The digital transformation challenge: five ways to get started

If I speak to CEO’s of big companies they all have digital transformation as one of their main priorities and almost all feel their companies are moving too slow. If I speak to those that need to drive the digital transformation, the digital transformers, the digital directors and other types of digital evangelists, I continuously hear how they bump into the walls of a system that doesn’t want to change. How can that be? Why is it so hard to push digital transformation, even when the most senior leaders are supportive of digital change? That is the focus of this blog. And of course the even bigger question: how can you force a company to move?

What defines a digital transformation challenge?

It is my experience that different people define digital transformation in different ways. I define digital transformation challenge with three key criteria:

  1. You can only create the best possible solution for this challenge if you learn to make the best use of new technology.
  2. The challenge forces you to break with old habits, strategies and processes.
  3. Both the solution and the resulting business results for this challenge are largely unknown at the start of the project. They can only be discovered by doing, not by predicting.

You can only go through digital transformation successfully if you address all three points. I personally help companies go through digital transformation in marketing and advertising, but there are many more types of transformation. In fact, it is very hard to think of a company not going through digital transformation. Think about farmers using drones to make the distribution of their fertilizers more cost efficient and eco friendly: digital transformation is everywhere.

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Farmers using drones to optimize the use of fertilizers: digital transformation is the ongoing process of making best use of the latest digital technology for your business.  

Even Amazon goes through digital transformation

Digital transformation is not just about ‘traditional companies’ growing digital. Even tech based companies can bump into digital transformation challenges.Think about a company like Amazon.com. At first sight you wouldn’t expect that is a company facing digital transformation challenges. However, just like any other company Amazon is faced with the challenge of consumers going mobile. This challenge checks all three transformation boxes:

  1. You can only solve the challenge by learning to make best possible use of mobile technology.
  2. Your old website, no matter how much you tweaked, tested and optimized it, has suddenly become a bad user experience. That means you need to start thinking different about building consumer experiences and give mobile a place in existing processes.
  3. Your data can’t predict how well the site will convert, you can only find out by building it in the first place and then investing the same amount of time and effort that you spend on your desktop site to test and optimize the mobile site. On top of that, there is a cross screen measurement challenge that needs fixing.

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Going mobile is a great example of a digital transformation challenge

Another common challenge that is as hard for modern tech companies as it is for traditional companies, is making most out of digital for brand advertising. Brand advertising cannot be measured through CPA’s (cost per acquisition) while at the same time traditional brand metrics don’t work in the digital world. Strategies for building brands are fundamentally different from what they were in traditional media and digital performance advertising is also not the answer. Both digital companies and ‘traditional companies’ struggle with this challenge.

Beware of pseudo transformation

When we encounter new technology, there is always a tendency to use it the same way we used old technology. TV planners who made their first steps into online branding preferred the use of video because that is closest to the use of a TV commercial. They often still use demographic targeting because that is what they use on TV. They prefer forced video over voluntary views because that is what they are used to and they prefer one off campaigns over always-on thinking. As a result they fail to use all new capabilities for targeting and engagement digital offers, they fail to create campaigns that address people with messages tailored to their personal needs. They are not future ready. You can see the same happening in the use of programmatic buying (automated buying and serving of ads). Performance experts were the first to embrace programmatic, but they still mostly use it to gather even more data to get even better CPA’s. Brand experts have also started to use programmatic, but they use it to do bulk deals to reach people at scale. Both do what they always did and they don’t use the opportunity to use data to reach people at scale with tailored messages across the full consumer journey. The fact that you are using new technology doesn’t mean you succeeded at digital transformation. Digital transformation is about making the best possible use of new technology.

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Most companies still use programmatic infrastructure the same way they advertised before: they don’t use the opportunity to provide 1:1 communication at scale across the full consumer journey.

