The world is witnessing a digital revolution which is taking businesses across multiple industry sectors by storm. This is something to which business leaders are paying an increasing amount of attention, with 68 per cent of executives expecting significant disruption in their industry over the next few years according to a survey by Accenture.
New and agile start-ups are transforming traditional industries. This change is sure to continue as organisations look to open up their data, processes and systems. In today’s marketplace, digital innovation is a necessity, rather than a luxury.
So with that background of digital change, the question for businesses is: will they be a thriving innovator or a struggling incumbent?
Collaborative cultures, clear strategic goals and intelligent ways of using data set innovators apart from traditional businesses, enabling them to create new sources of value. Established incumbents can learn a lot from their more dynamic counterparts. Especially if they focus on four key behaviours that drive success in the digital world.
1. Adopting a customer-centric approach
For decades, financial services companies, banks, retailers, insurers and utilities providers have taken a one-size-fits-all approach to customer service. Traditional business models that focus on serving broad customer segments using complex legacy processes are no longer relevant in today’s world of ultra-personalised experiences. Companies that are slow to realise this will soon see their customers leave for a competitor who is more responsive to their individual needs.
Industry and value-chain disruptors are focused on customers. Everything these organisations do – whether it’s product development, service delivery, billing or marketing – starts from a detailed assessment of customer expectations and habits. These companies then follow customers as they journey through different touch points. This process helps fine-tune each engagement to ensure the best all-round customer experience.
By paying attention to customer journeys, companies can gain more insight into how customers’ behaviour and expectations change based on the way they interact with the company (online, via mobile app or in store) and the kinds of products and services that they buy. Collecting, analysing and acting on this data supports a virtuous cycle of continuous improvement that organisations can use to create more tailored customer services and improve customer satisfaction.
2. Encouraging a collaborative outlook
To deliver seamless and satisfying customer journeys, organisations must bring together all their expertise and data. Traditional enterprises often struggle to build cross-functional teams because their processes, systems and talent are isolated in business units. When distinct teams do get together in these organisations, a competitive atmosphere can emerge between departments that are not used to working collaboratively. This slows down innovation and limits the eventual impact of new initiatives.
By contrast, disruptive businesses value collaboration, preferring to bring together expertise from across their business to drive new business and enhance customer engagement. Bringing multiple departments together helps innovative companies understand how each area of their business will be impacted by their overarching strategic goals and development projects.
What’s more, innovators don’t just collaborate internally. They also work closely with industry partners, helping them take advantage of skill sets, data and industry insights that they may not usually have access to. Internal and external collaboration gives digital innovators an upper hand over incumbents, providing them with a bigger picture of changes in their industry and revealing new opportunities for growth.
3. Keeping track of the right things
Because they haven’t historically been customer-first organisations, traditional businesses often dedicate too much time to measuring KPIs that deliver limited value. For instance, established organisations often focus on internal KPIs, such as the average handle time of customer calls or how much new traffic has been created by a new marketing initiative. These metrics tell you very little about how your customers rate your products and services.
Equally common is a tendency for industry incumbents to take a bottom-up approach to measure key metrics, collecting different sets of data in each business unit and then aggregating it to form a single view of the truth. However, in practice, this approach rarely delivers clarity. And it often leads to arguments over which department’s data is accurate instead of evaluating actual performance and adjusting strategic goals accordingly.
Increasingly, industry-leading companies take a top-down approach to measure the performance of their businesses. In this system, a company first defines the information that it wants to know. Next, it creates a plan for collecting the data it needs to measure business metrics. This enables them to align their processes and establish a centralised decisioning capability that focuses on customers.
4. Learning from failure
Traditional businesses often fall into the trap of avoiding failure at all costs. Such an approach means that when data and expertise are brought together from different business areas, the fear of failure and its consequences can slow down innovation.
To make matters worse is the time taken developing new data-driven approaches. As a result, employees and entire departments are held back from stretching the limits of what is possible.
Meanwhile, the industry disruptors tend to embrace a ‘learning from failure’ approach, making the most of lessons learnt to improve future outcomes. The logic behind this argument centres around the idea that the more employees can learn from failing fast, the quicker teams can deliver results, streamline engagement strategies and improve the services on offer.
What is certain is that shying away from failure will get organisations nowhere. Instead, failure must be met head on to stay ahead of the game.
Tiffany Carpenter, Head of Artificial Intelligence and Machine Learning, SAS UK & Ireland