Marketing Resources/Digital/Research/ADMA Adobe DrivingDigitalTransformation
DRIVING DIGITAL TRANSFORMATION
INTRODUCTION The velocity of change and the capacity of organisations to prepare, adjust and equip for a very different relationship with the new consumer lies at the heart of the debate around digital transformation. A recent round table discussion hosted in Sydney by ADMA and lead by Director, Strategy and Digital Transformation, APAC Adobe Marketing Cloud, Mark Henley dived deeply into some of the strategic and practical issues faced by Australian enterprises at a time when the velocity of change is accelerating and the expectations of customers is inexorably rising. The discussion included senior marketers from some of Australia’s leading, banking and finance, leisure and ecommerce brands. The rules of the discussion preclude specific reference to the brands represented, however we have put together with the agreement of the participants, a discussion paper on the issues raised. Three issues in particular resonated with the CMO’s present; • Representing cultural change through structure • The need to leverage, rather than compete with, the expertise of the tech sector
represented by the ongoing shift from building to buying platforms • And the importance of building staff capabilities to allow for agility
LEADERSHIP Leaders need to provide an environment where teams are free to innovate and drive internal change with a view to delivering much better customer experiences. And it is beholden upon those in charge to ask the right questions and tease out the right questions. “Do we want to tell a better brand story? Do we want to create a better customer experience. But we also have to give our teams the tools to ask those questions. As a leader I think that is where you start creating real transformation. Change is about asking the right questions and empowering them to ask the right questions.” As Adobe’s Mark Henley described it, “Transformation in and of itself is useless unless it has an output for the business. At one end we are talking the customer experience or customer journey and at the other end it has to impact the metrics. Great customer experience that doesn’t affect ROI is pointless.” 1
TWO SPEED IT Marketing, ecommerce, and digital are more likely to be found within single reporting lines these days, which represents a significant change in recent years, in the past each operated independently and often in conflict and competition with each other. More commonly now all three groups reported into a single executive although the background of those executives vary widely and probably reflect more their own leadership capabilities than their individual practice knowledge. Most importantly the alignment of these groups removes the inertia commonly caused by organisational friction. Greater collaboration between disciplines, stronger alignment with corporate goals and the shift from competition to collaboration were all highlighted as benefits which accrue from this change. This structural realignment was regarded as critical to delivering the cultural shift required to genuinely change the business.
ROCKS, HARD PLACES Not everything has changed. The technology group for instance has yet to come in from the cold. IT departments often sat in different and completely discrete reporting lines. In some companies there is evidence of evolution. Many businesses appear to have bought into the advice of organisation like Gartner and McKinsey that they need to split technology between operational matters and new transformative programs – so called two speed IT. Digital has become a catch all for a whole range of different technologies and skills many of which are mislabeled or misunderstood, the group heard. Problems with the role of technology and its relationship with other parts of the business often stem from this lack of clarity.
The speed at which technology is evolving affects the customer’s experience of brands and also influences their experiences at work. While Moore’s Law is well understood in terms of describing how basic computing power doubles every 18 months, what is less well understood is that a similar acceleration is evident in areas such as the internet of things, machine learning and virtual reality. If there was a consensus around best practice it is that there is a need for a technology group dedicated to the function of the day-to-day running of the business while the “divergent part of the business” is shifted into a shared centre of excellence.
