A few years ago a report by SAP revealed that while 84% of companies think digital transformation is vital to their business, just 3% were satisfied with the transformation they had achieved to date.  This was followed a year later by a report from MIT Sloan and Deloitte, which showed that progress is being made, but it’s very slow, with just a handful of organizations saying that their digital transformation was progressing at pace.

“This year’s study shows that executives across industries and around the world are investing in the digital maturity of their organizations,” the authors say. “Digitally maturing companies, in particular, are developing their digital talent at both leadership and employee levels and creating conditions that will enable the organization to experiment, learn, and collaborate in the marketplace.”

Given this mixed record of success and the inherent complexity of adopting technologies that can often be a world away from what you are used to, it’s perhaps understandable that many managers are reluctant to venture down such an uncertain path.  This is especially so as Harvard research has shown that failures, even those experienced after the best of intentions and under the toughest circumstances, are rated more severely than successes achieved under the most benign of circumstances.

Making the first step

With any complex and uncertain process, the best place to start is where the pain is at its most intense.  As far as digital transformation is concerned, this is likely to be where change makes the most sense from the point of view of your most important customers.  That’s the finding of research from INSEAD that has informed a new guide to B2B digital transformation.

The researchers conducted interviews with around 1,000 transformation leaders, with 20 detailed case studies produced of digital transformation in the B2B space.  A common thread throughout was that those companies that were able to utilize digital technologies to create value for their customers were ultimately able to utilize it to create value for themselves.  There is obviously no one-size-fits-all approach to this, but it typically boiled down to one of three approaches.

1. Using digital technology to better engage with customers and sell more effectively

Too often, sales and marketing each exist in their own silo, which makes it very hard to utilize digital transformation, as the status quo of sales owning the customer relationship and marketing providing the messaging is simply too cumbersome.  In the more digitally sophisticated companies, sales and marketing are largely intertwined.  Indeed, in many, there are numerous parts of the sales journey that are automated.

This then frees sales resources to focus on the most exciting leads.  It’s a situation that is common in the pharma industry, with digital playing a leading role in premarket condition and post-launch market development.

2. Use digital technology to enrich the customer experience

Once you have digital systems in place to help both find and convert prospective clients, the next stage is to ensure that any interactions they have with the company are as enjoyable and pain-free as possible.  This is a crucial distinction, because, in a B2B context, silos are rampant, which can make a smooth customer experience almost impossible.  These common customer pain points are a perfect starting point for any digital transformation effort as you can have an impact almost straight away.

3. Utilize digital technologies to fundamentally change the value proposition offered to customers

Last, but not least, companies should begin to apply digital transformation to the very core of the business and start to transform the essential value proposition that they’re offering to customers.  This will usually require a shift away from thinking purely in terms of your specific products and services and instead think in terms of striving to increase revenue through digitally-powered solutions.

The researchers then suggest that within each of these three main shifts, the companies that have successfully digitally transformed their business into more customer-centric and agile operations tended to take four key steps:

1. They begin by understanding the customer and their requirements, before identifying needs that aren’t being met.  This typically involves profiling, segmenting, and journey mapping.
2. Once these unmet needs have been identified they begin to explore how digital technologies can make a difference to their customer experience.
3. This strategy is then turned into action via rapid prototyping and pilots that aim to apply a test-and-learn approach to development.
4. Leaders then build customer data and experience development teams alongside transformation management offices to oversee the expansion of their digital transformation.

Obviously, this assessment has been undertaken in a B2B context, but the finding that customers are at the heart of the most successful digital transformations is surely transferrable into all organizational contexts.  It can be incredibly tempting to take a technology-driven approach to ensure your organization has the latest and trendiest tech, without really asking how that can make the lives of your customers better.  This report is a nice reminder that we are better served by taking a step back and making sure that the customer is truly at the heart of our digital transformation, and all changes are designed to make their experience with us better.