Pages

Wednesday, 9 July 2014

The Chief Digital Officer is dead (or at least should be)

Felix sat back and congratulated himself on a job well done. He had been under pressure from activist investors telling him that he wasn’t doing enough in digital, so poaching Clarissa from a silicon valley-based tech giant was a real coup. She was a star performer – Stanford educated and a host of experiences working for tech start-ups, the last of which was acquired by Digital Megavendor inc. Felex knew he had to be seen as placing a bet on digital, but in his heart of hearts he still struggled to see the relevance to his logistics operations, his heavy machinery and some of the clients he worked with who still saw digital as something for their teenagers. As Chief Digital Officer, Clarissa would take care of digital. She would free up valuable time for the c-suite to get on with their real jobs and her appointment may just bump up the share price.

Clarissa joined with high expectations. Felix had made some pretty impressive statements about wanting to place digital at the heart of the company and transform the company by learning from the very best of the digital leaders. She was impressed with his drive and with the fact that whilst he clearly didn’t really understand digital, he wanted to hire a change agent to lead the company through this period of disruption.

A few months into her role, it dawned on Clarissa that her role was simply not set up for success. A host of powerful middle managers and even the CIO just didn’t seem to get it. They were so entrenched in their day jobs and fighting fires that she was never given the face time or the support that she needed. The budget and headcount that Felex had promised her had also failed to materialise, following disappointing quarterly results and a new drive to cut costs and maintain margin. In short she had a weak mandate and no real resources to get things done.

Clarissa’s story is certainly not indicative of every Chief Digital Officers role. Some CDOs are empowered change agents, revitalising and re-imagining the companies that they work for and where that is the case I am fully supportive of the role. But the danger I see in the rush towards creating a Chief Digital officer role is that in some organisations the role is either a parking lot to park all of the challenges that no one else wants to deal with, or a vanity title with little ability to drive real change.


The impact of digital to an organisation is top to bottom – from strategy to customer engagement, operations, risk and tax. Digital should therefore be everyone’s job. If the role of the CDO is to incubate and infuse digital thinking and new ways of working across the company then the mark of success should be when the role is no longer needed.

Friday, 28 March 2014

10 bumps in the road of a digital transformation

So your CEO is now enthused by digital transformation? You have a new head of digital, a clear vision and strategy for how to digitise and transform different aspects of your business (from your business model and customer interactions to your supply chain and operations). You’re taking customer-centricity seriously, consuming computing power from the cloud, building in sprints, failing fast, iterating; following everything that the web companies are doing.

Unfortunately success is far from guaranteed. There will be a number of bumps along the road ahead... some of them obvious, some of them less so. Let me give you a quick flavour of 10 of the challenges that you should at least be thinking about:

1. Changing expectations and lack of exec alignment – I worked with a client recently and did a quick and unscientific survey of their exec. Around a third wanted to be extremely disruptive and innovative with digital, a third wanted to raise the bar and get to the level of their closest competitor, a third simply wanted to do the basics and nothing else. It goes without saying but in any major program exec alignment is crucial. In major digital programs, this seems to be even more the case due to the speed at which new technology, consumer expectations and market dynamics are changing and vast differences in what can be achieved (see my post on “digital channel shift vs digital paradigm shift”).

2. Consumer apathy / consumer backlash – if you build it, they might not come. Worst still, they might react angrily. Countless, well-meaning digital PR programs have provoked consumer rage from fury over utilities bills at a UK Utility, to “upper class jibes” at Waitrose to  anger at changing pricing at Netflix. Simply digitising content and blasting it out to social networks and apps is a sure-fire way to wasting your investment. Building customer attention let alone engagement is difficult. It’s essential to maintain a razor sharp focus on customer needs and the journeys that they go through. These can be used as a compass to guide investment decisions and focus during a digital transformation program.

3. Regulatory changes – it’s clear that the regulatory world is desperately trying to catch up with the digital world. Topics like privacy, use of data, security of personal information, misleading advertising and even new business models are under attack from governments and regulators worldwide. In the US, the New Jersey Motor Vehicle Commission recently voted to ban the direct sales of vehicles in the state. In Europe, the European Commission are harmonising data protection laws impacting all companies processing the personal data of EU citizens and calling for fines of up to 5% of global group turnover for major data breaches. That cool, funky app that was built in a garage by a couple of creatives had better have thought through data and privacy implications! Brazil also recently passed a bill of rights for internet users.

