Pre-pandemic, we saw the business world already moving towards digitization. COVID-19 only accelerated this progression. Today, brick and mortar business models are under more pressure than ever before to meet changing customer expectations or become defunct.
Erstwhile conventional business models focused on tangible assets but today, technology is enabling superior customer experiences. And for businesses, digital adoption is no longer just a technology imperative but an organization-wide mandate.
In our twenty years of facilitating business transformation for enterprises across the globe, we have observed these ten key shifts that determine and drive successful transformation.
Technology: from digitizing processes to driving customer experience
In a traditional brick and mortar business, technology is a support function that aids the digitization of processes like accounting. It manages the physical assets’ database and helps store or retrieve data with a wee bit of data crunching. Here, technology acts like a data vending machine and helps the company run like an assembly line.
What’s changed? Today, tech is at the core of digital businesses and it is the product and channel through which companies understand their customers. Also, data has become a critical business asset that is influencing customer decision-making — recommendation engines, surge pricing, etc.
What needs to change? To cope with the shift, enterprise tech needs an overhaul in talent, technology and architecture. More importantly, it needs a change in the organization’s approach to IT — from serving business, sales and operations to driving customer experience.
Research: from market validation to understanding customers at scale
In the brick and mortar world, research had limited purpose. For instance, a company uses market research to understand market sizing, customer segmentation, pricing, etc., after the product is made. However, few research teams informed business decisions about product design, operations and more.
What's changed? Customers expect hyper-personalized service. They expect businesses to understand them and deliver seamless omnichannel experiences.
What needs to change? Research needs to enable the understanding of customers at scale — trends, user behaviors, usage patterns etc. Businesses need to adopt ongoing behavioral research and invest in engineering research for competitive advantage.
Design: from aesthetics to curating experiences
Organizations often think of aesthetics only when it comes to design. Not unlike research, in the pre-transformation era, design has been an indulgence for businesses.
What's changed? With individual customers at the center of the business, experience design and perhaps even service design has gained significant prominence.
What needs to change? Businesses should leverage their data to better design the experience outside-in for customers and inside-out by anchoring technology. Leaders need to support research and design, realign expectations and empower this function.
Product management: from business problems to customer problems
Traditional brick and mortar businesses don’t have product management functions. Even if they do, ‘product management’ simply is treated like a synonym of ‘project management.’ This curtails product management teams using old practices of figuring out business problems instead of discovering and prioritizing customer problems.
What's changed? Business models have shifted from competing with other businesses to enticing millions of individual customers. The business itself has changed from – from renting out cars to selling rides.
What needs to change? Businesses need to hire new skills and competencies to drive a digital tech product. This also requires more cross-functional collaboration and better efficient management of interdependencies.
Program management: from command and control to autonomous, self-organizing teams
Most organizations have project management teams that follow a command and control approach to their projects.
What’s changed? Businesses are moving towards non-linear, fairly autonomous teams guided by roadmaps focused on customer problems. This requires alignment between and across functions that work synchronously and effectively.
What needs to change? Organizations need to design program management, keeping in mind autonomous, self-organizing teams. They need program managers who become a conduit between the business and the teams.
Legal: from fixed and watertight contracts to covering millions of sales risks
Legal’s role has conventionally been relegated to drafting contracts between businesses, vendors and customers. This involves details around SLAs, terms and conditions, regional legal needs, etc. and in case of any business conflict, legal teams represent the business.
What’s changed? In the new world, legal has to identify risks to the millions of unseen customers. And, more often than not customers are now rejecting the one-sided agreements and terms and conditions defined by businesses.
What needs to change? Legal teams have to draft open, flexible contracts and agreements that vary from customer to customer. They have to draft for millions of invisible customers.
Operations: now scaling to simultaneously support invisible customers 24x7
Conventionally, operations dealt with customers only during work hours using single points of contact for specific queries and with much of the backend processes hidden from the customer.
What’s changed? Today, customers expect 24x7 access to these problem-solving services. They are exposed to the businesses’ systems at all times.
What needs to change? Businesses should ensure the accuracy and consistent availability of data from relevant systems to the customers. They have to set goals around operational efficiency and accountability, meeting millions of customer demands.
Sales: from visible buyers to millions of invisible customers
In the pre-transformation era, selling was more straightforward. For customers, it was about getting a better deal. For sales teams, it was about maximizing sales within that price. This was often between two parties, who had a face-to-face conversation about the exchange.
What's changed? In the new business model, the customer is invisible. No negotiation happens across the table. The predictability of sales has dropped as businesses have no visibility or control over buyers. Sales are not trained for behavioral segmentation as the customer base is now diverse, mammoth and invisible.
What needs to change? Businesses must embrace behavioral economics. They must segment customers by their behavior. They need to predict the price vs. yield equation. This needs new tools, skills and approaches.
Marketing: from pretty posters to creating brand value for customers
Marketing efforts have long been geared towards generating leads. For example, press releases, conferences, promotions, advertising etc., are geared towards attracting customers.
What’s changed? In the new world, enticing customers is more important than closing known deals. The brand’s focus is on showcasing that its values match customer values, ensuring a great customer experience.
What needs to change? Businesses should move towards selling experiences. For example, Apple does not sell iPhones. It sells the experience of taking world-class photographs like a pro photographer just by using an iPhone.
Talent: from hiring good executors to developing disruptive thinkers
In traditional organizations, people work in specific roles around specialized skills. Like an assembly line, they are able to stick to their part of the process alone.
What’s changed? Customers are no longer willing to go from pillar to post to get their problems resolved. They seek a seamless omnichannel experience. They seek any company representative to solve their problems without having to call multiple people.
What needs to change? Agile, customer-centric businesses need cross-functional and collaborative teams. They need people with distinctive behavioral skills such as disruptive thinking and dealing with ambiguities. This needs a drastic shift in talent strategy – from redefining hiring attributes to redesigning talent development.
Key shifts that drive a successful transformation
From digitizing processes to driving customer experience
From market validation to understanding customers at scale
From aesthetics to curating experience
From business problems to customer problems
From command and control to autonomous, self-organizing teams
From fixed watertight contracts to covering millions of sales risks
Scaling to support invisible customers 24x7
From visible buyers to millions of invisible customers
From pretty posters to creating brand value for customers
From hiring good executors to developing disruptive thinkers
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.