Committing to change in a fast moving digital economy

This article takes a hard look at the fundamentals needed to adapt and change in a customer-driven digital economy, so as to avoid getting stuck in legacy models, cultures and skill sets that contribute to the self – demise of business.

Don’t let the digital era be a  burden to your business, embrace  the required change and enjoy  the success that comes from  commitment, adaptation and resetting  old models, not change  for change sake, measurable,  accountable change that gives you a  competitive edge.

Foundations

At the risk of yet another repeated  diatribe – the digital economy is  affecting every industry, start – ups  are leap frogging legacy companies,  new operating models eclipse  old ones and the customer is the  centre of all business. Everything  businesses do in operation should  provide the customer with the  right product/service, information,  and customer experience. That is,  above and beyond competitors,  and of course personalised. This is  true value in the digital economy  – faster, easier, cost effective and  reduced cost to acquire and retain,  with segmented and personalised  experience.

Core fundamentals

Here are the core fundamentals, assuming business change is required based on research. When adapting and updating, there will be varying degrees of maturity and understanding in how far companies need to stretch.

1. Executive and/or external review of existing models, competitors, benchmarks, data sets and current position.
2. Executive, founder, board and or other, evaluation of reports and recommendations and a commitment to upgrade, alter, repurpose or remodel the organisation under a clearly defined roadmap, with outlined and agreed strategies and completion timeframes.
3. Review and assess skill sets, people, culture, and make decisions on what will support the model and what won’t. Required change won’t happen unless the whole organisation is on board.
4. Set rolling budgets for initiatives with defined measures of success using data sets from analytics.
5. Set the agenda and cascade down and across the organisation and operationalise the plan.

Before unpacking the five fundamentals, it is prudent to give examples of three companies (unnamed) that are leading the digital revolution in their industry.

The article will not reference Google, Facebook, Twitter, Apple, Marketo and SalesForce as they are highly developed search, social, software, automation and enabling tools, platforms and advertising products that assist businesses in driving better customer acquisition, connection and service.

Example 1: Energy company X

Old models everywhere; coal produced power; escalating customer energy bills and cost to produce; customer demands better engagement and value and micro generation solutions; renewables and storage are forcing model shifts.

Review and evaluation produced the following four central strategies:

• Decarbonisation – closing fossil fuel plants, replacing with renewables and set production targets for 2020 and beyond.
• Decentralisation – energy supply is now away from long distance plants and is often micro generated, prompting need for energy solutions (battery for energy storage and solar for generation).
• Digitisation – digital applications and websites, where business and consumer can monitor and modify energy consumption reducing effect on bills and planet.
• Energy efficiency – Cheaper, less harmful to the environment energy production and consumption, and new products to save on usage.

In essence this company has made a three year commitment to not only change their models, but to revolutionise the sector and consumer engagement. Digital advancements, industry and political pressure has driven them to create a digital experience with applications, so the consumer/ business can select the energy source, choose energy solutions, monitor energy use and manage consumption, all via mobile or hand held device with integrated free apps.

Cleaner energy, self – sufficient consumers, new micro generation solutions, all from the availability of technology (apps, solar solutions, smart meters, energy production modes, lower cost to produce due to digital technology, reducing maintenance frequency and inefficiency). If they didn’t change, customers would be leaving in droves, driving profits down, not to mention the escalated cost from a fossil fuel energy generation model.

Finally, they also have a digital lab, a start up in a big company, yes indeed – where they invite individuals and companies to propose digital energy solutions. 150 have already been implemented (things like – smart city power grids, digital control of energy use in home/office, healthy living guides and promotion of renewables). They also foster and fund start-up ventures inside the company that turn ideas into viable commercial solutions, creating new jobs now and ahead – giving back to the community and getting the community to partake in change, genius and simple at the same time.

Example 2: Peer to peer lending for invoice finance company Y

SME’s operating to supply services and products; slaves to larger corporates with strict 30-120-day payment terms and the existence of somewhat scarce and costly working capital arrangements with banks. Conditions have prompted this company to disrupt the lending sector. Small, lean and agile, this start up with a little investment has revolutionised and digitised an old financial process into a fast, high demand platform. They have linked with MYOB and XERO to ensure technology and financial processes are linked and balanced, creating more jobs, empowering SME’s and driving change.

With well researched and planned digital platform development, company Y enables SME’s to get paid immediately by pools of investors via a digital platform, where payments are exchanged and the investor is paid when the debtor pays. SME’s can now get paid at competitive discounted rates, raising finance without the leverage.