4. Tax – now I admit that if you get a group of digital professionals together then tax is unlikely to be top of their list of topics to discuss (!). But most tax authorities have realised that their tax systems have a long way to go to catch up with a global digital market place, crypto-currencies, transfer pricing and IP protection. Late last year the European Commission introduced fundamental changes in the way in which digital goods and services will be taxed within the EU. Today it is possible to base a digital downloads business in Luxemberg and pay a flat rate of VAT there of 3 or 15%. From 1st January 2015, companies will have to register and pay VAT where the consumer is located, presenting a significant headache to anyone selling digital goods and services cross-border within the EU and exposing them to much higher rates of VAT such as 27% in Hungary. In addition to the margin impact of these changes and the need to deal with up to 28 different tax authorities, companies will be forced to reconsider their pricing strategies, customer experience and supporting systems in order to comply with the legislation, or face penalties from tax authorities in EU member states looking for new sources of revenue.

5. Technical debt – as easy as it may be to consume computing power from the cloud, technical debt is becoming a major issue. The barrier to entry into the digital world is extremely low and the pace of change extremely high, leading to many organisations developing and launching new apps, micro-sites and platforms in a sporadic and uncontrolled way and building up their technical debt. Gartner assert that by 2017, the CMO will be spending more on technology than the CIO. That spend needs to carry significant responsibility to ensure management of technical debt, including adherence to quality standards, governance, standardisation and re-use, decommissioning legacy applications etc

6. Delivery governance – with the CMO increasingly affecting digital spend and with the supplier eco-system increasingly fragmented into multiple agencies, SaaS vendors, SIs, analytics boutiques and others, delivery governance is becoming extremely challenging. Contrary to popular believe an Agile delivery approach requires strong governance and control, particularly when many third parties are involved. Lack of control of large scale digital technology programs will no doubt see many more major failed mega-programs (see “BBC abandons £100m digital project”)

7. Contracting and commercial challenges – in addition, simply contracting for a digital program can be a headache. Most procurement departments simply have no experience in contracting with a range of SaaS providers, each with different policies and standards regarding up-time, access to data, portability of data etc. Se Ray Wang – “What CFO’s need to know about SaaS and Cloud Integration”.

8. Cyber threats – quite simply there is not a single board today who should not be taking cyber risks seriously. In their Global Risks 2014 report, the World Economic Forum stated “The world may be only one disruptive technology away from attackers gaining a runaway advantage, meaning the Internet would cease to be a trusted medium for communication or commerce”

9. Cannibalisation and channel conflict – by its very nature a digital transformation, disrupts an analogue business model and ways of working. This often causes heated conflict and debate – should we disintermediate our channel partners and sell direct? Should we charge the same price for the digital version? How aggressively do we try and replace today’s cash cow?

10. Skills Shortage – digital has crept into almost every aspect of life with astonishing speed, but knowledge and skills are yet to catch up. The European Commission estimate that in 2015 the EU will face a skills shortage of 900,000 digital professionals. This skills shortage has manifested itself in almost every digital program I have worked on. Success with digital requires a broad mixture of skills from right-brained creative to left-brained technical and analytical. Skills shortages can appear in a broad range of roles from programmers to data scientists to digital tax and legal specialists.

The list above represents just 10 of the most common challenges that I see in digital transformation programs. If you think of others please do let me know! 

Friday, 13 September 2013

Caught between a digital David and Goliath

On one hand digital has democratised. It has created a level playing field for small, disruptive start-ups to launch a new business fast, leveraging computing power in the cloud and motivating peer-to-peer armies of willing consumers to create vast scale at a remarkably low cost (see my posts “Customer to Customer and the legend of Kachwachi” or “Outsource your marketing, sales & service to your customers”).

On the other hand, digital has created a vastly uneven playing field, concentrating enormous power into the hands of digital mega-vendors with enormous data stores, insight into consumer behavior and often one-click billing relationships with huge chunks of the population. More and more we see the mega-vendors moving into new industries like Financial Services (via mobile wallet offerings, virtual currencies etc), Computer & Telephony Hardware (phones, tablets, netbooks etc), Media (music, movies & sports), Automotive (driverless cars), Software, Groceries, Gaming, Communications, Healthcare and many more…

The challenge for the average FTSE 250 or Fortune 500 Company (that might have been around for say 20-50 years) is that they are neither a lean, disruptive start-up; nor are they a digital mega-vendor. They are, in effect, caught between David and Goliath.

