Marketing Expert John Ellett (Forbes Columnist) and I recently discussed the findings from an SAP Digital Executive Transformation Study conducted in partnership with Oxford Economics. The report examined the difference between leading companies (top 3%) who were achieving significant results from their digital transformation efforts by being more profitable while growing faster than their peers ( the remaining 97%) .
Here is what drove the changes in outcomes.
The first thread was that the leaders looked at [digital transformation] as not another IT project so they didn’t just relegate it to the IT department. They looked at it as true transformation, as a way of changing the way that they did business. The second thread was that they almost exclusively began with transforming the customer-facing functions first. This goes to show you that the mindset was not about operational efficiency but about the customer. The third one was the recognition that there was an enormous amount of up-scaling and retraining that needed to happen. They needed to bring in people with new digital skills to fundamentally change the talent mix within the company. We call it the virtuous cycle of talent, which is the fact that these companies were able to demonstrate to the market that they were investing in digital, they were able to pull in better people and that ultimately made them even better at digital.”
The last piece of it was where were and how they were investing in technology. We saw two clear patterns. The leaders were three time more likely than the other 97% to invest in IoT and analytics and seven times more likely to invest in machine learning and AI technologies. They were really progressive in these types of technologies compared to the rest.
In the past, many transformation efforts were executed within a globalization context – they started with an operations focused, ensuring that companies achieved both efficiency and scale as they went global to grow. This created and elevated new functions like the CIO and COO. Once companies standardized operations across locations, they were able to deliver consistent experiences, standardized to their customers anywhere, and at any time. Customer experiences were considered to be the outcome of the Operations Core.
Standardization and efficiency at the core are table-stakes for business to survive today. .
But whats different now is that in order to thrive – today’s transformation efforts will need to be executed with a customer context serving as the on ramp to new ways of doing business. And its no longer just about consistent customer experiences. AI and Machine learning combined with sophisticated Marketing technologies enable and unlock opportunities for personalized experiences, delivered at scale. This means that the customer experience has become the driver of the new operating core of the business. Unlike in the past, Customer experiences have become the input to the Operations core, rather than its output.
As leaders of the new customer experience, this creates new opportunities for the Marketing function to think beyond the brand and demand generation initiatives that they are traditionally known for. It has the potential of elevating them into a strategic leadership position as cross-functional business leaders, not just marketing specialists.
Marketers should take note.