And for the IoT, those are technologies that will factor into the journey. They might complement digital journeys but in cases like Amazon Echo, artificial intelligence, and chatbots, we will see those start to augment digital journeys but for a specific role within a mobile context.

Of course, measuring the customer experience is also critical. But how can companies avoid measuring customer experiences in a vacuum and ensure that they’re tracking meaningful metrics?

People tend to work with blinders on and that’s not challenging convention. Measuring things like NPS, traffic, and conversion are fine in terms of KPIs but they won’t help you understand what’s happening in the real-time world. One of the problems is that we’re not thinking of the customer experience holistically. For example, with NPS, those are just snapshots of a moment.

What needs to happen is experience architecture, designing the ultimate customer experience. Decide what the experience should be and use that as a guide to identify critical touchpoints and measure efforts against that experience design map. You also have to think holistically. For example, when Sephora embarked on its digital transformation, [executives] looked at all the critical touchpoints for the consumer including the store, the clerks, mobile, and social and saw they were working independently. So leaders like [Sephora Innovation Lab VP] Bridget Dolan worked to bring more people under one group and put new measurements in place. And now they have a leading innovation lab that’s able to test things in retail environments and share those insights [with the rest of the organization].

So, when can we expect your next Digital Transformation report?

We skipped a year [between 2014 and 2016] because digital transformation was moving so slowly that we identified another area of opportunity, which was documenting the six stages of transformation in the hopes of helping accelerate change. If I notice that the trends are moving faster, I will do a report in 2017, if not, then definitely 2018. Because by 2018 we should start to see some really interesting things come into play, like artificial intelligence and machine learning, as companies make mistakes and learn from them.