Technologists are being asked to do things they are not skilled for, due to a misunderstanding about their role and what it can do for a business. The end result is that everyone ends up disappointed and surprised when requests aren’t, as one participant put it, “delivered at the speed of light.” 2
FROM ANCIENT GRUDGE, NEW MUTINY The other big issue to dominate the discussion centered on the time old industry debate of Build versus Buy. Actually “debate” may be the wrong way to characterize a discussion where almost all the participants were comfortable shifting the technology build into partner organisations. The reason is simple enough. Even companies with genuine national scale lack the fire power to match the huge investments made by technology businesses in development. For most companies the longer term view is that they should look to rent rather than own technology in the future except where there is a specific benefit to be gained, or where new functionality can’t be easily purchased. Quote: “ Effectively when you put your five developers in a room and get them to build a mobile app you are betting they can do it better, faster and cheaper than developers working for Google, Microsoft and Adobe where such work is core business “. Importantly the shift to rent over purchase was not seen primarily as a cost saving exercise. Instead the motive was to realign priorities and to move the organisation away from work that gets in the way of it doing its real business, be that banking, retail or entertainment, for instance. The other significant change was the recalibration of the relationship between companies and their suppliers. These were characterized as often adversarial if not outright hostile, but the view was that this needed to evolve more into a partnering framework. Quote: “The idea that you would sign a contract for five to ten years and then be on the hook for 10s of millions of dollars is anathema to companies these days. Why would you put yourself through that?” Companies should be pushing their suppliers to do more than sell software. The relationships should expose them to the smartest people around the world in their sector and indeed the best learning’s from outside of their own verticals. Such an approach might be challenging to traditional IT managers schooled in the relentless war between buyer and seller, particularly where sellers often came to the negotiating table armed with lawyers rather than solutions. For marketers however the collaborative model looks familiar, resembling the kind of relationship many already have with their creative agencies. 3
VELOCITY AND AGILITY As the velocity of change accelerates companies have to change the way they operate to keep pace. The feedback was that businesses that had transformed successfully used agile methods not just in the pure technology sense but also across other disciplines such as marketing, finance and HR. Quote: Marketers spoke of a shift in mindset within their own organisations. “We used to be guilty of trying to do everything for everyone. Instead, now we do fewer things but do them better and faster.” When it came to the issue of skilling up for transformational projects, the view was that the capabilities gap remained a significant issue. Finding the horsepower necessary to do the prioritisation around strategy and direction, and then implementing process change was difficult with people focused on Business as Usual. And the BAU staff lacked the necessary skills to drive change. Quote: “There is a huge appetite of digital transformation but BAU had no capacity to do it.” One of the senior banking marketers present described the problem in terms that resonated across all the industries represented around the table. “Customers don’t need banks, they need banking. They want real time experiences, and intelligent use of their data to deliver better experiences. They want value and that doesn’t necessarily mean cheap. They want it quickly. They want you to do what you need and often they just want you to get out of the way.” Participants also agreed that it was important not to let the ‘perfect’ be the enemy of the ‘good’. Companies often strive for perfection but that such an approach could sometimes get in the way of joining up really disparate customer experiences. “When your offline and online data are not connected you can still provide great online experiences and you should be trying to do that rather than spending 6 months to a year that it will take you to bang these two pieces together.” In the end the discussion arrived at a simple conclusion. Culture matters.
“Give employees permission to innovate. Do it with the minimum friction and give them the tools they need.” 4
INTRODUCTION The velocity of change and the capacity of organisations to prepare, adjust and equip for a very different relationship with the new consumer lies at the heart of the debate around digital transformation. A recent round table discussion hosted in Sydney by ADMA and lead by Director, Strategy and Digital Transformation, APAC Adobe Marketing Cloud, Mark Henley dived deeply into some of the strategic and practical issues faced by Australian enterprises at a time when the velocity of change is accelerating and the expectations of customers is inexorably rising. The discussion included senior marketers from some of Australia’s leading, banking and finance, leisure and ecommerce brands. The rules of the discussion preclude specific reference to the brands represented, however we have put together with the agreement of the participants, a discussion paper on the issues raised. Three issues in particular resonated with the CMO’s present; • Representing cultural change through structure • The need to leverage, rather than compete with, the expertise of the tech sector
represented by the ongoing shift from building to buying platforms • And the importance of building staff capabilities to allow for agility
LEADERSHIP Leaders need to provide an environment where teams are free to innovate and drive internal change with a view to delivering much better customer experiences. And it is beholden upon those in charge to ask the right questions and tease out the right questions. “Do we want to tell a better brand story? Do we want to create a better customer experience. But we also have to give our teams the tools to ask those questions. As a leader I think that is where you start creating real transformation. Change is about asking the right questions and empowering them to ask the right questions.” As Adobe’s Mark Henley described it, “Transformation in and of itself is useless unless it has an output for the business. At one end we are talking the customer experience or customer journey and at the other end it has to impact the metrics. Great customer experience that doesn’t affect ROI is pointless.” 1
TWO SPEED IT Marketing, ecommerce, and digital are more likely to be found within single reporting lines these days, which represents a significant change in recent years, in the past each operated independently and often in conflict and competition with each other. More commonly now all three groups reported into a single executive although the background of those executives vary widely and probably reflect more their own leadership capabilities than their individual practice knowledge. Most importantly the alignment of these groups removes the inertia commonly caused by organisational friction. Greater collaboration between disciplines, stronger alignment with corporate goals and the shift from competition to collaboration were all highlighted as benefits which accrue from this change. This structural realignment was regarded as critical to delivering the cultural shift required to genuinely change the business.
