Embracing a digital mindset

There are three key reasons why incumbents find it immensely challenging to sustain digital transformation agendas

A few years ago, I studied a major digital transformation initiative at a large global media company. Instead of trying to change the core of its legacy television broadcast operations, it decided to build an entirely new culture for its streaming service. It hired digital natives from Silicon Valley to helm key positions, built cutting-edge data analytics capabilities, embraced new ways to hire and groom talent, and even mimicked how Big Tech players had created self-service tech platforms for advertisers to target audiences.

Over time, once the process and culture reached a point of maturity at the spin-off, the plan was to eventually bring it back to the core television operations and give shape to an organisation-wide digital-first culture. The bold plan though didn’t fructify once the firm was acquired by another global media mogul and the focus shifted to stemming the losses in its streaming service.

This isn’t new. Quite a few incumbents across industries prefer to create spin-offs to bring focus to their digital transformation efforts. It allows them to side-step the blockers that hold back change: Bureaucratic processes, a hierarchical organisation, the lack of a digital mindset, and an apparent lack of customer centricity.

Yet not all such efforts pay off because of a number of reasons: Invariably, the bureaucratic, rule-based culture of the mother ship tends to seep in, there isn’t enough leadership commitment from the top to build and sustain this new digital culture or quite simply, the digital opportunity isn’t large enough to warrant an accelerated pace of digital transformation.

So what lessons should incumbents rely on to power their digital transformation journey? What can they possibly learn from digital natives? How should they look to foster a culture of customer centricity? What are the minefields that need to be side-stepped? In the Indian business environment, there are three key challenges that tend to scuttle well-laid digital transformation plans:

Changing the core is hard: Designing a digital transformation agenda often starts by inviting digital natives to share their experiences of the road. There are valuable insights that could accrue through this process of listening.

Yet, learning from digital natives is difficult for incumbents due to several blockers. The most critical aspect is the legacy systems and processes, which are often outdated, rigid and difficult to integrate with modern digital technologies. It either needs to be adapted or replaced, something that can be both complex and costly.

Also, digital natives have an intuitive understanding of technology, digital tools and platforms. In the early stages, it is not uncommon to find that leaders in incumbent firms are unable to relate to the digital expertise that digital natives have gained in their journey.

Many times, incumbents need to operate in a multi-platform environment. With the smartphone becoming ubiquitous, a mobile-first approach is increasingly becoming critical. These multi-platform or mobile first approaches to serve different kinds of audiences come naturally to digital natives. But for incumbents, this is often a significant chasm to cross.

Bringing on board such tech leadership talent on a full-time basis is an option, but many times it comes without the subject matter expertise of that industry. It isn’t as if a leader with a digital transformation experience in a consumer durable industry cannot transition to, say, an automotive industry. In fact, they could well bring in fresh thinking and the much-needed diversity. But Indian firms tend to place a premium on domain knowledge and are loath to take a risk with such leadership talent.

Experimentative culture: There are many ways to tap into the pockets of knowledge available. Listening to digital natives, technology partners, digital consulting firms or even incumbents in other industries does yield insights. But it matters very little unless those insights are put to work.

There is, of course, a fear of the unknown. Hence, creating a psychological safe space for experimentation is one way to deal with the uncertainty and ambiguity. Also, mounting a few well chosen, small-scale pilot projects to explore what works and what doesn’t usually works best. However, many Indian organisations still work in silos. This test-and-learn approach demands the formation of cross-functional teams, where multiple perspectives help shine the torch on the business challenge and lead to more robust solutions.

Embedding customer centricity: This is by far the hardest challenge of them all. The risk of complacency is high, especially for firms that have been market leaders. Incumbents believe they already know what’s best for their customers. There is a tendency to underestimate the threat of digital disruption. This comes in the way of continuously upgrading one’s thinking and understanding and learning from digital natives.

The incumbent often loses its connection with customers because of its dependence on intermediaries. Peeling away those layers that come in between the firm and its customers, and placing the customer at the centre of the innovation process takes effort and commitment. Added to this is the obsession with market share and competitive rivalry, which comes in the way of understanding evolving customer needs.

There are pools of customer data and insights available within the firm, but they are often fragmented and require distillation. In a large established firm that was hoping to reimagine its customer experience process, the head of the call centre operations had a deep insight into the kind of issues customers faced. No one had till then bothered speaking to her. Nor had they listened to any of the customer complaint calls that bombarded the call centre every day. Roping her into the cross-functional project team opened up access to a whole new set of insights around the everyday issues customers faced. It helped spark a debate on how to redesign the customer experience process.

The writer is co-founder at Founding Fuel