Digital Transformation Presentation to the CTO Boardroom at the OPEX Week Business Transformation Summit 2024

The highlight of the OPEX WEEK BUSINESS TRANSFORMATION SUMMIT 2024 was the invitation-only CTO Boardroom, where 30 executives engaged in an exclusive forum to share strategies and solutions for Digital Transformation.

Explic8’s CEO Ian Nicholls began his presentation with a headline that shocked the audience by stating that research concludes that over 70% of Digital Transformation initiatives fail for the following reasons:

• Lack of clear vision and strategy – Without a well-defined plan and objectives, initiatives are doomed to failure;

• Focussing on technology, instead of people – Prioritising technical upgrades over addressing the human aspects of change.

• Lack of Transformation Readiness – Many organisations fail to first define their current state and identify potential weaknesses and gaps before embarking on a large-scale transformation;

So, the challenge is to address these causes of failure.

SETTING A CLEAR VISION

It is essential to develop an aspirational vision of what the business of the future will look like after transformation.  That vision has to be to deliver the BEST POSSIBLE CUSTOMER EXPERIENCE.

Ian explained that without the focus on the Customer Experience, there is no “North Star” as a consistent guide to the activities in an organisation as, inevitably, business priorities change over time.

The next question was “What makes a World Class Customer Experience?” to give context to the discussion.  The answer is simple.  What customers simply want is:

• What they asked for;

• When they asked for it;

• Where they asked for it;

• At the correct quality; and

• At perceived value for money!

The thinking of the audience was further challenged to rank their companies on explic8’s CX (Customer Experience) Maturity Scale.

The levels referred to are based on explic8’s model on a ranking of 1 to 5 where:

1. is “Under-developed” and is product led;

2. is “Emerging” which is demand led;

3. is “Evolving” – experience led”;

4. is “Maturing” – Customer led; and

5. is “Leading” – prediction led.

The development of increasing maturity is monitored by moving on the scale from 1 to 5.

Further questions posed to the audience included:

• Do you know your CX (Customer Experience) Maturity level?

• Do you have an aspirational CX Maturity level that you are working towards?

• Have you compared your views with your stakeholders?

The results of the Forrester 2024 Annual CX Index provided some stark facts.  Notably that:

• CX quality among global brands sits at an all-time low after declining for an unprecedented third year in a row!; and

• Performance dropped in all three dimensions of CX quality: Effectiveness, Ease, & Emotion!

Yet, the survey went on to report that:

• 3% of companies are categorized as customer-obsessed – putting customers’ needs, desires, and satisfaction at the forefront; and

• Customer-obsessed organizations reported 41% faster revenue growth and 51% better consumer retention.

There is an obvious disparity between the customers’ views of CX quality and the companies’ views on their prioritization of customer needs recognizing that if it’s done correctly there is better customer retention.

FOCUSSING ON PEOPLE

Many companies are trying to apply Digital Transformation initiatives such as AI, chatbots and personalization to improve their Customer Experience which led to the importance of considering the Effectiveness, Ease, & Emotion model:

1. Effectiveness – Focusing on achieving quality and efficiency across all channels;

2. Ease – Emphasizing the need for simplicity and accessibility in customer service processes;

3. Emotion – Highlighting the importance of emotional connection and understanding in customer interactions.

When organisations were asked to rank their most challenging issues:

• 47% of respondents’ issues fell into the Effectiveness

• 36% fell into the Ease grouping; and

• 17% fell into the Emotion

What this is telling us is that most companies do not feel they have issues with driving emotional connections between their brands or products but DO recognize that they have issues with delivering the customer promise.

Explic8’s challenge to those companies is why are you not addressing the Effectiveness element?

All companies want to drive brand or product loyalty by generating an emotional connection to their brands or products from the customer.

But, we cannot drive the EMOTION without the EASE.  We have to make it easy for customers to buy, to pay, to find order status, to communicate and to complain.  We cannot make it easy for the customers if we have not made it easy for the employees to support the customers.  This thought train focuses on the people, the users, not the technology.

We cannot provide the EASE without the EFFECTIVENESS!  Our processes and systems must be effective and deliver what the customers want, when they want it, where they want it, at the right quality for a value for money price.

At this point, explic8 introduced its CX (Customer Experience) Maturity level assessment.

