Becoming a ‘digital company’ is not just about having a website, or e-commerce, or using social media for customer service. Sure, these are all things that a digital company might do. But the far more important shift needs to be made at a management and cultural level within the organization.
While many companies will look at digital technology and see simply another sales channel, or a way to cut costs, great digital companies have a different approach. For them, digital enables a culture of experimentation and continuous improvement.
Let’s take a look at five things that great digital companies do differently:
Embrace transparency
Booking hotels used to be kind of scary. On my first trip to India we booked a package through a travel agent that included all our hotels, tours, trains etc. The hotels were a very mixed bunch. Some were quirky and fun. Some were awful. There was no way for me to know in advance, as even the biggest guide books could only include a handful of hotel reviews.
Travelling today is very different. Dozens of review sites explain the ups and downs of almost every hotel in the world. Most bookings are now made online, which means that a hotel with terrible reviews has virtually no chance of success.
Almost every consumer industry has been forced to embrace transparency. Shoppers go to an electronics store and as they browse the shop, they keep looking up the products online to compare the prices.
Great digital companies embrace this transparency; they don’t fight it. They try to offer great experiences and then request customers to leave reviews online. They offer multiple customer service options to quickly solve problems before customers leave bad reviews online. Knowing that consumers are researching their products, they proactively provide information that will help the consumer to make a purchase decision.
Quickly testing products and services – save money on failures
Launching a new product used to be an all-or-nothing endeavor. You did market research or tried to guess what the market would like, then you built prototypes, then went into production and launched the marketing campaign. Sometimes it worked (Apple iPhone) and sometimes it didn’t (Apple Newton, Apple eWorld, Apple round mouse).
Digital allows you to quickly test response to a new product, well in advance of prototyping. A standard strategy of new digital startups is to put up a product website and put a small amount of targeted advertising behind it. When the target audience went to the website, how many of them dived into the features, and which of the features did they spend the most time reading? How many of them tried to purchase the product or registered for more details? What questions did they look at in the FAQ section?
By testing multiple websites with different pricing and product details, companies today can get a far more accurate view of the interest level in the market, which features are truly valued, and which price points generate the most demand.
Reduce approval times
A key feature of great digital companies is that they move fast – and this is an area in which many traditional companies struggle. What makes it so difficult? Letting go of approval processes. In a traditional company, a long approval process might make sense. Changes to products, services or marketing strategies could be time consuming and expensive.
The way to reducing approval times in a digital company is to identify the impact level of changes and map them to appropriate approval processes. An employee wants to buy an office building? Yep, let’s get the CEO to sign off on that one. An employee wants to change a product description on the website for a week to see what happens? Or how about tweaking a minor product feature for a small test group of customers? Let their team handle it.
To avoid confusion, employees need a clear understanding of what the ‘core’ businesses is – what shouldn’t be changed and what all the small changes should seek to improve.
Look for small, continuous improvement
Visit the Amazon website every couple of months and you should notice dozens of changes. On any given day, the big e-commerce companies will run hundreds or thousands of small experiments aimed at improving the user experience (and therefore sales). Buttons move around and change colour. Images change size and style of presentation. Menu options change. Category names change. Many of the experiments fail to produce positive results and are abandoned. Some experiments show a clear benefit to the user and the company (ideally both) and are merged into the site for all customers.
This mindset is not limited to e-commerce websites. The early mail order companies were masters of testing, sending different letters or catalogues to different area codes to see which versions produced the best sales. Supermarkets and department stores test their layouts all the time. Do ties sell better if they are next to the shirts or the suits? Which varieties of chocolate sell best at the cash register?
Experimentation is a mindset, not a tool. Take a look at your own products, services and processes and ask, “What can be tested?”.
Value data over instinct
Most companies produce enormous amounts of data – marketing data, sales data, customer service data, manufacturing data. Most companies then ignore most of their data and make decisions based on the manager’s gut feel. When this works well, we say that the manager is talented and insightful. When it doesn’t work well, we say that the market is unpredictable.
Valuing data requires two changes in a company. Firstly, you have to put the right people and systems in place so that staff can access data in the first place. Maybe a simple analytics dashboard is all you need or maybe you should have a data scientist on your payroll? Either way, your employees need to be able to query the data that you have. Secondly, you need to push all staff to support their recommendations with data.
Looking for ideas on how to take your first steps?
Part 2 of this post will dive into an action plan. We’ll offer our suggestions on how to take your first steps towards becoming a great digital company. Subscribe to our blog to get our updates directly in your inbox.