In this talk, Tobi Adebisi will explore three critical pieces (people-group) that influence the success of a digital transformation: customers, employees, and leaders. We’ll also examine how a redirection of the starting point in digital transformation strategies could help reduce waste in resources and offer a higher likelihood of long term success.
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Today the topic I’ll be talking about is Why digital transformation begins with people and not technology. But before we go there, my name is Tobi Adebisi, as you already know I’m the sales engineer here at Detroit Labs. I’m always in wherever business meets technology. Whether it be the way we work at Detroit Labs, or startups, VC stuff, IPO stuff, direct listing, I’m your guy.
Beyond that, I’m very interested in chess. The Chess World Cup is going on right now. My boy Anish just got knocked out so that’s a bit sad. Football, tennis, swimming, watching documentaries. I just watched a really cool BBC documentary about ants and super colonies. Fascinating stuff. Ooh, is that me? Oh. The ants in Switzerland turned out to be friendly as well. They have multiple queens in one colony. Great stuff. This is Lewis Hamilton, five time world champion for MullerOne, and a Mercedes EMG driver. Soon to be six time world champion. This has absolutely nothing to do with what I want to talk about. I just told my fellow Lewis fans, Rebecca and Stew, that I was going to have him in my slides. And the colors of Mercedes matches my slides, so that’s great. It actually does. If you go back you can see it matches.
I’m talking about technology, and of course technology problems. All right, so digital transformation, what does that even mean? You’ve probably heard it a lot in different shapes or form. You’ve probably heard digital innovation group, we’re setting up a new digital team. Because we work with very big companies. And a lot of companies know it’s important now to become technologically savvy.
So just simply put, it is a process by which we use digital technologies to transform the way businesses work right now. Their processes, their culture, calls to my experience. Just to meet my requirements, using technologies to do that. But I want to take a step back, to what brought about my interest in this. The first time I heard this statement, that was about maybe three or four years ago. We’re not a spinach company, we’re a technology company that sells spinach. The first time I heard it I was like wow this is so cool. It actually makes sense, because and then I just keep hearing it. Pretty much every Harvard grad just says it every time. And you begin to see that there is some meat to this. There is that desire to become a technology company. Because it just makes sense. It’s 2019, you literally have no choice. If you want it to survive, you want it to become a technology company. But of course with that there have been some problems. And this was where being part of organizations that have super big Fortune 100, Fortune 500, I’ve seen the inner workings of some of these transformations that didn’t work out. And it took some time to do some research to see what’s not working.
And it turns out about less than 30% of these innovative initiatives are actually successful. It’s not surprising, you see that where the digital group here, reorg here, it happens almost every year, with every new CEO, every new CIO there’s a new idea. And a lot of this money just goes to waste. It’s inefficient, and something has to be done.
There are typically three different buckets that this funding goes to. Improving customer experience is very obvious. What we do here, we build apps. We build great apps. Because we want customers to have a better experience. Reorganizing internal operations, and reinventing business models.
For our technology spinach company would be if they figured out that they needed to start delivering frozen spinach because I don’t want to leave my couch. That would be a new business model that did not exist before, that I just started doing. Reorganizing internal operations could be a company transforming the way they communicate and collaborate, from using ravens and smoke signals to using something like Slack to change the way they work. That was a stretch, but they don’t use ravens actually. And then improving customer experience is of course the low hanging fruit that we see every day, new apps and new websites.
And we’re going to go through each and every one of this, and see what works well. Personally when I learn, or when I want to change habits, I’ve found it very valuable to see good examples of what to do, and why to do it. That’s not the only way to learn. There are other ways of learning. You can learn from failure as well, which is great. But personally, for example, maybe reading chess books for example. I would rather pick an author that tells me about ideas, and why they are the way they are. As opposed to reading three pages, and after three pages I’m told, well that’s not the right way to do this because of this. That’s like 20 minutes I can never get back. Or, you want to change maybe your eating habits for example. For myself, what I found valuable wasn’t that pizza is bad or fries are bad, it was eventually learning about foods that were really good and why they were good, and I just wanted to eat those more.