By conducting explic8’s assessment, companies will be able to analyse their current CX model under the three dimensions of customer service; Effectiveness, Ease, & Emotion.

We recommended that participants identify key internal stakeholders to take the test, e.g., Directors of Sales, CX, & Marketing.  Upon completion of the assessment, explic8 will provide a free detailed, consolidated report illustrating the areas of alignment and contrast amongst their stakeholders, outlining the strengths of their company’s current CX model as well as the areas of opportunity.

Participants were encouraged to share this information with their teams, to analyse the data presented, and to put plans in place and watch as the customer service levels increase.

This report is the first data set to initiate internal conversations and gain alignment with stakeholders, critical areas for improvement, and recommendations.

Next, the Seismic Shift in Digital Transformation Thinking was discussed, where companies are considering the use of IA (Intelligent Automation) and AI (Artificial Intelligence) to become business partners providing value-adding insights (forward looking) instead of transactional activity (rear-view mirror), and to achieve process and organisational efficiencies to lower costs.

The following steps in a Digital Transformation Roadmap were discussed:

1. Defining Digital Transformation: Defining a Common Understanding of Digital Transformation across the Organisation;

2. Motivation for Change: Aligning Key Stakeholders on the reasons for change within the Business and calculating the ROI;

3. Defining Needs & Objectives: Putting the Voice of the Customer, Employee & Market at the Forefront of Transformation;

4. Building a Digital Transformation Framework: Evaluating the Current State Through the Lens of Strategise, Optimise, & Transform; and

5. The Starting Point: Rectifying the Current-State gaps, Outlining Scope, Objectives and Measures, Gaining Sign-Off, and Buy-In.

The next step is to examine their organisation’s readiness to transform by utilising explic8’s Digital eXperience DX Maturity Assessment.

We strongly believe in the importance of aligning with internal stakeholders on where the organisation currently sits with regard to its Digital eXperience maturity.  This can lead to a significant increase in the probability of success when implementing a Digital Transformation.

By conducting our assessment, participants will be able to analyse their organisation’s digital landscape maturity under the three dimensions of Digital Transformation; Strategise, Optimise and Transform.

Upon completion of the assessment, Explic8 will provide a free consolidated report illustrating the areas of alignment and contrast amongst stakeholders.

The outcome of our assessment is a detailed report outlining the strengths of the current digital model as well as the areas of opportunity.

This report is the first data set to initiate internal conversations and gain alignment with stakeholders, and agree critical areas for improvement, and recommendations.

The finale of the presentation is THE THOUGHT HIERARCHY with the warning – “Do not make the mistake of thinking that a digital transformation is the silver bullet that will solve all of your company’s problems.  It is not!”  The thought hierarchy sets out a thinking regime to help decide on and prioritise work programs to deliver transformation guidelines.

What follows is a series of topics to consider in preparing the business to adopt a digital strategic mindset.

1. Business Strategy

A business strategy is a comprehensive plan that outlines how an organization will achieve its goals and objectives while gaining a competitive advantage in the market.  It encompasses various elements, including the identification of target markets, the allocation of resources, and the selection of specific tactics to differentiate the company from its competitors.  A well-defined business strategy takes into account both external factors, such as market trends and customer preferences, and internal factors, such as organisational strengths and weaknesses.  Ultimately, it serves as a roadmap for decision-making and guides the direction of the business to ensure long-term success and sustainability.  We need to understand and communicate clearly the business strategy so that all key stakeholders can contribute.

2. Decision Making

Implementing a business strategy involves a range of decisions that are critical to achieving the organization’s goals.  These decisions can be categorized into several key areas, including resource allocation, operational processes, marketing approaches, and human resource management.  For instance, leaders must decide how to allocate financial resources to different departments or projects, determining where investment will yield the greatest returns.  They also need to establish operational processes that align with strategic objectives, which may involve adopting new technologies or improving supply chain efficiency.  Additionally, marketing decisions are made to effectively position the brand in the marketplace, targeting specific customer segments and defining promotional tactics.  Finally, human resource decisions, such as hiring, training, and organizational structure, are essential to ensure that the right talent is in place to execute the strategy.  Together, these decisions create a cohesive framework that supports the successful implementation of the business strategy.  What decisions does your organisation have to make to successfully implement the business strategy?

