Digital Transformation through Connected Processes

Digital is an all-pervasive phenomenon and the industry is trying to wrap its arms around it to extract real business benefit it promises. It is omnipresent and all aspect of business, from customer at one end and supplier at other with production-logistics in between, can be transformed using Digital. Creating a compelling experience with every interaction with customer is one of the key benefits apart from other efficiency / financial benefits on back end. Companies are experimenting in different technology areas like Cloud, Mobile/Internet technologies, IOT, AI, ML, Deep Learning, Robotics, Big Data and experiencing some benefits. It is still in the nascent stage for most of the organizations and experiments are being done in for limited area/topic. Industry players are not certain of what needs to be done to achieve Digital Transformation holistically and reap benefits to its true potential.

There are three important components of Digital i.e. Data Capture, Data Analysis and Business Application of the same. It is critical to understand each one and their relative dependencies to define the road map for transformation. This paradigm is different than the one we are used to for several decades. There is no dearth of data points, there is too much data, too much variety and significant speed of evolution. The critical factor for digital transformation is to identify most effective and economic way of capture/usage of this data for transformation of business. 

This blog describes one method, if followed by the organization, can provide an effective way of using digital. The method involves CONNECTED PROCESSES. Let us take example of customer information.

Customer information in various forms is used in key processes like Marketing, Sales, Merchandising, Procurement, Warehousing, Delivery logistics, Customer service, Incentive planning for sales persons, Product design, Product planning / manufacturing, etc. With the level of customer centricity organizations aspire to build, customer information in one form or other will be used in all the business processes.

This customer information is available from various sources and in various forms. The information is available from internal systems like Customer master, Purchase Orders, POS information, Loyalty programs, Customer complaints, Returns, etc.  There are indirect data points like Response to promotions, Response to social events / campaigns run by the company, etc. There is a third capability of obtaining tertiary information from social media, wearables, online transactions, etc.      

It is a Many-to-Many maze which creates difficulty for an organization. The dilemma is how to decide on what type of data to collect, how to collect i.e. what hardware / software they need to invest in as well as how to use the data i.e. what treatment that needs to be given to the data or what information should be extracted from the data intelligently vis a vis transformational benefits expected to receive. On top of this, the technology is changing rapidly, posing further challenge of selection of technology which will not be obsolete at least till it recovers the investment made.  

One of the method to simplify this journey is creating a map of connected processes and mount a layer of digital on top of it.

Let us take an example of a process of point of sale transaction at a store where customer is paying for the goods purchased. The step by step process map of this sales closure process could be:

·         Scan the items

·         Scan the loyalty card / Telephone no.

·         Apply applicable discounts

·         Scan the customer credit/debit card or receive Cash and complete payment

·         Bag the item and give the receipt to customer

·         Say thank you

Each process step requires help from other processes e.g. when you scan item, the bar code reader scans it, goes to the Item master, searches information like make (brand), design, color, size, price, etc. and displays the same on the screen. Similarly, when the loyalty card is scanned, or telephone number is provided, the CRM system is accessed. It fetches customer information like name, address, status, etc. and displayed on the screen so that the employee at POS terminal can greet customer by name. Similarly, it performs remaining steps and it either fetches or updates one or many systems in the background.

Now assume that Digital transformation team working on enhancing the customer experience believes that the experience could be enhanced if we build some intelligence in the system and make it available to the employee at POS counter to create a lasting experience. One of the idea could be “Creating special PERSONALIZED discounts/ offers ON-THE-FLY in additions to the discounts published. Each person gets specialized discounts / offers which has a significant potential for increasing customer experience as well as improvement in business volume and basket of products that a customer would buy. It would really please a customer if he/she gets special discount when he/she returns to store after a long time and gets a coupon for the brand of cloths he/she likes for the next purchase. A person would be very happy to get special deals on furniture, home decoration when he has just closed a home. Customer would definitely come back if he/she gets a gift of shirt / dress (brand which store wants to promote) based on purchase volume. A deal on travel, based on a personal event like marriage, kid getting admission to college where he/she needs to travel. Customer getting a special discount on merchandise of his favorite football team. The base idea is to create these offers without asking customer but using an AI engine which uses the information captured from multiple sources. The diagram below depicts the new process  steps for the same process at POS and how it can be implemented.

This has all the classic components of digital i.e. multiple aspects of information gathering, storage and building an intelligence from the data collected to create a memorable experience for customer. The diagram shows a different mechanisms of data collection which need to be deployed. The variety is significant and so are the challenges around selecting an economic way to deploy these mechanisms. It is the relationship between “Mechanism of data collection”, “what components of data” and “How this component to be used” which guides the path forward.

Let us take example of two mechanisms depicted in the diagram i.e. “Social Media Sniffing” and “Returns”; one appears in every aspect and one appears for only one aspect.