The majority of businesses in this category certainly have considerable assets (e.g. brands, relationships, physical outlets, contact centres, contracts with customers etc), but they also have a considerable legacy (e.g. brands (?!), physical outlets (?!), contact centres (?!), contracts with customers (?!) etc). In addition, they also have to deal with the significant challenge of remnants of technology, mind-sets, route to market and operating models that were quite simply designed for an analogue age (see my post on “CRM for a digital age”).


The majority of FTSE 100 / Fortune 500 businesses therefore face a challenge; namely, how they identify and leverage the assets they have, whilst at the same time removing (or transforming) their legacy, in order to compete against both David and Goliath at the same time.

Tuesday, 21 May 2013

Watson, Connected Everything and what it could mean for Customer Service


I read three thought-provoking articles this week. Firstly, an interview with Cisco’s Padmasree Warrior, published by McKinsey Insights . In the interview, Padmasree Warrior argues that despite 20 years of digital revolution we have only reached around 1% of what could be connected in the world. Over the next 10 years Cisco expect that figure to rise significantly as more and more people, devices and sensors connect.

Secondly, I read Wim Rampen’s latest post “Don’t take the customer decision journey for granted”. As ever, Wim cuts through the hype of terms like “big data” and “customer engagement” and grounds our thinking in a service dominant logic mindset. He argues than rather than throwing more technology at Big Data and assuming that predictive analytics will fix every problem, in fact a greater abundance of data should present us with a greater ability to understand the jobs that customers are trying to do and give us better insight to the barriers they face. In turn this should inform investments that are made to give customers the right information, tools and transparency at each step of their decision journey.

Thirdly, I read today that IBM plan to redeploy Watson for Customer Service (see “Putting Watson to Work” ) by launching the Watson Engagement Advisor that key clients like ANZ Bank, Royal Bank of Canada and Malaysia Telecom will be piloting. This announcement follows hot on the heels of the announcement that Watson would be opened up as a service to developers to build applications around.

Bringing these three streams of thought together could be powerful for customer service. The exponential rise in the number of connected devices over the new few years brings an opportunity to infuse real time data from up and down the value chain into business processes to help customer service make smarter decisions. For example, sensing that parts in the supply chain are delayed, traffic conditions are bad, break pads seem to be showing greater wear than usual after 10,000km... can all help inform decision making, whether that be at a macro level (e.g. issuing a product recall) or at a micro level (pro-actively informing a customer of a delay or simply having all the right information to hand to understand what’s causing the customer’s issue).

The evolution of Watson from Jeopardy winning super-computer to an open, service-based platform could allow customer service organisations to put that smarter decision making into the hands of the customers via whatever device or app they want to use. What I like about the potential for Watson in customer service is that it will start by understanding the job the customer is trying to do (“How can Watson help you today?...”). This has always been the promise of voice self service systems, chat-bots and self service knowledge bases, but none have ever quite had the computing power of Watson to make sense of complex queries and compute vast amounts of structured and unstructured data to find the right answer.

Tuesday, 12 March 2013

Digital channel shift vs. digital paradigm shift


I had the pleasure of speaking with Bill Hutchison a couple of weeks ago. Bill is a pioneer in smart cities, working in Canada, Russia and Asia to evangelise the concept of the hyper-connected city and the potential for paradigm-shift thinking that hyper-connectivity presents. Bill chaired the Toronto Waterfront development, one of the largest urban regeneration and connected community projects in the world. One thing he said to me which resonated was that the last 20 years of digital innovation and disruption have simply set the foundation for even greater change to come. One of the opportunities of digital disruption is the potential it offers to think about paradigm shifts.

Many clients I have worked with over the years have approached digital as a channel-shift project - "if we could shift 10% of calls from our call centre to our smartphone app we would save x%", "if we could switch x% of loan applications to online we would save y% and acquire z% more clients". There's nothing necessarily wrong with that approach but the history of new technology adoption is littered with examples of people using a new technology to enable an old process or an old way of working. Putting a loan application online is not necessarily going to change the game or protect against a future industry disruptor.

10 years ago Nike has very little idea who purchased their trainers and how they used them. Consumers made anonymous purchases in sports shops and department stores and rarely bothered to fill in a registration card to tell Nike about themselves, let alone how they used their trainers. Nike could have adopted a channel shift mindset and approach to digital, creating an online portal for people to register their purchases and upload information about their training regimes. They could have done that but they chose a paradigm shift strategy. By embedding software into trainers via Nike+ and building a gamified community where users set their training goals or participate in virtual / physical games of "tag", Nike has transformed the information and insight that it has about it's consumers. At the point of writing a staggering 2,146,741,969 miles have been run by the community and automatically uploaded to Nike.