And it was from a push towards stuff that I like, and why they were good. That just kind of changed the way I saw nutrition altogether. So with that mindset, I want to look at some companies that were successful at doing this. The 20-25% of companies that do this well. And see what they do well, and why it’s that way.
Of course there are very obvious examples like Nike, Starbucks, or companies that are already digital companies like Amazon and Google. But I wanted to pick ones that were not as obvious, that did things that were really good.
And the first example in terms of customer experience was this fashion brand, British fashion brand called Burberry. Back in 2006 Angela Ahrendts took over this company as the new CEO. And at that time, compared to other luxury goods, they were struggling. Other companies were growing at 12-13%, they were growing at 1-2%. Because their revenues couldn’t compete, and they had to do something differently. They internalized and met and did a lot of strategy. And the result of that was creating a new focus on the customer. Who their customer is, who are they as a brand, and who are our customers. They ended up focusing on the younger demographic, and emerging markets. Because they found out that in emerging markets, their high net worth individuals were 15 years younger than the traditional markets. And they focused their marketing on that.
They did this concept called a retail concept, a retail theater. So when you go to their store you can experience the digital. They had screens and iPads, and you could watch the runway shows live as well, and order the catalogs as you see them. So the experience on mobile and the physical store matched each other. And they took it a step farther, by launching a program called Customer 360, where they’re able to aggregate information about the user preferences so they could market more effectively to the user.
And with all of this, Burberry turned out to be pretty successful at it. They were named one of the most innovative companies for a couple of years running, and the CEO went on to work at Apple, and of course, we’ve seen the great things since then. But from this story, there are some things I wanted to pick out of that, it’s that customers expectations are through the roof.
Case and point, last week was the Apple event. As Apple always says, the best one they ever made. And it’s true, it was the best one they ever made. But if you asked me I would be like, eh it was… Am I getting it? and I would be like I don’t know. But Rewind back to maybe eight years from that event, I was using a Sony Ericsson Esperia slide phone. And if I had seen this Apple phone, how it was, I would be so impressed I’d be like take my money.
But now my expectations are so great that I would watch the Apple event and I’m underwhelmed. Or, I’d think of a new book and in 30 seconds I know it’s going to be at my door tomorrow with Amazon Prime. There’s a level of expectation that we now have for products that we use. Whether apps or websites, I’m the quickest to delete any app that is not working well. And as a developer I would assume that I would have more grace, but it doesn’t work out that way. I’m like well it’s not working out, out of here. So brands have to acknowledge this, that the days of just mailing it in, they’re long gone. And there’s now an expectation. Everybody expects greatness, and you kind of have to offer it. Or you just lose business.
A unique strategy here was going back to understand customer behavior. What do your customers do? Why do they do it? Where do they do it? And, our designers here at Detroit labs have done a super great job of educating us and prioritizing a lot of user research before we even write one line of code. And we’ve done things like design sprints and things like that, to truly understand why are we building what we’re building. Because the technology or the amount of investment, or how many departments were spent up, is not as important as the reason or the impact that solution is going to make at the end of the day. So the customer experience has to be designed from outside in.
That these companies take the initial step like Burberry did to understand, okay at emerging markets this is what our customers truly want. They eventually released the app in 11 languages and are growing from there. Because they now understood where their customers were, and how to reach them. And also collaborations with social media like Twitter, Facebook, Google.
Sometimes you might not need an app, you might just need a super hilarious Twitter account to market and reply to people. As you can see with Wendy’s and a lot of these fast food companies. And there is the initial work, and data is a continuous work. We’ve been parts of a lot of projects where we use analytics. And that analytics sometimes is just a feature that just gets ignored. And it’s something that should continuously be driving change. Just like in the beginning where we do user research to determine the features we create. How customers use a product continuously changes. And they want to keep learning. You want to use that analytics and that feedback, or the Twitter rants, to change the way you make that product or update that product.
