Why digital transformation isn’t just about technology
Digital transformation is the latest iteration of company-wide transformation programmes which have been around for well over 50 years.
True transformation isn’t about squeezing out a 5% improvement in margin or seeking to uplift a Net Promoter Score by a few points. From my experience, it is about fundamentally shifting the dynamic of a company by altering the way it interacts with customers and changing how it thinks about how it does business. True transformation changes not just technologies and processes, but also the hearts and minds of a company’s workforce.
Defining digital transformation
Digital transformation builds upon tried and tested methods, such as lean process re-engineering, and adds a number of new tools. Here are just a few examples that I’ve picked up on from my career:
– Robotic Process Automation, or RPA, is able to remove repetitive tasks (even complex cross system ones) and replace them with “bots” which work 24/7, don’t make mistakes and cost a fraction of a human being. These bots can be defined and built faster than traditional technology – its not unreasonable to go live eight weeks after starting the analysis for a simple process
– Chatbots can interact with customers and colleagues alike to provide information. If suitably hooked up to the backend system, possibly through a bot, they are also able to action requests. At least one new bank has decided to use chatbots as its primary channel for customer interaction rather than an app or a website.
– Artificial intelligence (AI) is a broad toolset in itself. It sits behind chatbots to enable real language processing, so that “what is my balance?” is recognised as being the same as “how much money do I have?”. AI can also be used to track aberrant behaviour such as money laundering or search for cyber attacks. In the servicing space, AI is starting to be used to enhance agent and customer communications through approaches like next-best action suggestions, drawing on analysis of customer behaviour.
Clever transformation teams are coupling these tools with the new paradigm in technology around fractional ownership (Software-as-a-Service platforms, cloud hosting and data analytics) as well as agile management methods, to undertake rapid deployment and test & learn opportunities.
They are also creating transformation teams which bring IT and business staff together with common goals to ensure the technology is deployed in the right way. By being thorough they can engage the broader organisation in the transformation, leading to faster adoption and a flow of new ideas.
Making people the priority
However, transformation isn’t just about technology. In the last 20 years, I’ve had the privilege to work on or lead six transformations – some had grand titles, some had enormous benefits publicly pledged to the stock market, and some were about survival. In each and every case technology, how we used technology and the processes around it was crucial. In none of these cases was technology sufficient.
The most important factor in every transformation I’ve been involved in – whether a PLC or in private equity – was the reaction of the company’s people. The new toolset is nothing without an effective narrative to explain what is happening and to put the changes into a positive context.
The story has to be compelling to every stakeholder who is involved. Everyone has to understand and internalise why they should want the change to happen; why it is good for them. Fear can be part of the motivation – transformations in banks after the 2008 financial crisis were a survival story – but even in the darkest of times it’s absolutely vital that the leadership paint a clear picture of the future world which people can relate to.
A clear picture of how great the new workplace will be remains compelling so long as the transformation remains true to it. Doing what you said you were going to do is particularly important in the early deliverables (“quick wins”). For example, you won’t support a story of next generation customer service if your first delivery leads to redundancies and plummeting customer service levels.
The last few months have reinforced what I believe to be one of the most compelling narratives for digital transformation. A future state where self service, chatbots and RPA remove boring, tedious (but necessary) work from people’s jobs. Agents can then have richer and more valuable interactions with customers, using artificial intelligence to guide their conversations. Delivered correctly, these technologies reduce human work and enable what remains to be carried out from anywhere – remote working by design rather than by force of pandemic.
The new players in finance, the fintech unicorns, don’t talk about “digital transformation”. They already have effective modern technology at the heart of their business, tech savvy staff who know how to exploit it and have a clear vision of what they are trying to achieve. The question facing leaders of established financial services companies is can they use digital transformation to evolve their businesses fast enough to effectively compete?