GiffGaff could have launched an MVNO with a channel shift strategy. Instead they chose a paradigm shift by creating a peer to peer business model where customer word of mouth drives acquisition and members fix over 90% of service requests for other members in the support forum with an average time to fix a problem of under 3 minutes.

Zopa could have followed a channel shift approach and launched an online only business selling loans, but they chose a paradigm shift model by creating a peer to peer lending forum.

Threadless, Zappos, Kickstarter, eBay, ZipCar, Nabbesh (client), Netflix, Salesforce.com, Amazon, NowTV (client), CDBaby, Spotify, Lastminute.com and many others all could have pursued channel shift strategies in their respective industries... but they didn't.

Tuesday, 15 January 2013

CRM for a digital age


Most companies invested in CRM software for the first time between 1996 and 2006. That decade saw the CRM boom and bust. Siebel went public in 1996, signed huge multi-million dollar software license deals, peaked at a 45% market share in 2002 and was acquired by Oracle in 2005. The big ERP vendors all entered the market with varying success, Nortel acquired Clarify for $2.1bn in 1999, (before selling for just $200m 2 years later) and Salesforce.com was founded in 1999, winning over 20,000 customers by 2006.

The CRM applications that most companies implemented during that decade of 1996-2006 were predominantly Sales Force Automation solutions and Customer Service /Contact Centre software. Solutions designed to support Industrial Age distribution models of large field sales forces and customer service agents. Many projects failed (analyst estimates range greatly from approximately one to two thirds of projects) and many companies experienced long, painful implementations that rarely achieved the anticipated benefits. As many of the CRM projects were so slow and painful to implement, many companies have retained the solutions that they implemented for far longer than intended and the relics of these systems still power a large part of the customer experience today.

Looking back at the wave of digital change we have seen over the last decade or so, I would pick out 2006 as a tipping point. In 2006 worldwide Internet penetration stood at 15.7% (see http://www.internetworldstats.com/stats.htm). Since 2006 it has more than doubled to over 30%. During the last 6 years we have seen enormous changes in technology and communications. We have seen the mass roll-out of broadband and mobile broadband, an explosion of connected, smart hardware devices like the iPhone (2007), the iPad (2010) and the seemingly unstoppable rise of social networks like Facebook (founded in 2004 but hitting 500m users in 2010 and 1bn in 2012), Twitter (founded in 2006) and GooglePlus (founded in 2011).

There is a stark reality here. Most companies invested in CRM for an analogue age, designed to support a predominantly field sales force and contact centre-led distribution model. They invested before worldwide Internet penetration reached critical mass, before any of the digital disruption we see today became main stream and before digital became baked into the distribution model. Hence we now see IT departments in a spin, trying to keep up with increasingly frantic demands from the business and trying to bolt on new applications, services and channels to legacy systems that were simply never designed to be used in the way they are today.

CRM for a digital age has to look different. It cannot be the technology-centric, monolithic disaster that plagued some (but certainly not all) of the previous generation of projects. CRM for a digital age is not any particular software or technology and it will vary greatly from business to business but it is likely to display some of the following characteristics:
  • Designed for Customers and front line customer-facing staff, not just for management
  • Focussed on speed to value and positive internal momentum
  • Designed with a core foundation (e.g. data, processes) but able to embrace change at the front-end of customer interaction (i.e. devices, apps, social networks etc)
  • Delivered in an iterative fashion with constant business involvement
  • Open and integratable in nature (often made up of a collection of services rather than a single package)
  • Cross-functional in nature, busting through internal silos
  • Paid for based on value delivered to the business

The challenge most companies face is one of transition. Shifting not only from legacy CRM technologies, but also from legacy mindsets, procurement models, IT delivery models and of course distribution models. Without question, all of those challenges are difficult, but is it really realistic to continue with a CRM solution designed for an analogue age?

Wednesday, 24 October 2012

The future of TV is not quite as rosy for consumers as it appears

I’ve been reading lately about the future of TV. There are no shortage of interesting material on the topic like these short quotes from industry leaders compiled by CNBC, the great post by Brian Solis “The future of TV is more than social it’s a multi-screen experience that needs design” and this must listen podcast by Mitch Joel “The future of TV is social”.

