Beyond the Average: Improving your Digital Capability

Chasing the pack is not always the right decision to make, as reaching ‘optimal’ in all dimensions may not necessarily maximise return on investment or justify the level of internal disruption required to get to that point. Our research shows that it is better to concentrate on building a Target Operating Model and culture which helps realise the strategy that is right for your organisation.

Based on our experience in advising many organisations on digitisation, the first and most important question that needs to be answered is: “what does digital really mean to you”. Is it about leveraging technology?

Is it about new channels to engage with customers? Or is it all about new business models? Such diverse perspectives often create entropy in the decision-making processes as they reflect a lack of consistency, goal congruence and a common vision about where the organisation needs to go; it often results in piecemeal programmes or badly defined initiatives which lead to missed opportunities, underperformance or false starts.

TORI believe that digital should be considered as a modus operandi, rather than a static state i.e. a way of doing things rather than just a thing or a technology ecosystem. To make this definition more substantive we have distilled it down to three separate but closely coupled components:

1. Creating new value within the digital business world
2. Processes which underpin the vision around Customer Experience
3. The capabilities which underpin the Digital Target Operating Model

1. New Value

Having high digital acuity requires being capable of re-examining the entire way of doing business and to fully understand where the new frontiers of value are. For some this will mean developing new business models and for others it could mean the identification and exploitation of new value propositions in existing sectors. Simultaneously, being digital is very much about being intimate with how customer decision journeys, or “decision moments”, evolve over time within or outside of the business lines and business sector. This is imperative to getting ahead of market trends which could potentially deliver, or indeed destroy, business value.

2. Digitised Processes

This component relates to re-architecting the process and overall digital capabilities framework to improve business performance and User Experience. More specifically, digital is not just about the delivery of a single improved customer journey but the implementation of a cyclical dynamic in which processes and capabilities continuously evolve and improve based on customer expectations and other external stimuli – such as FinTech disruptors and competitor behaviour. Practically this involves four closely coupled capabilities:

• Predictive intelligence 

Relevance is the differentiator of today’s digital world. This means making decisions based on up-to-date intelligence to deliver content and experiences that are personalised and thus relevant to the customer. Analytics enriched through the use of AI can provide near real-time insight into customers behaviour which can then drive customised responses and offers.

• Data based interaction

As the customer interacts with the brand across the various stages of the journey, the organisation interprets the data to modify interactions to improve the customer’s experience. Content and experience adapt as the customer’s context shifts from a mobile phone to a laptop, for example, or from evaluating a brand to making a purchase decision. The rising number of customer interactions generates a stream of intelligence that allows the brand to make better decisions about what their customers want. The real benefit of this is ultimately the provision of an omnichannel experience to the customer.

• Agile automation

Automation can boost the number of self-service options and deliver consistent customer journeys no matter the channel, time, or device. Automating supply-chain and core business processes can drive down costs, but it is also essential to providing the company with more flexibility to respond to, and anticipate, customer demand.

• Customer-centric innovation

Providing good customer experience which itself provides more value and customer loyalty, gives companies the incentive to innovate how they interact with those customers. These innovations will eventually give rise to more interactions and further increase the worth of the customer/brand relationship.

3.Digital Capabilities

Organisation culture

Digital, and the use of data, improve the decision making process by delegating decision making to smaller teams and by developing more iterative and faster ways of doing things – supported by data and data analytics. This way of thinking should be extended to cover other operational approaches including partnering with external suppliers to leverage a wider spectrum of capabilities. A digital culture institutionalises company-wide collaboration and engenders team work and innovation. This should be incentivised and supported by a set of KPIs. Decision making agility is in line with the fast-moving digital marketplace and the customer digital journey.

Enterprise Architecture

The technology debt, along with culture and archaic processes, are the prevalent characteristics which hinder the adoption of a truly digital environment. Digital technology, through the adoption of microservices, focusses on reducing the impact to digitisation from existing legacy systems architectures. In recognition of the support that legacy systems provide to critical functions, microservices decouple legacy from new ‘digital technology’ and over time greatly reduce their stranglehold on critical processes – digital technology is the fast-moving to support real time digital customer journeys. Another key feature of digital technology is the capability to develop networks (Enterprise Service Bus) that connect technical services and people. This is characterised by a continuous-delivery model in which cross-functional technology teams (DevOps) provide an Agile software delivery capability to support the fast-moving digital marketplace and the onerous customer experience expectations.

Digital is about identifying and fully exploiting business opportunities in today’s disrupted business environment. Having a clear understanding of what digital means to your organisation allows you to develop a vision of how to use it to further increase or capture new value.

Identifying your organisation’s digital deficiencies, by the use of a flexible Digital Maturity Model within the framework of your digital aspirations, will steer you towards maximising return on investment and business value when embarking on your digital transformation journey.

TORI can assist your organisation to formulate your digital strategy and to navigate through the complex web of digital technology during implementation. Our practitioners will bring their many years of experience to bear and will support you throughout your digital journey.