Future-ready: getting fit for digital business

Rob Laurens

So…you’ve been disrupted

The cause?

Digital created a perfect storm:

• Evolving customer behaviour and demands

• Falling demand for traditional products

Bringing plenty of threats to most industries:

• New entrants with new operating models

• New intermediaries

• New business models

• New gatekeepers

Entry of invasive species:

• Digital-first mindsets

• Leaner & smarter

• Data-driven decisions

• Focused on customer ownership

Equipped with commercial superpowers:

• Super hearing: listening to customers even when they are not in the room

• Super speed and agility: platform, processes & people

• Super service: customer focus, data and logistics

Lower barriers to entry:

• eCommerce brought new competition from plethora of small niche companies

• Selling on platforms like eBay

• With access to low cost technology in the Cloud

Inevitably there have been casualties:

• Increasing competition

• Putting pressure on revenue and margins

• The decline of the traditional intermediaries

• There will be more

Because change is hard:

• The 4 phases of the Change Curve

• Phases 1 & 2: Denial & resistance

• Characterised by push-back & lack of internal alignment

• Slowing businesses on their efforts to get out of the blocks and get to grips with the shift

There are very real roadblocks:

• Digital impacts on entire organisation

• Every function, fiefdom & budget

• A challenge to ingrained structures, processes and habits

Hard for established players to catch up:

• Encumbered by legacy technology, skills, culture, structures and processes

3. Exploration phase:

• Acceptance of changing environment

• Developing digital capability

• But mainly defensive & reactive

• Often simply digitising existing processes

A false sense of security?

• Creates a sense that we are already “doing digital”

• But doing digital isn’t beingdigital

• Simply a tactical response to a strategic issue

Three flavours of digital transformation:

1. Re-engineering of the entire business model based on digital technology

2. Solely focusing on the operating model elements, such as improving customer experience or operations

3. Digital upgrade to increase efficiency or effectiveness at something your firm is alreadydoing

Clarity on what it is:it is only digital transformation

when you use digital technology to change the way you operate

Many companies stuck in a catalogue culture?

• From catalogue culture to digital mindset

• Shift from “set & forget” to..

• Dynamic “always-on”

• A need for better teamwork

Meanwhile the elephant in the room:

• Proven category killer

• While established players playing catch-up…..

• They have been busy raising the bar…..….and the stakes

• The dilemma…..

• Resellers more reliant on them for sales…but suffering from its competition

Changing expectations:

• Shifting focus from products, services and channels to the customer

• Customer experience the key differentiator

• Particularly with commodity products

With a compelling value proposition:

Save time:• One stop: > 100 million products

• 1 click buying

• Product discovery, personalisation, recommendations and reviews

• Faster shipping

Save money:• Price transparency - compare

prices from multiple sellers in their Marketplace

Making it easier:

• Relentless innovation and investment to remove customer pain points and add value

• For example a service that tracks and analyses a company’s purchases is very useful

• Taking market share from established players

Brought the industry to a moment of truth:

• A fight for relevance & survival

• Getting into shape for a digital world

• What is our purpose today and tomorrow?

• How do we stay relevant?

• Is it already too late?

Office Depot:

2014, the company decided enough was enough and that it was time for a reset.

Driving commitment:

• Phase 4 – commitment

• Going “all-in” for change

• Embrace digital transformation in every corner of the business

• Challenging everything, everywhere

In the struggle for survival the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.

Charles DarwinThe Origin of the Species

When it’s survival of the fittest:

It’s a good idea to get fit:

• Create a new narrative for change

• Shift conversation from threat to opportunity

• Work to get buy-in across the organisation

• Begin a serious effort to improve digital business capability

No-one said it was easy:

• Making fundamental change happen

• While keeping the show on the road

• Recognition that talk is cheap

• Execution is everything

• Developing muscle memory takes time & practise

There are lots of pieces:

• That need to fit together

• And become future-ready

It’s important to start with a framework:

• Break it into manageable chunks

• Outside-in thinking

• Not what the business thinks is best for customers

• But taking the customer perspective

It’s a process:

• From the moment of truth

• To absolute clarity on where you are and where you’re going

• Getting the team aligned so everybody pulling in the same direction

• Roadmap to stay on course and track progress

It’s begun in the office products industry:

• Mergers (and attempted mergers)

• Continue delivering shareholder value when organic growth stalls

• Strategic acquisitions

• Innovation centres

Office Depot:

• OD $1 billion strategic acquisition of CompuCom Systems; products and solutions that enable the digital workplace for enterprise, small and midsize businesses.

