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Four Guidelines For Success In Innovation In Digital Transformation

A problem afflicts many companies undertaking transformation: they aren’t ready for innovation. But they need innovation to change their competitive positioning in the market. Today, many companies want their IT organizations to partner with the business to create opportunities for innovation and supportive services that drive transformation. And they look to their procurement chief or sourcing organization to ensure that any services they buy support innovation. How important is this? It’s critical. In fact, how your company leverages its IT organization and sourcing organization is a determinant of success in digital transformation.

I talked recently with Gopi Suri, an executive who has a background of successfully positioning IT organizations to be more transformational in nature to support their company’s business. Suri shared with me his four guidelines for a successful outcome in digital transformation.

Guideline 1: Start With The Cultural Shift

In one of his successes, he led the digital transformation of a leading company’s call centre operations. The company had been satisfied with the status quo, Suri recalls. It had reached a plateau in its services; but if it brought in revenues and delivered high-quality products to customers, innovation really didn’t matter. Then came the disruption of the digital world, and competitors began looking at ways to leverage digital technology to provide innovative services. Suddenly the company was challenged to find new ways to remain competitive, and Suri says the business wasn’t ready for innovation.

 At first, the business executives looked to the IT organization to take the leadership role in transformation. But Suri says they had been doing more of a “plumbing job” (maintaining infrastructure, running operations). They delivered what the business wanted, but they didn’t partner with the business in bringing ideas to meet emerging needs. IT needed to be more consultative instead of just operational.

“The IT team was very good at building programs and products and delivering them with a great amount of quality. But they never questioned anything the business asked them to do,” Suri says. “For example, if asked to implement a portal, the IT team did that, but they didn’t question whether there were better ways to accomplish the objective. They didn’t try to understand the high-level business problem.”

The business executives realized the company needed a paradigm shift in its culture to be able to focus on innovation and generating ideas. This kind of culture, at a minimum, includes a structure that encourages the following aspects:

  • Facilitates cross-functional teamwork (and cross-collaboration with external service providers)
  • Motivates people to come up with ideas that can create value
  • Encourages risk-taking and experimenting on how to create value
  • Ensures bureaucracy doesn’t hinder the approach to innovation projects.

The company decided to outsource the digitization of the customer call centre to accelerate the transformation while taking steps to build its innovation culture.

Guideline 2: Communicate The “Why”

“You must make sure people understand why you’re undertaking digital transformation,” advises Suri.

“Otherwise, it’s hard for people to imagine why they need to change.” And that leads to resistance.

He recalls what happened at a company where there was a COO mandate for transformation, which originated from a desire to cut costs. Although the company wanted to improve the customer experience, communication from the COO focused on cost reduction. This led to employee resistance because they feared job loss.

“When you communicate the real objective and reason for the change, employees will get more comfortable with the change,” says Suri. “They need to understand that competitors are performing better than in your company. You can then motivate them to be part of the change process and begin thinking differently about how to meet the objective.”

He goes further and advises that the IT organization also needs clear communication about the IT vision and road map so they understand how to align technology and their services with the business needs.

Guideline 3: Ensure Collaboration

This advice is twofold. In addition to facilitating collaboration in the company culture, Suri says it’s critical to engage upfront with customers to understand their needs and how they would use the new solution. It’s also critical to assess the implemented end-to-end customer experience through their feedback.

The second aspect is to ensure collaboration with external service providers or vendors in shaping the solution. Many companies treat their providers in a tactical manner. They expect them to take instructions from IT in terms of implementing projects that the business approves and funds. They don’t engage in collaborative discussions with the providers to develop the solution.

In addition, it’s important to develop new metrics to monitor the progress toward achieving the objectives and metrics to measure performance after implementing the solution. If people are to trust the process of innovating, it’s important to get this collaboration.

Guideline 4: Sourcing An Innovative Service Provider

If your company decides to outsource services, how can you ensure you end up with a strategic partner that will innovate in meeting your needs? Suri explains what happened at a company going through the service provider selection process for a digital transformation project. Unfortunately, they ended up with proposed solutions that I refer to as “snowflakes” – all claim to be unique like snowflakes; but if you drawback to any meaningful distance, they all look the same.

Let’s look at how to avoid the snowflake phenomenon. Suri explains the company first generated some ideas of how to transform the customer experience. The company’s marketing and customer teams talked with peer companies and attended industry conferences to get ideas.

They obtained an advisory firm’s market recommendations for leaders in excellence in the outsourced function. Then they sent a Request for Proposal to several service providers and conducted sessions on the company’s issues.

“All the proposals we received were very similar,” Suri says. “We found it difficult to see any differences. They all were boilerplate in their approach, and they didn’t try to customize their solution or try to identify opportunities for innovation.”

Suri says the company wanted a balance between the innovation capabilities and cost reduction, but they knew the improved customer experience was more important than cost. They recognized they could end up with an unsatisfactory customer experience if they just focused on lowering costs.

It turned out that some of the proposed solutions were based purely on cost reduction. This happened partly because in the initial discussions about the company’s issues they mentioned the digital transformation included a need to reduce costs. They also didn’t spend time collaborating with the potential service providers on innovating a solution because the company’s culture at that time lacked a focus on cross-collaboration.

Keep in mind that your company can buy low-cost third-party services. But is that what the business wants? Will it bring the innovation your company seeks? The right service provider can help your company innovate in digitizing an end-to-end process and improve the customer experience if you collaborate on your vision and needs.

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