In part one of this blog series, we examined what digital reinvention is, what’s driving it, and the importance of proactively changing an organization’s business model. In this blog post, we’ll delve into two key changes required to successfully compete in the digital ecosystem.
A Two-Pronged Approach to Digital Reinvention
Focus on the Customer
The first key change is to place customers at the center of companies’ digital activity. Instead of seeing themselves as a set of functions, products, territories, and processes, companies must now view themselves through the lens of a portfolio of consumers.
Companies create “customer journeys” – or a description of the various ways a consumer would engage with their organization – in order to develop better and more impactful customer interactions. Optimizing for these customer journeys improves the key consumer touchpoints, as the experience has been designed holistically – not pieced together across departments.
For example, a large manufacturer of hospital beds recently reinvented its core product. In the past, the manufacturer/hospital interaction was transactional – the company would manufacture and sell the bed, the hospital would purchase it, and the interaction would terminate. After undergoing a digital reinvention, the manufacturer reevaluated its interactions with hospitals by examining what they were really looking for in a medical bed: safety and reduction in the number of falls. Using Model N’s configure, price and quote (CPQ) tool, the manufacturer redesigned its offering to the hospital and began a subscription-based model for its medical beds. If the new beds were able to create a certain level of reduction in patient falls, the manufacturer would receive additional compensation. Furthermore, the company digitized the information the bed’s software collected and was able to seamlessly disseminate it to nursing stations and doctor’s mobile devices. The net result was a safer bed, an increase in revenue and a happier client.
Create Intelligent Operations
The second key change is to transform internal processes into intelligent operations. A common mistake that companies make here is to focus on optimizing their existing processes, rather than redesigning them from scratch. No amount of optimization would have allowed horse-drawn carriages to compete with the Model T, for example. Instead, it’s vital that companies stay current on emerging technologies and open to internal innovation.
In general, most companies are making efforts already to improve, but these efforts are often siloed and uncoordinated. The marketing department might be implementing new customer analytics into specially crafted messaging, while the IT department automates some of their more routine tasks – but these step-changes aren’t shared across the organization, and this caps their overall effectiveness. Working across departments on customer journeys begins to solve this issue, but companies can go even further by instilling platforms that enable this digital transition.
A platform-based solution connects each disparate branch of an organization and standardizes the operations into repeatable processes. This shift allows routine tasks to be automated, freeing up time and focus for higher-skill tasks. Additionally, a connected end-to-end solution helps to measure which customer journeys are seamless – and which need further iteration.
Embracing Digital Ecosystems
Implementing these changes will allow a company to not just compete in a digital ecosystem but thrive. McKinsey predicts that by 2025 there will only be 12 major industries, with competitive and cooperative lines blurring. In the final installment of this blog series, we’ll explore what these emerging digital ecosystems might hold for companies.
