Digital transformation has to deliver both efficiency and customer satisfaction

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When I talk to clients about what they do in terms of digital transformation, I get answers like, "We are going paperless, or we want to improve efficiency." Quite often what I don’t hear is a clear articulation of why? Digital transformation needs to fulfill a business objective or purpose and not just be undertaken because it is fashionable. 


The business objective should be both efficiency as well as improving customer satisfaction and creating new business models. In the current economic environment, the board quite rightly puts more and more pressures on the CIO to find ways for the organisation to become more efficient which is where digitization can help. 

However this desire to drive operational efficiency must compliment initiatives that enhance the customer experience. 

A  study from the MIT Sloan School of Management found that companies that increase both digital operational excellence and customer experience outperformed industry average net margin by up to 16 percentage point. 

The study also identified these 2 key observations:
  1. Enhancing customer experience alone doesn't get you to the industry average profitability
  2. Focusing on operational excellence doesn't make you an industry over performer neither. 
Conclusion: The only way to compete and overperform in the industry is to do the two together

The study also showed that only 25 percent of companies surveyed managed to succeed in both operational excellence and customer satisfaction. A critical success factor is to have an end-to-end approach to digitization that isn't limited to automating existing processes, but completely rethinking how value is delivered to the end user.

For example, digitising an airline boarding pass so that you have a paper version of it on your mobile device is not an end to end transformation if it requires the end user to print it off and show it at airport security and the boarding gate!

In summary, when a business wants to digitally transform they need to rethink the whole process from the lens of what the customer expects today and in the future. To achieve this, organisations need to shift their mindset from thinking about a business process to thinking about a customer journey.

A customer journey is a step by step experience a customer goes through to use a service or product. It can go from the first inquiry to the after sales service and it is not just about one journey. Every business would typically manage many different customer journeys through different channels for different products and services.

Design Thinking


Design thinking provides a compelling framework to re-imagine the customer journey, with the customer at the centre. The design thinking process is iterative, flexible, and focused on collaboration between designer and user. 

In summary, design thinking consists of five iterative steps:

  1. The first step aims to give the designer team and empathetic understanding of the problem they are trying to solve. What is the customer looking for? What are the so-called moments of truth? What really bothers him or her? 
  2. The second step is where the team analyses the observations from the first step and synthesizes them up to create an end to end view. They might need to re-frame the problem in human centric way or even define a new unmet need that should be tackled. In this example of my flight, it is the lack of transparency on gate changes on delay, and on alternative connection. 
  3. In the third stage, the idea stage, the team members start to identify new solutions to the problem, work with the customer to test these in principle and prepare for developing a prototype to evaluate the solution.
  4. The fourth step is the prototyping phase where the team produces a number of inexpensive scaled down versions of the product or services they want to change. It is an experimental phase whereby the aim is to allow rapid improvement on the initial solution. 
  5. In the fifth stage, the testing phase, the team tests the prototype in real life condition, to see how it impacts the customer experience along the whole journey. This is essentially a trial and error process. The successful features will be rolled out, the failed ones direct the team back to the drawing board, talk to the customer, again, rethink the solution, prototype it, testing it and so on. 

Conclusion


When companies embark on, the digitization agenda, they need to aim for both higher operational efficiency and better customer experience. This is how companies maximize the value they can generate, versus industry peers. The right lens to rethink value delivery is to shift from focusing on process automation to what they mean for key moments in the end to end customer journey. To re-design a customer journey, digitization teams can follow a five step iterative process centered on customer needs and feedback.

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