Digital disruption is happening at lightning speed and only some of the best-in-class businesses are successfully keeping up the pace.
In documenting how companies are going through this digital transformation, Brian Solis, principal analyst at Altimeter Group, a Prophet company, developed a maturity model that chronicles the stages and the key areas of focus and change.
Solis said the "6 Stages of Digital Transformation" took 1.5 years to assemble and was developed to help CIOs, CMOs, and key stakeholders follow the paths of other successful companies like Dell, Lego, Starbucks, and Target to help make the case for driving transformation.
Last week, Solis spoke with me about his inspiration for the research, the key takeaways, and his vision for our digital future.
Your new report examines the six stages of digital transformation. What inspired this research?
In having done several reports on digital transformation I noticed everyone was operating somewhat blind and the one thing that everyone wished for was some roadmap or model to bring about change that would have impact and the steps to get to each of them. Through all the conversations I became an analyst and a therapist listening to the challenges people had. After I published the first few reports I went back to see if there were indeed patterns and there were. I spent the next year and a half looking for those patterns.
The thing that surprised me the most was the brands that we all celebrated as being on the leading edge weren't as far as they need to be and had so much more work to do and that was surprising. When they had seen the model, they had all said they wished they had this when they started. Here were these trailblazers that weren't seeing the sense of accomplishment and deep down they have a greater vision on how things should change to be relevant in the digital economy.
What kinds of organizations are typically at each stage, and what advice do you have to advance to the next stage?
One of the things that I found was no one business is at any one stage at any one time. It starts in pockets. They're exhibiting the behaviors of what will later become digital transformation. When you're in the "Business as Usual," stage it doesn't mean that you're ignorant or open to change, it does mean there are aspects that are being experimented with.... As you move from left to right [on the scale], you may see a lot of CMOs investing in marketing technology. The CMO in many cases starts driving new innovation. That sparks a lot of debate. What ends up happening is now you have certain pockets of the group that are distributed. Somebody or some people realize we may not all be moving in the same direction and at the same pace. You might have an executive sponsor of one or two projects. When you get to the "Formalized Strategic" stage, usually it's driven by the customer experience team. There has to be some kind of light people are drawn to.... If you're a company like Starbucks or Motorola, the CMO and CIO would eventually form a union to expedite these pilot programs.
For the research, you spoke to numerous brands. Was there a common thread? What surprised you the most?
A lot of the companies I interviewed were right in the middle to the right so they were in the 50th to 60th percentile. A few of the companies I interviewed were getting to the far right. Then I applied the framework. My post research interviews were on the left side of this model. For those on the far right, what we really started to see were experiments in new business frameworks. There you start to have companies opening up new innovation centers and becoming extremely adept. Just because it stops at innovative and adaptive, doesn't mean it's the end of evolution. At that point, they still struggle with how to train aging employees with new skills and how to get the culture to be pervasive across the group.
So it sounds like after the "Innovative and Adaptive" stage is an employee engagement stage.
We're looking at EX now. The same factors affecting customer experience are affecting employee experience. Everything from communications to leadership to roles and responsibilities...we're going to see incredible innovation on those fronts.
In many ways, as the company advances from left to right, you can almost start the conversation around EX. I call it 'culture 2.0.' I did research on employee engagement. I call it the engagement gap.... This is the next big revolution.
Are you saying even "Innovative and Adaptive" companies still have a lot of work to do around employee engagement?
They're higher but their complaint was that there's is still so much work to do.... They're starting to develop the skills and technology necessary to advance in that space. And they're starting to introduce more human resource models to expedite this.
What's your advice to help move companies from left to right?
One of the most common mistakes is they put technology first. Start with a sense of purpose around customer experience and find where you can remove friction and where you're missing opportunities like Google's micro moments. Start small. Where the best companies are finding success is starting small and removing friction and bring an executive sponsor to the conversation. Then they become cheerleaders and bring the right people together to be collaborative and to generate momentum. Sephora, for example, reorganized everyone who touches the customers in one group, which led to changes.
You have to prepare for this to be a marathon. A lot of change agents express frustration. They also have to stay strong. Change has many enemies. There are many people in the organization that don't want to see this happen. It's simply because of the nature of change. It's common.
What's on the horizon this year for digital engagement?
One thing we can see is how companies can use Snapchat or how can we invest in customer journey mapping in digital CX. Maybe you're looking at what technology trends can we adopt in VR or AR or ways to improve the customer experience. We see these trends are having the right intent. One thing is companies are creating a common approach to understanding the dynamics of how digital is changing market behavior and then using technology to solve for that. The best-in-class companies get there but they don't talk about it because it becomes a competitive advantage.