• CompuCom kiosks rolling out in all 1,400 of its locations

Staples:

• Bought PNI Digital media; allows customers to print business cards, wedding invitations and premium photographs.

• Also bought MAKR; software that allows customers to develop their own brands

Renewed visions:

• Broader range of business services

• An omni-channel future but digital first with reducing retail footprint

• The need to be fanatical about driving down cost

• Driving productivity and efficiency by digitisation throughout the supply chain

Staples:“The big picture is really extending the selection beyond office supplies….. we want to be a one-stop shop for all business needs.”

“Office Depot:Technology is the office supply of the future” Gerry Smith CEO

Leveraging assets:

• High spending loyal customer base including enterprise accounts

• Variety of customer bases e.g. Education

• Businesses still need office & technology products

• Store networks; enabling fast delivery and personal service

Amazon opened their first physical store in New York City in March…..implement brick-and-mortar stores that will have the capability of same-day-delivery. Now 11 book stores.

Create new value propositions matched to customer segments:

• Figuring out what the customer of the future wants & needs

• Particular focus on SMEs and mid-market

• Services as well as products

Staples: The things customers want these days are speed, convenience, and the

best price those things.”

Office Depot:

…opportunity to bring world-class IT support services to all of Office Depot’s customers, particularly underserved small- and medium-sized businesses (SMBs).

Staples:

“Let’s be clear: it’s not going to be just physical. But it’s not going to be just digital, either - it’s going to be a hybrid.”

New brands:

• Winc: Work Incorporated

Differentiation:

• Repositioning

• Change the perception that investors and customers have of the business

Winc: Tools, environments and guidance Everything in one place, tailored and

delivered to your deskthose things.”

Office Depot pivoting the company from a traditional office products retailer to a broader business services and technology products platform

New thinking:

• Not a ‘more-of-the-same’ strategy

• Bring a breath of fresh air to an industry that has historically been both traditional and predictable

“This rebrand goes far deeper than our new name and identity. This will be the start of a complete change to the customer experience”

“It is more than defending disruption from the likes of Amazon, it’s about developing our ability to see around corners and fully anticipate customer needs.”

Darren Fullerton – CEO Winc

No silver bullet:

• Not technology

• Business leaders often default to discussing IT infrastructure, technologies and applications

• That is only part of the equation

Six key elements:

• Holistic approach

• The multiplier effect

1.

Mind-set

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

Mindset:

• Journey not a destination

• A renewed culture of dynamism and continuous improvement

• Small, continuous actions are the foundation of habits that stick

Mindset:

• Aim to become a “Bionic business”

• Humans and machines working effectively together

• Humans using technology to create value for other humans

• Acquire those customer experience superpowers

Think people before technology:

• Relatively easy to update tech

• The machines don’t feel or care

• But humans are harder to update and they care quite a lot

Address underlying causes of resistance:

• Uncertainty about the future

• Perceived loss of power

• Increasing workload

• Competence concerns

• Actual professional harm

1.

Mind

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

Don’t ignore your core:

• A strong core underpins everything

• The central link connecting all the parts

Six pack:

• Clarity on purpose and destination

• The needs of connected customers

• Your values and value proposition

• Your roadmap

A crystal clear vision:

“Our vision is to be earth's most customer centric company; to build a place where people can

come to find and discover anything they might want to

buy online”.

Amazon.com

And mission:

“We strive to offer our customers the lowest possible prices, the best

available selection and the utmost convenience.”