Social Media Sniffing is a vast area which starts from Facebook, Instagram, Twitter, and goes on.  The objective of this sniffing is to create certain profile of customer with specific view point which is required to help achieve the objective of process underway. Let us consider “Customer Likes /Dislikes” as one such view point; we are using this view point to create a personalized offer to customer at the point of sale. However, the same view point can be used in multiple processes such as Online Sales, Mobile Sales, Campaign formulation, Merchandising, Product Design. These processes are connected, and the binding glue is “customer likes/dislike view point”. Each process may use a little different processing of sub components as per its need, but the base data is common. This exercise provides a clear list of what data components need to be captured for every customer. Once we know this, we can look at the tools/ technology available at our disposal e.g. is it sufficient to look at Facebook data only or we need to look at Facebook, Twitter, Instagram or may be Tinder, etc. Which then provides us the mechanism that we need to adopt, is it going to be only indirect method, or we need to look for some direct methods like surveys (which could be designed based on holistic requirements for more than one processes) or just use the data available in the CRM system.

We have seen that Social media sniffing can be used to create some other viewpoints also like “Customer lifestyle”, “Customer Health”, “Customer Personal Events”, etc. These viewpoints are now used in multiple different processes and we get some additional data points that needs to be captured using the same or different tools / technology. These are the important points that needs to be kept in mind while selecting technology for its holistic application.

Same principles apply to the “Returns” also. The returns information is used in multiple processes in the organization in different but unique ways. e.g.  Any “Feature Dislike feedback” from this info is useful for Product Design Process to see what could be improved so that product is attractive to the customer as well as it becomes part of Like/Dislike view point. Any “Non-Performance feedback” is useful for Manufacturing process to understand if any improvement needs to be done while manufacturing the product.

Any “Damage in transit feedback” helps the Logistics / delivery process to see if something needs to be improved. This feedback is typically captured in the returns transaction either through a form filled by customer (Physical / online) or the interaction customer service agent has with the customer at the point of return. Many a times, this may not be the real reason. Company can use other methods like customer purchase history, their likes and dislikes on social media etc. to collect and corroborate the data and get the real returns view point/ information for driving improvements. This aspect of collecting data from tertiary sources to corroborate the data collected directly takes it beyond aspects of “Returns” and gets connected with multiple other processes in the organization which are planning to use mechanism of “Social Media Sniffing”. It has created two maps of connected processes.  

Thus, creating connected process map/s help us understand the ultimate data that we need to collect and the technology that we should use for the same to bring in desired digital transformation in holistic manner and reap the desired benefits.

Very few people EXCEL in personal / professional life, Do you? – a simple mantra to try!

There are a few leaders in the corporate world, who have provided a steady growth to their organization while they were disrupting the industry at the same time. You see this phenomenon in non-corporate worId also. I observed them to understand what is their secret sauce; what is that they have done which enabled them to excel surmounting the odds. 

After a careful study, I observed one common theme across all these people, their secret sauce. They believed in one simple rule and implemented it rigorously in all aspect of business or any non-business operations managed by them. They made it a point that everyone on their team understands it and incorporates it in their part of work for the organization. The rule typically is so simple that it is very easy to understand and key for winning is its comprehensive implementation across all aspects of business.

Let us take one well known example of Steve Jobs; he believed in the simple rule of “Be Yardstick of Quality”. It is easy to understand; it means the industry should look at apple products for what it is called as “best quality product” and build their products to reach those standards. This is easier said than done though.  It means all aspects of the product right from conceptualization, design, features, performance, manufacturing, distribution, sales and finally service; all aspects, should demonstrate this YARDSTICK QUALITY and being in commercial world, the product also should be price competitive in the market. The apple team, has taken this rule of “be yardstick of quality” and implemented it comprehensively in all aspect of business and result is in front of us. It takes a significant effort to incorporate the theme in all aspects of daily working when there are multiple external and internal stakeholders / partners doing their part to get the product in customer’s hand.

There are several examples like this; " Put the Customer first, Invent and be Patient" by Jeff Bozos; “Be no 1 or 2 in the industry we operate” by Jack Welch took GE to new heights. Similarly, “Non-Violence” by Mahatma Gandhi created a huge freedom movement in India leading to its independence. There are several such rules come to my mind like “Just Do It”, “Be Authentic”, “Do what you say”, etc.

One of the common theme we hear from various people / organizations is around “Customer Centricity or Customer Focus”. Different companies and their leaders provide their own spin of this theme. When we observe these organizations, we can clearly see difference in their performance, perception of their customers about them, their product portfolio, their customer service based on level of depth they have gone to implement the theme they proclaim. The organizations, which have primary focus on customer benefits in preference to regular things like cost, profitability, etc. are seen to be performing well on all fronts, including profitability.

This same thought process or mantra could be extended to an individual who wants to excel. First step is to identify a rule that resonates with you; it could be simple as “Respect Others”, “Do as you say”, “Make others smile” or anything personal like “save 20% of my salary for future safety” and Next step is to implement the same in all aspects of your life and see the miracle. Start small, experiment with it and then create your own niche.

