Marketing expert and Forbes columnist John Ellett and I recently discussed the findings from an SAP Digital Executive Transformation Study conducted in partnership with Oxford Economics. The report examined the difference between leading companies (top 3%) that were achieving significant results from their digital transformation efforts by being more profitable and growing faster than their peers (the remaining 97%).
Here is what drove the differences in outcome.
First, successful business leaders looked at digital transformation as not another IT project, so they didn’t simply relegate it to the IT department. They looked at it as true transformation; a way of changing the way that they do business. Second, they almost exclusively started by transforming customer-facing functions first. This shows that the mindset is about the customer rather than just operational efficiency.
Third, they recognized that an enormous amount of up-scaling and retraining needs to happen. Leaders understood that they need to bring in people with new digital skills to fundamentally change the talent mix within the company. We call it the “virtuous cycle of talent:” Successful companies were able to demonstrate to the market that they were investing in digital, which attracted the right people and ultimately made their digital transformation even more successful.
The last piece concerns where and how top companies invested in technology. We saw two clear patterns: Top leaders were three times more likely to invest in IoT and analytics, and seven times more likely to invest in machine learning and AI technologies.
Historically, many transformation efforts have been executed within a globalization context, starting with an operations focus to ensure that companies could achieve both efficiency and scale as they went global. This created and elevated new functions such as the CIO and COO. Once companies standardized operations across locations, they were able to deliver consistent experiences, standardized to their customers anywhere, at any time. Customer experiences were considered to be the outcome of the operations core.
Standardization and efficiency at the core are table stakes for business to survive today.
What’s different now is that in order to thrive, transformation efforts will need to be executed with a customer context in mind. It’s no longer just about consistent customer experiences. AI and machine learning, combined with sophisticated marketing technologies, enable and unlock opportunities for personalized experiences delivered at scale. That means that the customer experience has become the driver of the new operating core of the business. Unlike in the past, customer experiences have become the input to the operations core, rather than its output.
This creates new opportunities for the marketing function to think beyond the brand and demand generation initiatives that they are traditionally known for. It has the potential to elevate marketers into a strategic leadership position as cross-functional business leaders.
Marketers should take note.