Digital transformation seems to be the topic of every executive event these days; its needs, its requirements, and its potential for generating rapid innovation and breakout growth. Yet, too often the pitch misses the most important point. What does “digital transformation” really mean? Or more specifically, what does it mean for my business?
Ultimately, it’s the rate of technology innovation, and the pace at which your business can respond, that really drives market share. In this sense, digital transformation is less a lofty goal for trendy businesses, and more a critical imperative for all modern businesses.
The truth is that while customer problems rarely shift (they continue to seek solutions to the same challenges they’ve always had), it’s customer expectations that have skyrocketed with the rise of new technology. Customers want their original problems solved, but faster, cheaper, and more effectively than ever before. So, while customer problems change slowly, you must move to solve them at lightning speed.
However, not just any action will suffice. Hasty decisions based on uninformed opinions can lead to more mess and misfortune than you wish to imagine. Winning organizations have discovered that the secret is to engage customers and co-create business innovations together with those customers, thereby continuously transforming how they work and what they deliver.
How to accelerate your transformation
From working with global businesses and industry leaders, Fastly and I have identified the steps to success and the stumbling blocks to avoid. By empowering your people with the permission and tools to experiment cheaply and learn quickly with customers, your organization holds the key to unlocking endless innovation, continuous transformation, and growth. The question is: what are you willing to transform about yourself and your organization to make it happen?
Leading businesses are moving decision-making control, and therefore the capacity for rapid product innovation, into the hands of the teams closest to their customers – teams who are at the edge of the organizational and technological systems, where the information is the richest.
Increasing the rate of product innovation means enabling teams to respond to opportunities and issues in real-time with speed and safety. Speed relies on giving authority to the teams with the best information to take action. Safety means providing them with the tools to recognize, respond, and recover from the results of those actions without harm.
A trillion reasons to transform
There’s a simple reason that technology-led business such as Amazon and Apple are tipping over trillion-dollar valuations, and past giants like GE fading out. They put technology capabilities into the hands of their teams to make data-informed decisions based on customer insight at speed.
By connecting your teams to real customer feedback, you can co-create outstanding experiences together with your customers. In a fast-paced world, quick customer feedback loops transform the speed at which teams can identify problems and incorporate insights into your products and services, out-innovating your competition.
To make this work, control and capability needs to be moved from leaders at the core of the organization to the teams working closest to systems and customers at the edge of the organization, then scaled up as you succeed.
The power of performance
When you’re pinning the world’s most inspirational content, waiting isn’t winning. Pinterest discovered the power of putting the teams at the edge of their organization in control. They did this by empowering the teams closest to customers to make site pinning and customer experience product changes, and the capability to measure the performance impact of each change in real-time. The result? Customer engagement in the application increased by 10-30% when pin saving got faster. The bonus? A new culture of performance excellence spread across all the teams within their organization.
No team wants to create a poor customer experience, but this unintentionally happens when they are unaware of the real impact of their new product “innovation.” Product performance relies on teams being made aware — and rapidly — about how their contribution helped or hindered the application they delivered before customers start socializing their dissatisfaction.
Pinterest put the power and tools in the hands of every team making changes to measure and understand the effects of their actions on product performance in milliseconds. When teams get better visibility very quickly, better behaviors emerge.
Empowering a team with the tools to gather, measure and monitor the impact of their efforts for each new release helps position Pinterest ahead of the pack. Increased awareness prompted increased accountability for the consequences of each change and its effect on customer engagement. Teams took ownership of issues and championed better practices across the organization, with customers and the company both getting a better return as a result.
Rapid response breeds customer satisfaction
In a highly competitive market, providing customers with poor or inaccurate options doesn’t just frustrate them, it drives them away. Businesses must not only respond to customer complaints and requests, but they must do so quickly, seamlessly, and consistently. But it can be costly and complex to provide the highly customized, personalized, and relevant search results customers expect. As a result, many businesses fail to deliver. The impact is slower responses, higher costs, and potentially stale and inaccurate information.
As a mobile-first business, HotelTonight’s success relies on their ability to instantly respond to customers with the latest information about the best hotels closest to them. Recognizing how crucial responsiveness was to their customers (and their own bottom line), HotelTonight took action.
By moving their product responsiveness capability closer to their customers at the edge, HotelTonight found they could return results to site visitors in less than 50 milliseconds, and gain an 80% reduction in traffic to their central systems. Faster and more accurate results increased customer conversion and loyalty, while cheaper application and infrastructure costs allowed HotelTonight to invest more time and effort in transformative innovation in other areas of the company. Improving responsiveness and quality of service was a key step in their transformation.
Learn fast and scale safely
Innovative organizations know how rarely grand plans survive first contact with real customers. Instead of relying on hope, they develop the capability to respond and adapt to the realities they discover. This requires cultivating a culture of experimentation and learning — one that many organization struggle to adopt.
Big ideas with big releases often result in big bang failures.
By taking an experimental approach and working at speed with small, safe, and targeted releases, organizations can effectively manage the risks that are inherent in innovation and enable teams to make better judgements when faced with situations of extreme uncertainty.
By providing teams with a platform to explore uncertainty with safe-to-fail experiments and fast feedback loops, teams can scale up solutions when they see success, and rollback gracefully when they see undesirable results.
The Financial Times took this approach by testing new features with specific subsets of 1-10% of customers in their digital platform before releasing the product innovations to their entire site. Giving teams the power and tools to segment new deployments and target tests allowed teams to create safe-to-fail experiments to gather evidence of what worked and what didn’t before rolling out new features across the board.
Without control or the capability to experiment and release iteratively, your teams have no option but big-bang releases with potential big-bang failures. When teams have tight feedback loops with customers, they gain evidence-based insight to inform intentional or corrective action. Their control over product development, innovation and satisfaction scales up with their level of customer understanding. It’s exactly this process of scaling up safely based on evidence of success that meant the Financial Times could move quickly and intelligently.
Co-create with customers to transform your company
Companies like Pinterest, HotelTonight, and the Financial Times are moving ahead by moving control and capability to the edges of their organizational and technological systems.
Your business innovates best when you empower the teams closest to your customers. Speed and safety transform how you work, what you work on, and the results you achieve. Co-creating with customers not only delights, but exceeds their expectations.
Taking your first step to transform
You may be surprised to learn how the smallest step can have the biggest impact on your business. You don’t necessarily need a big budget or a big team. You can, and should, start small with speed and safety.
Identify one area of your organization that you want to see move faster and co-create with customers, and start to cultivate a new culture of experimentation and learning. Give your teams at the edges the control and tools to turn their efforts into business impact. Test, tune and see the results in seconds, and scale from there.
In the next post in this series, we’ll look more closely at how organizations that focus on performance — both of their systems and their people — are leaders in the digital transformation game.