Why we keep falling back in old routines

What keeps amazing me most, is that almost all professionals are quite aware they are not making best use of new technology, yet they keep falling back in old habits. There are many reasons for that. Below are a few common ones:

  • Transformation harms achieving your targets and bonus
    An E-commerce department with a target to achieve a certain maximum CPA is very unlikely to make a shift towards digital branding, because it will harm their CPA. Not because branding is useless, but because it is a long term conversion. A marketing organization with a target for offline sales is unlikely to cooperate with the Ecommerce department to create a seamless user experience across online and offline channels. Not because they fail to understand a seamless cross channel experience is important, but because it harms their targets and bonus if they start referring people from the offline towards the online shop.
  • Transformation is a risk
    Existing methods and processes are always a proven success. We’ve learned through trial and error, data and research what works and what doesn’t. Doing the same as last time is therefore always a safer option that doing something you never tried. Particularly in highly political organizations it can be very risky to try something new. If you fail, you might be stabbed in the back. Those that choose the safe route have more career opportunities in these types of organizations.
  • Transformation is more work
    Transformation projects always mess up existing processes, which means they create more work than doing the same thing as last time. Particularly if we have to work under time pressure, falling back into old habits is always an easy way out. Unfortunately that time pressure never seems to go away, which means we keep shifting transformation to the future time after time.

Digital transformation requires people to take on risk and extra work. They will only do that if transformation is a career opportunity for them. If you want your company to go through digital transformation, you have to think different about how you incentivise people: people need to be rewarded for innovation (even if it failed), they need to have targets for long term success, not just short term sales and they should never ever be backfired for trying something new.

Experiment your way into the future

If you look at digital transformation as if it is a reorg, it becomes very hard to go through change at the right pace. It works a lot better if you can make transformation look small and feasible by defining it as a series of experiments that your company can start running tomorrow. The five topics below can be the basis of experiments that get you started with digital transformation in the context of branding:

  • Sequential targeting: using Remarketing to serve follow up messages to people after they voluntarily engage with your ad. These types of experiments literally help bringing brand and performance advertising together.
  • Audience segmentation and tailored communication: Digital allows you to target different people with different messages, yet very few brand advertisers make use of that capability. The easiest way to start here is splitting between existing versus new clients and test tailored versus one size fits all messaging.
  • Content strategy: This entrance point into digital transformation is mostly a good one for strong brands with a clear brand mission. Brand experts can define what topics to claim and what content to make, online experts can help distributing the content.
  • Database management: If people in your company are conscious about the fragmentation of data it mostly isn’t hard to convince decision makers to invest in building an infrastructure that can help integrating it. Once you have a database that is structured better, it becomes easier to prioritize and validate digital experiments.
  • Creative experiments: Sometimes it is easier to get people on board for a creative ad hoc idea than for strategic transformation projects. A great creative experiment can help getting people excited about digital transformation so you can do even more experiments.

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Rather than looking at digital transformation as a reorg, try to define it as a series of experiments and you will move much faster.

For different types of transformation, you will have to come up with different types of experiments, but the principle remains the same: chop the process of transformation in smaller pieces so people can get started experimenting their way into the future right away.

Some things you just can’t start small

For some experiments, luckily you can start small and then optimize step by step to make them bigger. For the really hard digital transformation challenges however, there is just no way to start small. For example, if you want to move into content strategy and you start by building a YouTube channel with five movies on it hoping to see your channel become popular before you invest more in it, that is obviously not gonna work. You can only win an audience for your channel if there is sufficient great content on it, so you have to go all-in. The same is true for going mobile. If you build a cheap mobile site and then are only willing to invest more if that site converts well, you have created a self fulfilling failure. The only way to go mobile, is to make it your main priority and invest in making it work no matter what. Digital transformation is for those who dare to reinvent themselves over and over again, despite the extra risk it brings and the extra effort it takes.

 

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This blog is based on the book “Online Brand Identity” by Joris Merks-Benjaminsen (www.onlinebrandidentity.org). The book covers various topics related to this article, including:

  • Making most out of digital for branding
  • Thinking mobile first
  • Cross screen measurement
  • Defining new currencies to measure and optimize digital advertising in all stages of the consumer journey
  • The 10 most common challenges for digital transformation
  • How to organize for change