The banks’ working capital sector is being challenged like never before and the “Big 4” are quickly discovering, that turning convention on its heels will be difficult. This space of peer to peer lending in time, will become crowded and be the catalyst for further evolution – better rates, different industry sectors, business size, new contenders, start-ups getting a footing. Digital doesn’t stand still. Opportunities are everywhere and can be harnessed immediately. So a start-up, writes $100 million in lending in year one, and enters into the black, profitable, just because someone seized a gap in existing marketplace and went for it.

Example 3: Payment process company Z

This company allows consumers to purchase and pay in four subsequent equal fortnightly payments, revolutionising and disrupting payments for consumer goods. This new disruption has the technology engine and security frameworks to ensure seamless and secure payments.

Launched in 2014, retailers can’t get enough of the product, which in turn has assisted them in converting more sales from otherwise dropped purchase opportunities. They assume some of the risk and provide retailers with a gateway for consumers to access and purchase otherwise unattainable goods. Both online and offline, this payment model has shifted the way airlines, retailers and now wholesalers sell to existing and otherwise unfathomed consumers.

It opens up the old model of credit, with a purchase now, pay later model, creating more jobs, revenue and profitability all from one firm. Companies may not need to invent anything however they can connect with the likes of this company to assist shifting their businesses to a new stream of revenue without sabotaging convention too much.

So there are a few of the many examples of how digital is affecting industry, supply chains, payments, processing and how you can aspire or shift models to embrace what others are creating that benefits businesses, especially something like peer to peer lending. Business should not rest in idle mode, waiting for the revenue bus to come to them. They must create and disrupt themselves.

The core fundamentals in detail:

Executive and/or external review of existing models, competitors, benchmarks, data sets and current position.

Action 1: Commonly referred to as the strategic review, look at revenue sources, budgets, operating models, financial models (creditor/ debtor terms), products and service, growth or not and why? Competitors, are they eroding the business? Does the business have a point of difference and do clients and the market know this? Does the business have the right people to evolve? Can they be trained? Can the business open a new stream of revenue using digital (might be a way for clients to complete tax as they go with a system that is linked to their bank accounts and extracts the tax, the business gets a clip and saves client time)? Can the business acquire more customers with freely available marketing tools? Can the business automate service (CX) and retain and drive more value from clients? Budgets, do they support new initiatives, with ROI dependency? The list will need to be finite and cause the business to challenge convention and check what it can alter, stop doing, ride the back of etc. Start today, review and revive before legacy runs the business over.

Action 2: Once the business has conducted an honest review and outlined the report and recommendations it’s time to agree, COMMITT, set the roadmap and begin the implementation of new strategies, ensure the business sets up time frames and measures of success.

It might be a simple – let’s segment customers using a database interrogation tool, find out what customers in each segment want, the standard of service needed and begin to market and engage with them as personalised as the business can. This could start as simple as an update on new improved products, a survey and feedback loop. The importance is start small and evolve with check points and measures (e.g. more sales, less attrition, more advocacy and repeat purchase). Digital offers businesses the opportunity to use data for good, not just an output of process and operation.

Segmentation is no secret and customers love personalised and relevant treatment. The effort will generate previous unrealised return.

Action 3: Part of the review is to ascertain if the skill sets and culture are right and if new models will be adapted. If the answer is people need to change, then maybe it’s a simple upskill conversation, role change or something more definitive. With individuals assessed, businesses need to review the culture, aversion to change or team and determine advocates. With change comes transition, so if new models and new ways of operation are essential to growth and competitiveness, people and culture will need to be “on boarded” and part of the journey.

Action 4: If reviews are out of cycle and the agreed actions require investment, fixed conventional budgets won’t stack up. Pre planning, rolling budgets and agreed investment, with respective measures will. If the actions are a necessity and essential to growth and competitiveness, then as mentioned – do a test and learn, small steps, with data to measure outcomes, this keeps risk down and allows businesses to move progressively and organically, not boom and bust and then retreat. Action 5: Assuming all reviews, actions, budgets and the roadmap are in place, conversations at individual levels and overall are complete, you can begin cascading down and across the organisation. It is mandatory that people have the confidence in their skill set, the required training to assist to reduce the resistance to change, and be advocates for implementation. Too many times, great – plans, new initiatives and ideas fail due to no executive buy in and the organisation change roadmap not having been considered or regarded as a dependency for success.

Summary

With the above steps you have a procedural model to guide change in the digital economy. Remember small steps, test and learn, personalise experience and measure success. Fixed models that don’t allow for change, adaptation and new thinking may just be the undoing.