By building a common understanding of how digital changes their organizations, leaders can ensure alignment, drive customer satisfaction and deliver profitability
One of the significant differences in implementing digitalization from past strategic implementations is the number of new technologies and the multiple moving parts involved. At any one time, employees will be working on numerous technologies, initiatives and experiments. Those organizations which succeed in embedding digitalization have an overriding purpose that allows for alignment throughout an organization, inspires their employees and customers and delivers a higher return on investment.
A digital purpose articulates the desired strategic outcome for the organization. Critically, it creates cohesion and unification across the whole organization. It is an essential first step for leaders in digitalization.
Digital purpose in practice
Without a cohesive and unifying digital purpose, teams go in different directions and end up competing to deliver on conflicting goals. This leads to frustration and failure rather than success and growth.
The point is illustrated by the experience of one organization in the financial industry which was implementing design thinking. This required different departments to come together to rethink and improve the customer experience, but the teams were struggling to achieve the expected result. The cause of the problem was that there was no unifying purpose. Each department was aiming to achieve different goals and this resulted in confusion and conflict. For example, the relationship manager was focused on how the MVP (minimum viable product) could generate additional sales, while the IT representative was focused on delivering on their goals of speed, sustainability and scalability. This resulted in a different ‘language’ being spoken by each member of the design team, with no enthusiasm for listening to the other members. They lacked cohesiveness across the team.
This is the sort of situation that a digital purpose addresses, aligning the organization and creating a common language. It’s also an inspirational statement, similar to a vision statement (although we call this a purpose rather than a vision as it’s a shorter-term goal).
Consider, as an example of a digital purpose, how the French multinational Schneider Electric has moved from being an electrical equipment manufacturer to providing intelligent energy solutions. Its purpose has been reinvigorated and the whole organization has been fundamentally reshaped, transforming how it operates and what it offers its customers. Schneider now markets itself as providing energy and automation solutions for efficiency and sustainability. They leverage internet of things (IoT) technologies, such as sensors in buildings, to maximize efficiency to the benefit of both their customers and the environment. The digital purpose inspires the whole organization by visibly articulating what going digital means to the business and its customers.
For some organizations going digital means building an app, adopting AI or mapping out customer journeys. For truly digitally driven organizations, it involves all of this and much more, as they redefine and redesign their whole business model. Digitally driven organizations recognize that digitalization in itself is not a strategy. The aim is to have a strategy in a digital world.
Without a cohesive and unifying digital purpose, teams go in different directions and end up competing
In DBS Bank, Singapore, the leadership team met in 2015 to discuss how they could leverage new technologies. One of the team pointed out that banking is a pain for many customers, suggesting that they focus on making it joyful instead. This led the team to shift the question from: “What did the bank want to do?”, to: “How do we make dealing with DBS easy, fun, convenient and meaningful?” Identifying their purpose, to ‘Make Banking Joyful’, the bank’s leaders recognized that by leveraging new technologies they could make banking ‘invisible’ to their customers. That would create opportunities for customers to have enjoyable interactions with the bank and, ultimately, experience a sense of happiness and peace of mind throughout their journey.
A common question among employees facing digital transformation in their organizations is: ”Am I going to lose my job?” That fear is often misguided. Research published in the Harvard Business Review in September 2019 (‘The Top 20 Business Transformations of the Last Decade’, by Scott D Anthony, Alasdair Trotter and Evan I Schwartz) found an average increase in profits among the top six companies listed – Netflix, Adobe, Amazon, Tencent, Microsoft and Alibaba – of 1,315% over the decade. A digital purpose is not only unifying and cohesive, it can drive dramatic revenue increases. What is more, at these six companies the employee headcount grew sevenfold, a result of the need to manage the growth in new business.
We are starting to see that, in the long run, digitalization delivers more to the top line than the bottom line. Initially – and especially through automation – there are opportunities for cost savings. But in the long run, because businesses can offer a significantly better and easier customer experience, customers become more engaged and business grows.
The following questions enable the leadership team discussion which is needed to articulate the digital purpose:
- How can digitalization add dramatic value to our customers?
- What is our digital opportunity?
- Is our strategy to be a follower or a market leader?
- What are customers’ pain points?
- What is the opportunity to leverage technology to solve customer pain points?
- Why will the digital purpose inspire employees?
- What will create an advantage over our competition?
Establishing a digital purpose articulates the value to customers, which delivers value to shareholders. It unifies teams across the organization and inspires a cohesive drive towards common goals. In the digital economy, it is nothing short of essential.
CEO of Bridges Business Consultancy Int and a Duke CE adjunct faculty member. He is coauthor, with Jeremy Blain, of the Digital Implementation Playbook