“We are sleep walking into a digital tsunami with an urgent need for solid research on the impact of digital disruption.”
Dr Jim Hamill, Director
A tsunami is a series of destructive ocean waves with very long wavelengths caused by large-scale disturbances of the ocean from above or below.
A digital tsunami is more predictable but just as disruptive. Numerous organisations have become digital dinosaurs by failing to adapt. Remember Nokia and what was their name again?
Almost every industry will be disrupted. When and the impact is less clear. What is clear is that customers get to exercise choice from increasingly transparent options.
Business as usual (BAU) assumes shared understanding of what ‘usual’ is? Staff in silos often have differing views. If the customer view is BAU delivers a negative customer experience that is a great opportunity for digital disrupters.
Digital transformation redesigns a business model to improve the customer experience, minimise waste and free resources for better customer and business outcomes.
A health professional recently explained the hospital prints 2 copies of an electronic document to fax information between hospitals. They mail the original and file the 2nd copy. There are a range of additional expensive and time consuming processes in getting the stamped addressed letter into the post and delivered to the correct address.
The receiving hospital receives the fax my phone line and later the hard copy in the mail. They eventually locate, match and staple both copies together before filing them in a paper based manual process.
Filing is easier than retrieval. It takes time having the right folder delivered on request before it is eventually returned to storage which occupies large and scarce floor space.
In this example, unnecessary staff time, telephone traffic, phone lines, paper, envelopes, stamps, transport, motion and large storage areas are components of a traditional system using scarce and expensive labour and assets inefficiently and wastefully.
Australia Post thinks it can charge more for less and compensate by turning into a $2 shop. Subsidy or deficit funding a failing business model, when consumers prefer digital options, is not sustainable and wasteful.
Digital provides significant opportunity to maximise the customer experience which is overtaking price and product as key brand differentiator. A former cost centre can become a revenue generator by digitally transforming the customer experience to:
- Increase purchases from existing customers
- Save revenue by better customer retention.
- Drive new sales by word of mouth/referrals/testimonials.
The alternative – lost revenue from ex-customers, declining market share, reduced revenue and cashflow challenges
Pathway to Digital Opportunity
- Map your customer journey (value stream) from order to payment
- Identify the difference between your and your competitor’s customer experience
- Identify the constraints which make your customer’s journey less desirable
- Design an improved customer experience without those constraints
(Quality, Cost, Time, Convenience, Certainty, Reliability, Size, Weight)
- Identify additional revenue opportunities in the improved customer experience
– Paper Based Manual processes
– Paperless processes with Manual elements
– Paperless and Automated processes
– Digital process by default – starts and ends digitally
- Identify the opportunity to create more ‘digital by default’ processes
- Define integration opportunities to reduce duplication e.g. records, transport
- Clarify the opportunities mobile applications deliver to your customer experience
- Document the customer benefits of 4 – 9
- Quantify the reduced operating cost and increased margin benefits
- Develop a strategy to deliver increased customer benefits and improve margin
Improving customer experience while increasing margin motivates digital disrupters! One company’s digital transformation opportunity is another’s imminent threat.
Cost Management Specialists Digital Opportunity work takes a practical and pragmatic approach to opportunity and risk in the evolving digital world.
We motivate key stakeholder ‘buy in’ to digital reality and identify operational practices that, once transformed, can deliver competitive advantage.
We are a catalyst to thought leadership and cross-functional action. We work with key stakeholders to develops a plan to transform your business model to better meets the needs of customers, build market share, increase margin.
A staff engagement strategy is important. Research suggests 40%+ of jobs could be lost through digitalisation.
While digital transformation is an enterprise challenge, it is less of a challenge than reacting to the peril of losing market share to a digitally enhanced competitor, reduced revenue, declining cashflow and underutilised capacity.
Digital transformation requires
- leadership and thought leadership
- leaders to lead and managers to manage
- clear stakeholder communication and staff engagement
- a bias for action.
Forewarned is forearmed. NOW is the time to take a practical and pragmatic approach to realising digital opportunity and manage the inevitable threat to your customer base.
Like to better understand the digital opportunity and threat? Whether you want to invest in the financial sustainability of your business or discuss a digital disruption opportunity, John Cleary can add value. Contact him on 0411 522 521