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Creating an Enterprise Fit for Customers
The chasm between what customers expect and what most enterprises are currently able to deliver is growing, and while that nebulous term digital transformation is discussed in most boardrooms, progress is painfully slow.
Every year Ovum surveys around 5,000 enterprises globally, covering all sectors. A comparison between the last two annual surveys found that on average fewer than 13% of enterprises felt they had made significant transformational progress, across nine transformational initiatives. Of these, the most pressing, at least as far as growth and customers are concerned, is in the field of omnichannel customer engagement, where fewer than 10% of enterprises felt they had it mastered, a rise of only 3% on the previous year.
Customers expect convenience because they’ve experienced it
The convenience provided by Internet and agile big data natives such as Amazon, Uber, and the like have shaped expectations. Omnichannel, as the name implies, should allow customers to connect with companies and their brands in ways that make sense to them given their locations and contexts. Instead they often experience friction, frustration, and a complete lack of insight into what they’re trying to achieve.
These barriers to a frictionless and positive customer experience aren’t intentional. For the most part, they’re the consequences of organizational structures, departmental processes, and a tangled bird’s nest of legacy technology that evolved based on the needs of the enterprise, not the customer. Adding digital capability to existing processes and approaches to customers is bound to fail. For digital transformation to have any value and meaning, it must create an environment that is fit for customers, to meet their ever-rising and rapidly evolving expectations. It’s that obvious. So why is it so hard to do?
The 20th century industrial mindset keeps getting in the way
Genuine entrepreneurs intuitively identify better ways to serve and deliver value to customers. Most large and midsized enterprises are run by managers, not leaders or entrepreneurs. In the mid to late 20th century, enterprises focused on supply to meet demand. It was a serial process supported by departmental processes in a linear sequence across the value chain. You make something by sourcing components and combining them into things that customers would buy, often through a limited choice of outlets -- the local retailer, or if a business customer, the distributor or reseller.
The Internet, the smartphone, and social networks changed all that. The power shifted to customers who could search for alternatives with ease, and buy from companies around the world, often prompted by people they trusted, their friends, rather than advertising promises.
Marketing to the rescue? I think not. Modern marketers have tried to step up to the challenge and have often taken the technology lead, investing in customer data platforms and marketing automation to create “personalized” offers. They’ve become adept at plaguing consumers with poorly thought out and ill-timed offers that pop up, unbidden, on their social networks. While they inhabit the 21st century, the old 20th century mindset persists.
It doesn’t have to be this way -- consider Inditex (think Zara)
When I ask people if they’ve heard of Inditex I often draw blank stares. When I mention fashion brand names like Zara, Stradivarius, Bershka, or Massimo Dutti, I get a nod of recognition. These fashion brands are part of the Inditex business empire. Since being founded in 1963 in Galicia, Spain, the company has grown to $39 billion in revenue, with more than 7,000 stores serving 202 markets around the world and an online commerce operation covering 45 countries. It’s now the world’s most successful fashion retailer.
Inditex sticks to the knitting, but transforms continuously.
The remarkable thing about Inditex that makes it world-class from a digital transformation perspective is that its underlying vision centers on the customer. Everything across its value network -- from design, sourcing, product manufacturing, logistics, and stores -- revolves around customers and meeting their expectations. Underpinning this holistic and coherent approach is the intelligent use of a raft of technologies. From design to store can take as little as two weeks. In the fashion industry this is virtually unheard of. Its CEO, Pablo Isla, heads the 2018 list of the world’s top-performing CEOs in research conducted by the Harvard Business Review.
Inditex has no single technology bullet, but rather a habit of combining technologies that make interactions simpler, more pleasurable, and reliable for its customers, irrespective of geographical distances. It’s not afraid to experiment and is awash with new technology meticulously applied to augment the customer experience, including radio frequency identification to help customers find products easily instore, nearby, or online; augmented reality in 120 stores; interactive fitting rooms; integrated stock management; and eco-efficient stores, among other technologies. Its employees are highly engaged, and well trained and supported. They’re integral to the value Inditex creates and delivers.
This purposeful, holistic, and ethical approach to business and IT investment has served Inditex well over its 56 years of growth. The technologies have changed substantially over that time, but the underlying principles and approach have remained the same. It’s an example of visionary leadership that stands the test of time. It should serve as the benchmark for continuous digital transformation, and how to sustain relevance. It’s customer-adaptive by design and philosophy.
(To read more about Inditex, how to orient the enterprise around customers, and how and when to apply a broad variety of technologies to accelerate digital transformation, Ovum subscribers can read the full report: “Creating an Enterprise Environment for Augmented Customer Engagement,” INT001-000145 (June 2019).