3. Business Intelligence – Data, Analytics & Insights

How can/should we use Business Intelligence (BI) – Data, Analytics & Insights to implement business strategy?  Using BI — encompassing data, analytics, and insights — is essential for effectively implementing a business strateg

4. Data Strategy

Once your organisation has decided upon its business strategy, it needs to define the decisions it must make to implement the strategy and in doing that it must identify how to use BI to improve the decision making.  In order for BI to be effective the company must identify the data required to analyse to provide the insights.  And to do that, the business must formulate its data strategy.

A data strategy is crucial for the success of any digital transformation initiative, as it establishes a framework for effectively managing, analysing, and leveraging data across the organization.  In an era where data drives decision-making and innovation, a well-defined data strategy ensures that data is accessible, accurate, and secure, enabling organizations to harness insights that inform strategic objectives.  It facilitates the integration of diverse data sources, supports the implementation of advanced analytics and artificial intelligence, and promotes a data-driven culture.  By aligning data initiatives with overall business goals, organizations can enhance customer experiences, optimize operations, and identify new revenue streams.  Ultimately, a robust data strategy not only underpins the technological aspects of digital transformation but also empowers organizations to adapt to changing market conditions and maintain a competitive edge.

5. Reporting / Dashboards

To effectively monitor performance and progress against business strategy plans, organisations should implement various types of reports and dashboards that provide actionable insights.  This cannot be done without an effective data strategy.

6. System Level Elements

System-level elements include the scalability and flexibility of the systems to accommodate future growth and changing business needs.  Integration capabilities with existing software and data sources are crucial to ensure seamless operations.   The system-level elements of a digital transformation can be described as interconnected components that work together to enhance an organization’s capabilities and drive change.

7. ERP & Component Systems Transactional Level

Lots of companies start here.  It is the wrong place to start.  However, the reason businesses begin with this topic is because they may be thinking of implementing a system for the first time.  In this case the business will be familiar with its internal processes and will seek a system with relevant functionality.

Alternatively, a company may be looking to upgrade or replace an existing system.  In these cases, the business will be familiar with what the existing system currently does and can compare that with functionality in the new system.

Whichever is the driver for the change, transactional level elements of a digital transformation refer to the specific interactions and processes that occur within an organization, focusing on the execution of day-to-day operations.  These elements are essential for ensuring that digital transformation initiatives effectively enhance operational efficiency and customer experiences.

Lots of companies often start at the transactional level thinking before they have adequately addressed some of the higher-level thinking but transactional level has to be done, it’s just not the place to start.

Before commencing a digital transformation, companies should define several key elements regarding their data strategies to ensure effective utilization of data throughout the process.

In summary:

1. Develop an aspirational vision of the future business

2. Start with the Thought Hierarchy and develop a Data Strategy;

3. Focus on the customer and the employee, involve them from the start.

Company representatives who attended the CTO Boardroom, left with:

1. copies of the slide deck used to frame the discussion;

2. a copy of explic8’s book of case studies containing experiences with real clients – “7 Lessons from 7 Stories – How to Think LEAN,”;

3. a copy of the Customer eXperience (CX) Maturity Assessment; and

4. a copy of the Digital eXperience (DX) Maturity Assessment.

The overall theme of the CTO Boardroom provided a comprehensive approach to understanding where to start thinking about engaging in a Digital Transformation initiative and building the roadmap with the “North Star” aimed at improving customer experience by integrating the elements of Effectiveness, Ease and Emotion.

Comments from attendees:

“Really interesting presentation”; “Thought provoking”; “Very engaging discussion”; “I am definitely going to try these assessments in our company“; I can’t wait to read the book”.

Explic8 is a management consultancy company which specializes in business transformation and operational excellence implementation.  The name, explic8, pronounced – ex-pli-cate, is a verb which means to analyse or develop an idea or principle in detail – which is what we do for our clients.

The book “7 Lessons from 7 Stories – How to Think LEAN” can be downloaded at https://www.explic8.com/7-lessons-from-7-stories-how-to-think-lean/

The Customer eXperience Maturity Assessment can be downloaded at https://www.explic8.com/customer-experience-maturity-test/

The Digital eXperience DX Maturity Assessment can be downloaded at https://www.explic8.com/digital-experience-dx-maturity-assessment/