Assessing Customer Readiness in a Digital Age
Business Transformations in Digital Age
Businesses have always transformed their business activities to support customer needs. Businesses today, just like businesses in the past, will continue to meet customer needs using digital transformation. However, empowered customers with smart phones and wireless access to information from diverse sources are demanding businesses deliver services where and when they need them. Advances in digitization and the entry of many new digital players into the marketplace to address these evolving customer needs have increased the pace of transformation of business activities along the value chain and altering their business models. While such a transformation has been more pronounced in service industry, it has started to influence many product industries as well, with technologies such as AI and Internet of Things allowing business track product use. The type of transformation seen since the beginning of 21stcentury in support of customer decision making has led us to classify customer services into empowerment (awareness and decision support prior to purchase) and engagement (purchase and post-purchase use) services. Refer to White Paper: Evolution of Business Transformation in Digital Age.
Digital Strategies and Leadership to Support Digital Transformation
Transformations in business operations and the supply chain are internal to the firm and buffered from customer visibility. Demand side transformations, both modest and extreme, however influence business services developed to support customer decision-making. They have high failure visibility and hence a higher risk compared to transformations within business operations and the supply chain. Independent of where the transformations are needed, the newness of technologies, the number of external vendors or partners used, and the complexities associated with business change need the development of digital strategies using a new kind of leadership, referred to here as digital leadership. It is a co-leadership of business and IT leadersengaged in a leadership process to create an ecosystem that supports digital transformations in today’s market dynamic. The ecosystem nurtures a culture of empowerment, innovation, exploration, evaluation, reflection, adoption, and incorporation, which are all required to take advantage of advanced digitization opportunities that create value. The leadership process to create such an ecosystem uses an interplay of three different leadership styles: administrative, enabling, and adaptive and four different platforms that support a number of activities discussed below. See Figure 1.
The administrative leadership empowers a team of individuals operating within an innovation platformto identify innovations that create value. The enabling leadership supports the innovation team using agile system and business platformsto design and deliver digital services or IT implementations to create value. The system and business platforms include many elements, such as strategies, business models, and mindsets, as well as enterprise platforms and IT functions. Adaptive leadership analyzes these IT implementations to support reflection and learning using a learning platformand evaluates them for potential adoption into the regular business using an adoptive platform. Administrative leadership in turn will decide when these IT implementations become a part of organizational routines to help the organization compete and grow. Refer to the white paper on digital strategies to support business transformation.
Figure 1: Three Leadership Styles and Four Platforms: Constituents of Digital Leadership
Customer driven digital transformation
The growing use of mobile communication, social media, and the Internet is empowering customers to seek information, evaluate competitive products and services, and shift allegiances among competing firms to maximize their value. The customer focus is at the center of many demand side digital transformations today, even as organizations continue to leverage advanced technologies such as AI, Internet of Things, etc. to improve their internal operations and decision-making processes. Based on many principles of service dominant logic, digital leadership methodology to support demand side transformations starts with value propositions developed to support a customer and is shown in the Figure 2 below. The value propositions are analyzed using various customer touchpoints (or service encounters) that are needed to provide value. This leads to service analysis – identification of various processes/workflows needed to fulfill the customer service needs. The next step is look at digital services design - automation of service encounters, processes, and workflows, as appropriate, to deliver value. The degree of automation may vary depending on the nature of digitization expected by the customer and what is needed to deliver value.
This leads to the next step – business and information analytics. Besides the operational data collected to support service encounters and processes/workflows (referred to here as business operations), data is collected to track service metrics and to gain insight into customer behavior. The service strategy positions digital services to meet customer strategy, and service management ensures that a team of internal and external partners will deliver digital services to mitigate customer risk. The implementation of the digital services should lead to the next set of value propositions, either to reduce any expectation gaps or complement/enrich these services with new value propositions. The methodology developed here is customer-centricin value creation, service-drivenin addressing evolving customer expectations and technology changes, and agility-focusedto support configurability in both the design and delivery of the services. See the white paper on digital leadership.
Figure 2. Digital Leadership: Customer Centric, Service Driven and Agility Focused
Is your organization ready in the digital age?
Businesses have been dealing with radical or incremental changes in their internal operations and supply chain for over four decades, even if today’s technologies such as AI, Internet of Things, and virtual or augmented reality are calling for collaborations with many new technology partners with significant risks and uncertain returns. However, remote monitoring technologies, mobile Apps, and social media are creating new opportunities for organizations to develop customer service encounters to understand customer decision journeys during the “pre-purchase evaluation” phase and “post-purchase use” phase. In other words, “empowering” customers to make right decisions prior to purchase, and “engaging” customers during purchase and use phases can lead to gaining deeper insight into the ecosystem that influences customer decision journey.
Customer centric digital strategies today need to leverage empowerment and engagement services to gain insight into customer decision journey and transform the design and delivery of product/services to help with their future decisions and build brand loyalty. Organizations, who want to be customer-ready in digital age, need to begin with an assessment of the service encounters used in the empowerment and engagement phases of customers, and how well are these encounters helping them gain an insight into the customer ecosystem. Refer to the white paper on digital readiness instrument.