Once again, the Mantra to excel – “Believe in Simple Rule and Implement it rigorously in all aspect of business / personal life”

Customer Experience Improvement using Differentiated Needs Pyramid

The current wave of transformation in the industry is led by the combination of Customer Experience and Digital Technologies associated with it. Industry has already reaped significant benefits from ideas of Volumes, Global and distributed manufacturing (Low cost geographies), Process optimization, etc.  Now the industry has reached a stage where most of the competing products in any specific category look similar in specs, performance, price. The only ray of light for retaining and growing customers is through creating an experience which will compel customers to repeat the process again and again. As an old saying goes that “Satisfied customer will keep the satisfaction to himself but a Delighted customer will spread the story to others”, the companies are vigorously working on building a great customer experience.

The customer experience themes and actions have now moved from touchpoints to journeys; the responsibility to drive implementation has moved to the leadership levels in the organizations. Consulting organizations like McKinsey have built models around how these journeys should be undertaken by the organizations to reap the maximum benefits; Forrester Research have defined six disciplines for great customer experience i.e. strategy, customer understanding, design, measurement, governance and culture; Wharton's Professor of Marketing Barbara E. Kahn has established an evolutional approach to customer experience as the third of four stages of any company in terms of its customer centricity maturity and so on…. There is a significant variability in this exercise as it depends on selection of journey which is determined by the interplay of strategy, business criticality, customer feedback, competition, organizational change required, etc. These factors are different for each company and thus each journey for each company is unique giving rise to anxiety and uncertainty of its success.

I feel, if one uses the good old Maslow’s Theory to create a differentiated needs pyramid while designing Customer Experience improvement initiatives/actions, the results could be effective and predictable. 

Briefly speaking, Maslow’s theory states that people are motivated to achieve certain needs and that some needs take precedence over others. Our most basic need is for physical survival, and this will be the first thing that motivates our behavior. Once that level is fulfilled the next level up is what motivates us and so on. The hierarchy includes Physiological, Safety, Belonging/Love, Esteem and Self Actualization in that sequence. There might be cases where some needs at higher levels get satisfied before lower levels but overall trend for large % of needs follows the hierarchy. The first four levels are called as deficiency needs i.e. they arise due to deprivation and intensity of these needs is directly proportional to the level of deprivation and the top most needs in the category of Self Actualization are called as Growth needs, which helps person in his/her individual growth. 

If we keep this hierarchy in mind and build a hierarchy of needs of customers for a product / service a company is offering, it provides a superior insight in to extent of change in customer experience in response to specific actions undertaken by the company. Let us take an example of grocery retail store and see how it works.

I have defined one such hierarchy for grocery retail and distributed various needs of customer in to various levels of the pyramid. 

For a customer, the physiological needs from a Grocery retail store would be something like, store should be easily identified by name signs and has basic things like parking, access, etc., the stores should have the most of the essential goods that the customer would be looking for, once customer enters stores, there should be a fair identification of isles v/s products to find the products easily and the stores should not be dirty.

Moving upwards to safety related needs, which cover physical, financial and other securities, would include things like detailed isle marking, properly stacked products easy to reach and remove, there are no boxes lying around and one can freely move around with no hindrance, clean and effective mechanism to keep it clean and finally you have a variety of products to choose from.  If all these things are present, then customer feels better than the store which can fulfil only physiological needs; and chances that he/she will come back are higher.

The next level of needs would include extension of products beyond Grocery, which is main purpose for customer visit, like cloths, furniture, gift articles, home décor, etc. or a restaurant, a coffee shop which could help shopper to spend some time relaxing after the Grocery shopping or some activities like cooking workshops, kids arts/craft workshop, etc. These things start building an emotional connect and satisfying multiple needs of customer beyond Grocery. This emotional bond plays an important role in bringing him/her more frequently to the store.

When we extend this emotional bonding through some highly specialized things like significant variety/choice of specialty foods like vegan, glutton-free, fat-free, sugar-free, organic, etc. or the whole store associated with any specific sport/sporting team or philanthropic activity or a gourmet restaurant, creates a CULT LIKE FOLLOWING with some of the customers. These customers are PROUD of the store and how it fulfills their needs; they visit often and strongly recommend the store to their friends and family.

The self actualization level for a store could be catering to customers by their specific needs in all the levels without being asked; if there is a shift in the needs, the store is capable to reflect and re-present themselves to their customers. Which is very difficult but could be aspired by grocery stores to achieve through latest technologies in AI/ML.

When an organization is building strategy and actions to enhance their customer experience, this Maslows hierarchy based mapping comes in handy. We should do a simple assessment for each action with respect to which customer need gets fulfilled. Depending on the level of the need which gets fulfilled, the impact on the experience and subsequent improvement in sales could be assessed. If the need at physiological level gets fulfilled, we may not see any significant change in the customer behavior, but if the need at belonging or esteem level, we can see tremendous impact.

So when we cross check our strategy and actions there in with this hierarchy we understand two important aspects

1                     Is there any types of need that are not being addressed? which means we may not reach desired level of customer experience.

2                     What kind of change we should expect from the customer after implementation of these actions.

Based on the result of assessment, the strategy and actions could be modified before implementation. This proactive approach will save missteps, wrong investments as well as miscommunication and ensure a significant positive impact on customer experience.

I have explained the concept with one example, the needs pyramid will be different for each company even if they are in the same industry segment. If each company spends energy to build such pyramid for their product/s, they can refine their strategy for improving their customer experience to give expected results.