ROCKS, HARD PLACES Not everything has changed. The technology group for instance has yet to come in from the cold. IT departments often sat in different and completely discrete reporting lines. In some companies there is evidence of evolution. Many businesses appear to have bought into the advice of organisation like Gartner and McKinsey that they need to split technology between operational matters and new transformative programs – so called two speed IT. Digital has become a catch all for a whole range of different technologies and skills many of which are mislabeled or misunderstood, the group heard. Problems with the role of technology and its relationship with other parts of the business often stem from this lack of clarity.
The speed at which technology is evolving affects the customer’s experience of brands and also influences their experiences at work. While Moore’s Law is well understood in terms of describing how basic computing power doubles every 18 months, what is less well understood is that a similar acceleration is evident in areas such as the internet of things, machine learning and virtual reality. If there was a consensus around best practice it is that there is a need for a technology group dedicated to the function of the day-to-day running of the business while the “divergent part of the business” is shifted into a shared centre of excellence.
Technologists are being asked to do things they are not skilled for, due to a misunderstanding about their role and what it can do for a business. The end result is that everyone ends up disappointed and surprised when requests aren’t, as one participant put it, “delivered at the speed of light.” 2
FROM ANCIENT GRUDGE, NEW MUTINY The other big issue to dominate the discussion centered on the time old industry debate of Build versus Buy. Actually “debate” may be the wrong way to characterize a discussion where almost all the participants were comfortable shifting the technology build into partner organisations. The reason is simple enough. Even companies with genuine national scale lack the fire power to match the huge investments made by technology businesses in development. For most companies the longer term view is that they should look to rent rather than own technology in the future except where there is a specific benefit to be gained, or where new functionality can’t be easily purchased. Quote: “ Effectively when you put your five developers in a room and get them to build a mobile app you are betting they can do it better, faster and cheaper than developers working for Google, Microsoft and Adobe where such work is core business “. Importantly the shift to rent over purchase was not seen primarily as a cost saving exercise. Instead the motive was to realign priorities and to move the organisation away from work that gets in the way of it doing its real business, be that banking, retail or entertainment, for instance. The other significant change was the recalibration of the relationship between companies and their suppliers. These were characterized as often adversarial if not outright hostile, but the view was that this needed to evolve more into a partnering framework. Quote: “The idea that you would sign a contract for five to ten years and then be on the hook for 10s of millions of dollars is anathema to companies these days. Why would you put yourself through that?” Companies should be pushing their suppliers to do more than sell software. The relationships should expose them to the smartest people around the world in their sector and indeed the best learning’s from outside of their own verticals. Such an approach might be challenging to traditional IT managers schooled in the relentless war between buyer and seller, particularly where sellers often came to the negotiating table armed with lawyers rather than solutions. For marketers however the collaborative model looks familiar, resembling the kind of relationship many already have with their creative agencies. 3
VELOCITY AND AGILITY As the velocity of change accelerates companies have to change the way they operate to keep pace. The feedback was that businesses that had transformed successfully used agile methods not just in the pure technology sense but also across other disciplines such as marketing, finance and HR. Quote: Marketers spoke of a shift in mindset within their own organisations. “We used to be guilty of trying to do everything for everyone. Instead, now we do fewer things but do them better and faster.” When it came to the issue of skilling up for transformational projects, the view was that the capabilities gap remained a significant issue. Finding the horsepower necessary to do the prioritisation around strategy and direction, and then implementing process change was difficult with people focused on Business as Usual. And the BAU staff lacked the necessary skills to drive change. Quote: “There is a huge appetite of digital transformation but BAU had no capacity to do it.” One of the senior banking marketers present described the problem in terms that resonated across all the industries represented around the table. “Customers don’t need banks, they need banking. They want real time experiences, and intelligent use of their data to deliver better experiences. They want value and that doesn’t necessarily mean cheap. They want it quickly. They want you to do what you need and often they just want you to get out of the way.” Participants also agreed that it was important not to let the ‘perfect’ be the enemy of the ‘good’. Companies often strive for perfection but that such an approach could sometimes get in the way of joining up really disparate customer experiences. “When your offline and online data are not connected you can still provide great online experiences and you should be trying to do that rather than spending 6 months to a year that it will take you to bang these two pieces together.” In the end the discussion arrived at a simple conclusion. Culture matters.
“Give employees permission to innovate. Do it with the minimum friction and give them the tools they need.” 4
