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This article was published on November 17, 2021

Can we please stop talking about ‘digital transformation’?

Please... I beg you... stop

Can we please stop talking about ‘digital transformation’?

I don’t want this to be my Jerry Maguire moment but to be honest, I’m sick of hearing the words ‘digital transformation.’

What does it even mean anymore? It’s such a hyped-up term, overused by a market saturated with evangelists spouting conceptual nonsense, amplifying its enigma-like existence (and profiting handsomely from it).

It normally starts with the C-Suite coming back from a strategy week, a Silicon Valley trip, or a CMO change — in tow is a strategic imperative on doing something better ‘digitally.’ This enthusiasm trickles down and results in a bunch of smart people sitting in a room formulating a digital strategy — and that’s precisely where companies make their first mistakes.

Caught up in the hype of digitally transforming their business, the inconvenient truth is that they often don’t have the right people in the room and they’re not tackling the right questions.

Asking your existing workforce to reimagine what they do, why they do it, and how they do it is a fundamentally flawed approach in my experience.

To achieve any material progress, you really need an injection of outside-in. It avoids (most) of the politics, stimulates the right conversations, and allows for a forensic analysis of your value propositions.

It acts as a trojan-horse for the big questions that need to be objectively answered and more importantly, challenges internal teams to think beyond digital transformation — because that game is dead.

In 2021, for me, it’s all about competitive advantage. Creating experiences, products, or services that not only transform individual businesses, but those that completely reimagine whole industries.

Don’t just transform your business — reimagine your industry

‘Reimagining industries’ could be easily taken as another fanciful phrase… so what does it really mean?

Right now at Ciklum, I’m currently working with a client who is completely rethinking how consumers buy and sell cars.

How is that redefining an industry? Well, in some areas of the geographies that they operate, women are not allowed to go shopping without a male companion, in fact, driving is still considered taboo for them too.

We’ve introduced a new digital product for that market that is fundamentally breaking down barriers — empowering women to independently purchase a car, online, for the very first time.

Look at the top market players — the Revoluts, eToros, JustEatses — democratizing trading, financial services, or something as simple as access to restaurant food. They didn’t just take on digital transformation, they are creating truly differentiated products with a clear competitive advantage, which have reimagined their industries.

So, how do you deliver a competitive advantage?

Ruthlessly assess your value propositions

Many wander into the conversations on digital transformation expecting that technology is going to fix everything. And the bottom line is, if what you’re trying to sell doesn’t resonate with your consumers, then there’s no piece of technology that is going to solve that problem for you.

What I’ve seen firsthand across a number of brands is that some are asleep at the wheel. There’s a mentality to address value propositions maybe once a year, locked away in a fancy hotel for a few days, doing a bit of a refresh on the personas, and then that’s the box ticked for another year.

To be blunt, that is naive and it’s going to catch the brand out.

Unless you’re paying very careful attention to what your consumers are telling you about your value propositions and have the agility to respond to their needs, you’re going to have major problems.

A few years ago, I spent some time working with a big tobacco multinational. With regulations tightening all the time, the question was always:

How can we get our brand/products in front of our consumers when there’s a whole anti-smoking movement working against us and we’re not allowed to market to our consumers?

It’s a fair question but was it the right question? At the time, smokers were pivoting in droves to alternative, non-combustible products, with a number of emergent companies coming from nowhere to completely dominate the market. Fast forward to today and there are 13.5 million consumers regularly using non-combustible products with revenue predicted to exceed £5 billion in 2025.

As markets and consumer habits change, you have to keep moving — you can never stand still.

Marshalling capital investment

The reality for most organizations is that there are a number of competing priorities across every function that are fighting for the investment capital in a given budget cycle. So the real exam question is: “am I spending my investment capital in the right areas?”

What we see time and time again is that companies that are successful in creating competitive advantage are those that are putting a high proportion of their investment into their front-end technologies — the areas that are visible to the consumer.

Of course, back office technologies are important, it’s the foundation of your business. However, it’s not the area that is going to drive competitive advantage.

Navigating your buy versus build decisions

Whether you’re a startup or an FTSE 100, every organization needs to be smart about its buy versus build decisions. In many cases, an off-the-shelf piece of technology — one that is available to the masses — is a perfectly sensible decision to achieve a level of capability, particularly for middle and back-office applications. Think SAP Commerce, SalesForce Commerce, or Magento.

But will using the exact same tooling as your competitors help you stand out in the crowd and differentiate you in the marketplace? Probably not.

Custom shouldn’t be used in every part of your ecosystem but what it’s perfect for is the front-end/customer experience layers.

It allows you to achieve differentiation by giving you the freedom to orchestrate those magical moments across your customer journeys with infinite control and autonomy, allowing you to pivot, flex, and scale where you need to do, and most importantly, keep you one step ahead of your competitors. A lot of companies have woken up to this over the last few years and it’s really exciting to see.

Let’s create an example of this. Imagine a very well-known high-street fashion retailer; they deeply understand their customers and their research has told them that a flexible and diverse set of payment options is an essential ingredient of their value proposition with millennials.

Great insights! However, the retailer in question has an off-the-shelf commerce solution that has yet to introduce these capabilities and is now at the mercy of their provider to get these offerings to market…

Get the point?

Think bigger

So, in summary: challenge yourself to think beyond digital transformation, because it’s all about competitive advantage.

Don’t neglect your value propositions and think very carefully about how you’re managing your investment capital, especially with customer touchpoints. Then evolve your technical capabilities to keep you ahead of your competitors, and stay agile to ensure you’re always, always customer-centric.

Watch out for the charlatans and above all else, never stand still.

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