You may change your priorities. You might have a five year roadmap, and your customers have been complaining on Twitter, they want something else. And then you are able to allow that new data to change your plans. And this was super important for Burberry. The physical experience and the in-store experience was the same. That was the goal they set out to have. We can see whether we recognize it or not, one of the things that made Apple really successful, the app, the genius bar, or Apple store experience, and the phone, there was that seamless uniformity.
You know that you’re an Apple fan. And, Burberry set out to be intentional about making sure that when you walk into any of their stores, it felt like you were using the app, or you were using the website, or you were in their headquarters in wherever their headquarters were. And, so going digital does not mean abandoning your physical stores per se, it’s stepping them up so everything matches. Because as we said, your customer expectations have of course improved.
The other one that was also not very obvious is UPS. A lot of you get packages from UPS. I get a lot of them from my Amazon orders. And, UPS as a company, the way they work with different routes, many drivers, I believe they have about 400,000 employees. And maybe 100,000 drivers on the ground. There are infinitely many routes they could take to deliver a package. Infinitely. Well, there’s a number but it’s pretty large. And, if they could save a mile from each driver, that could when you add everything together, it could save like 50 million dollars each year. And they took the step back to fix their internal operations, by making them more efficient.
So, each driver is using the most optimal route to land a package. And also sometimes with different service options, you could choose oh I want to receive my package at 6 pm. To put that all into account continuously every day. And they were able to save about 6500 metric tons. Reduce their carbon emissions by that. And also of course even the cars, the idle time, when the drivers are not in the car, were reduced by I believe 10 million minutes. Which is a lot when you put actual dollars to it. So little changes, half-mile saved here, two miles saved over there, you add it all up and a company like UPS is working so effectively.
Businesses are ultimately like icebergs. What makes a company truly a business? A lot of it is not seen. The internal operation, the customer experience is what we see when the app is a smidgen of the actual business. It’s when you see maybe on the internet people will comment, oh Slack I can build that app in a weekend. That is not what makes Slack a ten billion-dollar business. It is the processes and the internal operations that a lot of people don’t see, that makes it as valuable as it is.
At Detroit Labs, as Paul just said, our people and our process is what makes Detroit labs Detroit Labs. That is incredibly difficult to explain or to copy. We’ve talked to many companies and they were like, we like your process but it’s difficult to replicate because that is what makes the value. So even if internal operations are not as fancy as improving customer experience, it is probably more important, and it is the foundation for building customer experience. Because without that collaboration, that communication, that culture, that process, you can’t really effectively improve your customer experience. You can’t give what you don’t have.
Spend the time to improve the way your teams work, and collaborate, is foundational to a business’s success. And again we’ve said this, it is incredibly difficult to replicate. Amazon, for many years the way they work, and how their business is, and the tools they use were public knowledge. Same with Facebook. But for companies like Wal-Mart to compete, it still takes years to catch up with that internal well-oiled machine that these companies have.
So as a business, as a brand, having a very efficient internal operation is a competitive edge, that even if your competitors are going to catch up, it is going to take a little bit. And by then you’re on to doing even cooler stuff.
The third company I want to talk about is Pages Jaunes, AKA The Yellow Pages in France. It is actually The Yellow Pages in France. This company, just like every print media company, was struggling. And they were losing 10% of their income year after year. But their employees just felt that is their new life. We’re just going to live with it, and we’re going to make do with what we have. The new CEO Jean Pierre Remy, I believe in 2009, really wanted this company to survive, and to go digital completely. But the employees were understandably very skeptical of another digital wave. They had survived the dot com bubble and bust, and they’re doing well. So why change.
And the CEO did a really great job of really convincing his employees. And one of the things that stood out was seeing a vision about Yellow Pages not being in the business of building just directories and books. They were in the business of connecting small businesses to local customers. It just happened that books were the way they were doing it before. Now their customers are no longer reading the books, they are now on their phones, so we need to get there. And just that message, that direct vision, was very clear.
