Leveraging digital technologies to improve business performance presents an array of non-technological challenges. In this interview, Neeti Bhardwaj, a Principal with A.T. Kearney in the Leadership, Change & Organization practice, offers some insights on how to overcome those challenges.
We increasingly hear that digital transformation is about much more than digital technology. But what is that “much more”?
Yes, clearly technology is just the starting point. Digital technology changes the way organizations work. It changes the way they go to market and engage with their customers. It can fundamentally change their business model. So for digital technology to deliver results, you need to think about transformation across the board and across the organization. We’re not talking about plug-and-play systems. We’re talking about fundamentally changing the processes in which digital technology is deployed. We’re talking about changing the way the entire organization supports those processes, which means helping people to understand the change and their role in it. We’re also talking about flattening the organization and creating an interconnected structure that is built not around a traditional product but around the customer journey, a structure that can respond to pivotal events in that journey.
What’s an example of how digital technology might transform those processes, people roles, and traditional products?
Well, take an auto insurance company. Traditionally, if I’m in an accident, I place a call to the company’s 800 number. They ask if I’m okay and take some basic information. Later, someone calls me back to get the details. Then they send out an adjuster to look at my car to assess the damage.
Now, the industry is looking at how digital technology can both streamline the claims process and improve the customer experience. For example, in some cases, the entire process might be automated. If I have a minor accident, I would place a single call, answer some recorded questions, and the claim would be settled and paid.
In other cases, when I first call to report an accident, I might be connected to an adjuster who, through the use of Facetime or another video app on my phone, would be able to immediately assess the damages. This not only would save a trip by the adjuster to come out and view my car but also change the nature of his job. Instead of traveling from place to place inspecting damaged vehicles, having little contact with the owners, and returning to file reports, the adjuster now would interact one-on-one with customers who have just been in an accident.
Instead of being three or four steps into the claims process, he is now front and center. So in addition to his professional expertise in damage assessment, he needs to be comfortable using digital communications technology. He needs to be empathetic and customer savvy. Both the claims process and people’s roles have changed dramatically.
As you can see here, saying that you’re going to implement a digital solution to make interactions with your customers more efficient and engaging is only the starting point. You need to revamp the process. You need to be sure the people who are going to enable the new process buy into the change and have the tools and training to make it happen.
What did you mean when you talked about companies organizing around something other than products?
Well, let’s stick with insurance. Traditionally, a company sells me a product, an auto insurance policy. If I get in an accident, I file a claim – which, by the way, given the unfortunate events that led you to that point, lends kind of a negative connotation to my interaction with the company.
But digital technology allows companies to go beyond simply selling customers an insurance policy. It allows them to create a platform designed to respond to key events in the customer journey. When I call to say I have been in accident, the company still gathers claim information. But by focusing on my situation, it might offer to get me home in a taxi and my car to a repair shop. It might set me up with a rental car for the time that my car is in the shop.
There are technology solutions that can enable this as soon as a customer calls—that, for example, allows the company to immediately access my customer profile, including my preferences in rental cars or towing companies. But to do that, companies need to rethink their organizational setup. A traditional product-based structure is organized in silos—sales and marketing, customer service, support functions like finance and HR. Shifting their focus from the product to end-to-end customer solutions based on digital technology requires companies to be more horizontally interconnected. And this requires tremendous organizational change.
How do you make these sorts of borad-based organizational change happen?
You need to create a flatter, more customer-centric organization, one that isn’t built around product-based silos. You need to enable agile ways of working. That means having a structure which is flexible enough to easily pull together specialists from different parts of the organization, which leverages informal information networks across functions in order to explain changes, gather employee feedback, and help ensure that decisions stick. This may require a change in your culture.
But the first thing you need to do is recognize that such changes are necessary, that the technology solution won’t be successful without them.