I don’t dispute any of the conclusions in the content  above. The lines of argument are that TV is the next big battle ground. One that has remained relatively unchanged for 25 years but one that looks set to see significant disruption over the next few years through the convergence of social media and digital technologies with television, through dual-screen media consumption and through a wave of technology innovations from motion control, voice control, ultrahigh definition, 3D, to greatly enhanced search and streaming etc. This post is not about the potential technology innovation in the future of TV, it’s about some of the practical barriers that consumers may face over the coming years as the TV industry goes through its transformation.

The first challenge I see is that in an industry dominated by mega-players content will be distributed amongst multiple providers via a rights bidding war. If I just take the UK market as an example, competition to define the future of TV is fierce. We have the traditional terrestrial TV providers like the BBC and ITV who are investing heavily in digital and streaming content. We have the dominant Satellite TV provider BSkyB, whose monopoly has been eroded somewhat over the last few years by BT, Virgin Media and others. In addition, we have Apple TV, Netflix, Google TV, Tesco (via their blinkbox acquisition), Amazon (via their LoveFilm acquisition) and a host of other players inclusing potentially some of the content providers streaming their content direct to consumers. In other words the TV industry has some of the largest companies on the planet with some of the deepest pockets, all competing for eyeballs. In order for any of those players to remain relevant in the market they have to have content rights. A potential scenario for the next few years is that we may see a battle of the giants for content rights which will not only push up prices but also ensure that content is scattered across multiple providers. Take for example the recent announcement that the 2013-14 to 2015-16 premier league football rights have been sold to BT and BSkyB for £3bn – this represents a staggering increase of £1.25bn on the current rights package and splits content between 2 competitors. As rights for other premium content follow suit the result for consumers may be that consumers will need to go to multiple providers for content and that these providers may change at every rights renewal.

A secondary impact of the rights war will be that providers, keen to claw back their investments, will hang on to their existing business models. Those with lucrative subscription models will cling on to them as long as they can and those with exclusive rights (e.g. premier League football, Heineken Cup Rugby etc), will maintain either high prices or increasingly sophisticated (or relentless!) forms of advertising – some of the terrestrial providers in the UK now seem to have more forced adverts on their streamed content than they do on free / live television! The result for consumers? We may well have to consider multiple subscriptions, multiple contracts, multiple hardware devices and more adverts forced into our content. In addition, it’s likely that we may see more providers heading the way of Setanta sports to bankruptcy as over-prices rights become a poisoned chalice for some providers.

A third challenge I see is viewing quality. Over the last few years picture quality within the DVD / Cinema and Cable TV segments has improved radically – we’ve seen a mass roll out of HD, some muted take up of 3D and the potential launch of ultra-high definition. In the streaming world, when picture quality increases so to does the strain on the broadband network. This phenomenon is of course exacerbated as more and more people start to stream more and more content. At the end of last year Netflix accounted for 33% of peak time internet traffic in the US. As more players enter the streaming video market, more consumers stream content and the resolution of that content increases, broadband networks will likely struggle to keep pace.  In reality this means one thing for consumers in the short to medium term – buffering!

A final challenge that consumers may have to contend with will be shortening product lifecycle times and continual hardware / software compatibility issues. To illustrate what I mean here, let me use a personal example. I bought a smart TV less than 18 months ago. The software is already out of date and cannot be upgraded – in effect my “smart” TV is now just a dumb monitor. Now, I understand that many hardware manufacturers moving into software have a pretty steep learning curve to produce brilliant, upgradable software (with the exception of Apple it’s simply not in their DNA). In addition, I understand that rapid technology innovation is resulting in shorter product lifecycles. But most consumers, used to purchasing a TV that lasts many years, may not be so accepting. In addition, TV manufacturers will likely battle against an array of players for dominance of the living room. If you’ve invested millions in developing “smart” TV’s, the last thing you want is for your device to be kept as a dumb monitor, while consumers plug in IP boxes and TiVos and “flick” content from their smart phones onto the TV. Whilst consumers will undoubtedly see huge innovation, it is highly unlikely that the various hardware / software providers will work in harmony, again leaving consumers facing potential frustration, confusion and expense.

Bill Gates once said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”. There are some incredibly exciting innovations in the future of television, but mass adoption may be held back, unless some of the barriers above are addressed.

Share This

Share |
Creative Commons License
The Customer Revolution Blog by Laurence Buchanan is licensed under a Creative Commons Attribution 3.0 Unported License.
Based on a work at thecustomerevolution.blogspot.com