The five vowels of Digital transformation

In my view, there are three outcomes of a successful digital transformation effort – improvement in efficiency (driven from speed and agility), enhanced experience (both at the customer and employee ends), and differentiation from competitors (through data/ insights-driven customisation). Such interactions need to be delivered omni-channel and ubiquitously (anywhere, anytime, and any device).

Vowels of Dx1

Agility: Digitalisation of specific processes require them to be reimagined, and therefore eliminates redundancies, reduces wasteful activities, and reduces overhead costs. All these contribute to increased efficiency and faster turnaround times.

Experience: As I have been arguing, good digitalisation should make lives simpler for customers, employees, and all other partners as well. As different stakeholder groups (customers, employees, and partners) engage with the firm digitally, there is significant reduction in variation of service quality, leading to consistent experience.

Insights: As digitalisation allows firms to capture data seamlessly, it is imperative to not just store data, but be able to generate meaningful insights from the same. And use those insights to develop customised/ innovative offerings to their stakeholder groups (customers, employees, and partners).

Omni-channel: The digital experience should be provided to their stakeholders across all the channels that they interact with. It is not just sufficient to digitalise certain processes, while keeping others in legacy manual systems. Imagine an organisation that generates electronic bills for its customers but requires its employees to submit their own bills in hardcopy for reimbursements!

Ubiquitous: The digital experience should be available to everyone, anytime, anywhere, and on any device. The entire purpose of digitalisation would be lost if it were not ubiquitous. Imagine an online store that only opened between 0800-2000 hours Monday through Friday!

As it can be seen, omni-channel and ubiquitous are hygiene factors (they do not create additional value with their presence, but can destroy value with their absence), and therefore are at the denominator.

Glass box organizations: Platforms

Way back in September 2017, David Mattin of Trend-Watching wrote about Glass box brands. He argued that organizations are moving away from being black boxes (where customers could only see what was painted outside) to glass boxes, where everything that happens inside and outside of the organization is visible to everyone.

The primary arguments of the glass box world are: (a) in an era of social media and high organizational attrition, even the mundane activities like routines and rituals are visible to the outside world; and (b) trends like automation, inequality, and globalization have led to “meaningful consumerism”, bordering on activism. Therefore, consumers are making choices about their brand affiliation and loyalty based on the company culture and values, apart from other considerations.

If the internal culture is the window of the brand to the outside world, it is important for every organization to meaningfully nurture it, articulate it, and live it. I am not going to dwell on how to develop your internal culture and values, but the implications of the glass box metaphor in the context of platforms and digital organizations.

Multi-sided platforms as glass boxes

By definition, multi-sided platforms (MSPs) have many “sides” that drive network effects. For instance, a guest chooses to use Airbnb while travelling because she values the number and quality of hosts. When Airbnb doesn’t treat one side well, it directly impacts the quality of interaction with the other side and affects the strength of network effects. Which in turn, affects the willingness to join (WTJ) and willingness to pay (WTP) of the users on the other side. The quality of the platform deteriorates and can even degenerate into a “market for lemons”. Such dynamics of network effects ensure that platforms do not unduly favor one side over the other, especially when there are cross-side network effects. However, these do not include how the firm treats its employees – remember Travis Kalanick and Uber?!

Digitalization and glass boxes

The omnipresent social media and the constant need by employees and customers to document share their experiences online (most often with the general public, including strangers) has been one of the drivers of glass walling of organizations. Isn’t it why the digital platform that allows for employees to review their workplaces called glassdoor.com? Sure, glassdoor.com monetizes its corporate side of the network through its recruitment services, but its primary differentiator is the large volume of anonymous employee reviews of the work culture and salary structures. We know that when the side that is being reviewed is monetized, it is in the interest of the firm to have good quality reviews on the platform, failing which it finds it difficult to attract enough quality candidates. There is enough incentive to witch hunt people who write bad reviews, as well fill the site with paid/ fake reviews to overshadow the “real” bad reviews. It is still a glass door after all, not a glass box!

Digitalization of employee experience holds a significant potential in managing the quality of the brand, as perceived outside the firm. A lot of firms focus on improving customer experience in their digitalization journeys, but employee experience is equally critical (read more about it in one of my earlier posts). Good employee experience ensure that the positive experiences have spill-over effects on efficiency, performance, internal culture, as well as customer experience. A variety of organizations including VMWare, SAP and IBM have laid explicit focus on improving employee experience in their digital transformation journeys.

Stay home, stay safe, stay healthy!

(c) 2020. Srinivasan R.