Agile enough for digital transformation? Strategies that help
May 13, 2021
May 13, 2021
It's an age-old maxim — "put the customer first." Not everyone gets it right, but these days those who do are increasingly putting technology at the heart of their customer-centric strategy. These companies operate in an "outside-in" fashion — their departments, including information technology, work together to move with agility to meet customer needs. In contrast, many enterprises are based on an "inside-out" organization — departments operate in silos, pursuing their own goals without considering how their efforts affect the broader enterprise and the end customer.
Not surprisingly, the standard-bearers for the "outside-in" organization are today's technology giants. But companies across industries can achieve comparable performance, as CIOs unite with their C-suite counterparts to incorporate critical innovation into their businesses.
If you're pursuing a real customer-centric business model, here are four strategies to consider:
Knowing your customers and understanding their behavior is key to targeting them effectively. Historically, businesses that relied on third-party distributors to sell their goods and services had limited means of gathering customer intelligence.
In recent years, digitization has allowed more businesses to sell directly to the consumer, yielding a windfall of customer data. Pandemic lockdowns — and the associated spike in online shopping — accelerated this trend. But having access to information is just the beginning. CIOs must ensure their organizations deploy the right systems and tools to store, analyze and draw real-time insights from customer behavior and determine customers' needs.
Take, for instance, the Brazilian private education company Kroton, a subsidiary of Cogna Educação. Initially, the business focused on offering classes — a very inside-out model. But in recent years, the company began using artificial intelligence (AI) to comb students' data, measure their engagement in their classes, and identify students' knowledge gaps. The company also uses an analytics platform to monitor job vacancies and determine the skills in demand by employers. All this data and analysis help Kroton tailor its content accordingly.
"No one has the precise answer of exactly what and where future disruption is going to be," Rodrigo Galindo, Chief Executive Officer, Cogna Educação, said in an interview with Forbes. "In the meantime, what we can do is invest in incremental technology solutions that generate a lot of value and that is what we are already doing."
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CIOs are well positioned to take the lead in the shift to outside-in. They should choose the right architectures and hire the right tech talent for the business.
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As more businesses aimed to increase online interactions during the pandemic, one pain point emerged — customers used to "trying before buying" certain products were wary of buying those goods online.
Various companies, however, managed to rise to the challenge with the help of interactive tools. Furniture sellers allowed customers to use augmented reality (AR) to visualize how couches and coffee tables would look in their own living rooms. Beauty companies introduced make-up simulators.
Fashion brands and retailers sought to replicate the experience of shopping in a boutique alongside a knowledgeable salesperson. Live-streamed sales events featured clothes and accessories. Hosts even offered styling tips and answered questions submitted by viewers. Participating businesses reported rebounding sales; the success of these practices suggests they'll be in place long after the pandemic subsides.
Are sales always the most valuable sign of a company's success? Not necessarily. They might actually be a lagging indicator, while other data are more useful in shaping a company's growth. As with customer journey mapping, it's up to companies to identify key performance indicators (KPI) and figure out how to improve performance on them. And it's up to CIOs to ensure their organizations have the tools and data analytics capabilities for measuring those new KPIs.
Take, for example, a company that has a network of salespeople. They can measure how many new salespeople fitting the most productive profile join the network and forecast the increase on profitable sales generated by the right profile, instead of growing the number of indistinct people and having high churn and low productivity. So, the process is measured from beginning to end with some meaningful operational markers that are more important to teams than just the measure of final sales growth. But for people with the right profile, the interest in training, development and understanding of products is higher, thereby implying the improvement of other processes is required on the value chain. This increases conversion rates (productivity). As a result, accountability for each team creates a need to improve its specific KPIs and the compounded result is more profitable sales growth.
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CIOs should constantly ask themselves how they can take advantage of innovation to create value for customers. As they pursue more solutions, they should be careful to avoid two common missteps — limiting themselves to internal proprietary solutions and adopting tech that doesn't coexist with their legacy systems.
Some companies may plan to develop exclusive technology that their competitors can't access. The problem with this practice is that it slows them down; rivals willing to partner with third parties can develop capabilities more quickly. What was supposed to be a competitive advantage becomes a burden.
Legacy systems, meanwhile, are a common source of frustration for business leaders eager to move their companies forward. But scrapping those systems in favor of new ones can be a costly, time-consuming endeavor. Instead, companies should opt for a two-track solution — adopt tools that can help them become more agile and coexist with their legacy systems. They should also work toward replacing those systems over time.
CIOs are well positioned to take the lead in the shift to outside-in. They should choose the right architectures and hire the right tech talent for the business. At the same time, their CEO counterpart should advocate for the adoption of those technologies by employees across the business. More broadly, leaders should promote collaboration that cuts across silos to meet enterprise-wide goals.
Reorganizing business in this way is uncomfortable at first but will help the company thrive amid escalating customer expectations. Going outside-in may not be easy, but it's certainly better than being left out in the cold.
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