Taking it a step further, explaining how the employees’ knowledge right now with their connections that sells people to various small businesses and advertisement, can be used also to sell the digital ads. So, connecting where they are now to the future, there was a clear roadmap. As an employee, change for anybody is hard. And you want to know why you’re doing what you’re doing. And Yellow Pages, it wasn’t a smooth transition per se, it took a while for them to become truly successful. But in 2015 I believe they recorded their first profit. And that is saying a lot for a company that is I don’t know how many years old, to be able to truly successfully do this.
And this was key, to acknowledge the resistance of the employees. Again it is not unreasonable that after the 200 reorgs that you do every six months, and new hires, new CEO, new CIO, with a new brand new vision. It is okay to be skeptical. I will be skeptical. And the CEO did a great job of kind of sharing the vision and showing the roadmap. And also there are just some people that would never buy into the vision until they see things start happening. In the beginning, you set out to make a vision and a strategy. And just like we get feedback and analytics when we talk about improving customer experience.
In the same way, the vision can change. And the strategy can evolve. You are not beholden to what you decided three years ago. The world changed so fast. And that’s one thing The Yellow Pages did very well. The vision was very clear. We want to let’s say, make 75% of our business from digital. That was very clear. The employees could understand what success meant. And they knew that if we sell this amount of ads, this is successful. And that is one important part of every digital transformation. There has to be that leader that makes a clear vision of what success looks like.
And how to connect your current assets to where we’re trying to go. This was also pretty important, educating, retraining, and empowering employees. Yellow Pages in France did a great job at those who were very skilled at selling print ads, and communicating with local businesses in a physical way before, they did a great job at retraining them and teaching them how to sell digital ads. Or their designers from doing print, to be able to web pages, and things like that. There’s a lot of domain knowledge, and a lot of things that, even though some of the skills will not be transferrable, the knowledge itself and the reason why you are actually a business, it is transferrable for sure. And this was pretty important, to have leaders that govern the transformation throughout.
When organizations are really big, you see different departments interpreting the digital transformation in different ways. Or maybe in the same way but in duplicated efforts. They might be using the same tools in different ways, or spending the same thing just because there was no communication. They are all trying to achieve the goal the CEO or CIO set out, but these companies are huge.
Labs, we can’t relate that much, because we’re a much smaller company, and we can kind of figure out what is going on. This group is doing this and doing this, and oh why can’t we just collaborate. But in bigger companies, maybe to the next all-hands meeting in the Summer next year, you find out, we just spent the same amount of time and money building the exact same thing that this other group built. So there has to be that leader that continuously governs the transformation. And governing does not mean dictatorship per se, it’s just someone that kind of enables communication and collaboration, who knows what is going on in all parts of the business, and knows the clear vision that where we’re going to in the end.
I’m bringing it all together. Ultimately what is important in business, it begins with people. Your business exists because you solve a problem. And your customers are super important. Without those customers, there is no business. So that’s the first people group, and the other is the employees. The employees need to be brought into the vision. When this is done very well the business is successful.
Digital transformations do not fail because you use AWS instead of GoogleCloud. It fails because employees are not brought in. They don’t even know the vision, the company, why we’re doing what we’re doing. And then if you can’t motivate, maybe after a couple of months, the candle fizzles out. And that’s where the leaders come into play to be able to set a clear vision, define what success looks like, and continuously just govern that transformation. So from this research so far, I think it led me to kind of understand that digital transformation, or reorg, or whatever we do, does begin with people. And the reason why we do them, the impact they have is significantly more important than whatever technology, whatever app, whatever website. It’s ultimately what your customers want, where they want them, where they’re using them. And your employees, why do they work for you. Why do they come to work every day? And as a leader, where are we going. And where are you taking us to? I hope that you found this very cool, helpful. If you have any questions, feel free to hit me up on Twitter or Instaram. Yeah. I do love social media. And thank you very much.