The Secret to Innovation Rests With Knowing Thy Customers

As brands continue their quest to leverage the latest shiny object tech affords them, the question remains how adept companies are in really knowing how to best reach their customers. It turns out that less than half of all businesses are really mapping out their customer’s journey and understanding how to connect with them, but in light of data breaches, privacy concerns, and negative perception around tech, it has become even more important to understand the modern consumer’s behavior.

These were some of the findings borne out of analyst Brian Solis’s latest edition of his “The State of Digital Transformation” report. In its fifth year, the research has looked at how brands are evolving to reflect today’s society and adapting to the latest technological shifts. According to Solis:

This year it’s clear that digital transformation is maturing into an enterprise-wide movement. Digital transformation is modernizing how companies work and compete and helping them effectively adapt and grow in an evolving digital economy. What’s also evident is that there is still much work to do as companies are, by and large, prioritizing technology over grasping the disruptive trends that are influencing markets and, more specifically, customer and employee behaviors and expectations.

The State of Digital Transformation

Companies know that the status quo from a decade ago isn’t sufficient anymore and recognize that technology is the way to go to help adjust to the changing climate, but it’s one thing to select tech you think is popular in the public arena and another to know whether your customers are actually using it. “Many organizations are not doing their due diligence when it comes to understanding their customers, with 41 [percent] of companies making investments in digital transformation without the guidance of thorough customer research,” Solis writes.

“The State of Digital Transformation” provides a snapshot in time, a look at how businesses are receiving this concept of evolving. In 2018, businesses were more accepting, with more than half of those companies surveyed saying they were building a “culture of innovation” complete with in-house resources including change agents. But simply having a dedicated team charged with righting a proverbial sinking ship isn’t enough — more work is needed.

Key drivers of digital transformation in an organization.
Screenshot from “The State of Digital Transformation”

There are many forces dictating how a company will respond to digital transformation, of which the main one appears to be growth opportunities in new markets. Brands in the past year don’t appear as motivated to focus on improving the customer experience or fending off competitors, but one of the fastest rising trends involved regulatory and compliance concerns. This isn’t surprising as the tech industry has been rocked by numerous allegations and concerns over user privacy. Whether it’s concern over Facebook, whether our smart devices are listening to us, ownership of our data (e.g. the European Union’s GDPR law), or anything else, brands must be aware that “business as usual” isn’t going to cut it. They need to be cognizant of what their customers are concerned about.

Mapping out the customer journey is especially critical to the success of digital transformation. Although your customers might be present on social media, using chatbots in Facebook Messenger, Kik, Line, or any other messaging service might not be well received, even though there might be high usage in general. And developing a tool that would allow support teams to track a customer’s location in order to optimize assistance may not go well if customers haven’t indicated consent. Digital transformation cannot succeed with siloed teams.

Long-term versus short-term priorities around digital transformation.
Screenshot: “The State of Digital Transformation”

This process is a marathon, not a sprint, and while there are some things that can be accomplished in the short-term, ultimately really transforming an organization will take years, if not decades. This isn’t surprising as the technology landscape keeps changing, from websites to emails, messaging services, artificial intelligence, voice assistants, virtual and mixed reality, and who-knows-what in the future.

It’s understandable that transforming legacy companies won’t happen overnight, especially if you look at all the challenges facing them. Solis’ report highlights 13 key factors for hindering innovation efforts. In 2018, executives cited a lack of data or Return on Investment as a key factor in adopting digital transformation. This probably shouldn’t be surprising since executives always like looking at numbers before making a decision in order to justify a course of action. Solis concludes:

While they often perceive digital transformation as a resource that takes away from shareholder value and quarterly performance, the reality is that it is an investment in near and longer-term competitiveness and value creation. Without clear data that shows how digital transformation positively affects the bottom line, digital transformers or change agents
struggle to get the resources they need to succeed.

Although this has largely focused on the customer, their perceptions and behaviors aren’t the only things that’ll revolutionize a business — it’ll require the assistance of the company’s employees, change agents, and understanding culture. At the end of his report, Solis lists out seven priorities for companies to focus on in order to accelerate their efforts. Since this report is essentially a living document, executives could view this as akin to an annual physical exam where they pause to examine their progress, take a temperature check, and evaluate what needs to change.