The new connected customer:

• Deep audience segmentation

• Creating customer personas

How they research and buy today:

• Their needs and wants throughout the customer journey across all channels

• Multi-device & screen size

• Customer journey mapping the focal point for co-ordinating people, processes and platforms

• Identify opportunities to remove pain points and add value

Office Depot: We’ve built into our ecommerce ecosystem the ability for us to track and understand the customer journey across both the online and offline touchpoints … allowing us to continually respond regardless of how the customer chooses to engage with us.”

Personalise and nurture:

• Not making a sale but starting a relationship

• Personalisation

• CRM particularly for B2B customers

Office Depot has built personalisation capabilities into the core platform that allow it to optimise the journey on a one-to-one basis.

Live the brand:

• Now the brand is everything they see.

• Every person. Every process. Every value. Everything that happens

• Customer centric lip service won’t cut it

Renewed culture?

• Back to a start-up mentality?

• Stay lean and dynamic to innovate

• Test and learn before going big

1.

Mind

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

New skills:

• Power is nothing without control

Marketing has changed and so have the skills:

• From sales (financial) led to marketing (customer) led

• From broadcast to interactive

More pull – less pushy:

• Inbound marketing

• Content as well as products

• Build brand and visibility

• Active across social media for awareness and engagement

The dynamic duo:

• CMO + CIO the new power couple

WINC (Staples) A/NZ: “We want to bring on a world-class CMO to sit on the executive table to be at the heart of this shift and bring marketing from a little ‘m’ to big ‘m’……This has been a big structural shift. We have historically been a traditional, sales-led organisation.

Nurturing & attracting talent:

• Attracting bright sparks

• Nurturing talent

• Digital natives and immigrants

• Training new skills and new blood

Office Depot:

“From a people standpoint, it was clear to us that we didn’t have the right talent internally at the time to deliver our aspiration.”

1.

Mind

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

Power to get things done:

• Technical platforms

• Team formation

Technology:

• Typically a rat’s nest of systems and complications

• Blocking efforts to improve customer experience such as personalisation initiatives

• Need to simplify, find synergies, and improve internal process control

• Move to the cloud?

Office Depot:

“When it all came down to it, we did not have the business ability to run a world-class ecommerce data centre.”

Get on cloud nine:

• Less capital expenditure on server set-ups

• More flexibility - scale up and down as required

Tech stack:

• Loosely coupled systems for flexibility in fast-moving technology ecosystem

• API integration for interoperability

Demolish silos:

• And flatten hierarchies

• Speedier execution

• More innovation

• And joined up customer experience

Staples:

VP of e-commerce and customer experience at Staples.

Aligning our e-commerce and global technology organizations under one leader

Office Depot:Aligned its ecommerce, marketing, and IT operations with a single view of online performance

1.

Mind

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

Effectively harness data:

• Data drives performance

• If it is actionable & real-time

• In the hands of the people that need it

• Improve targeting, cut out waste and increase ROI

Office Depot

From: We have a ton of data. We don’t know what it’s telling us.

To: online performance management has moved from the back offices to the forefront of the business

Getting the KPIs right:

• Common data sets from top to bottom

• Objectives are still important

• But less obsessing over metrics that are tied to business goals

• 80% of Amazon’s metrics provide feedback on how well it is helping customers achieve their goals

6. Agility:

• Where it all comes together in execution

• Speed and complexity of digital requires business flexibility

1.

Mind

2.

Core

3.

Skills

4.

Power

5.

Data

6.

Agility

Agility:

• Not just Agile for digital product development

• Also marketing

• And throughout the organisation

Processes:

• Simplify

• Simplify

• Simplify

Small, medium or large:

• Not only for the big dogs

• Same principles apply

Case study for smaller businesses:

• Fröscher a traditional 100 year old office furniture manufacturer

• Employees there for 40 years

Recognition of the need for deep change:

• Their moment of truth

• Recognition of adapt or die

• They chose to adapt

• Understood customers’ purchasing behaviors and the power structures between buyer and supplier have shifted

There’s less “I guess I’ll pick something from the catalogue” and more “I demand a solution

tailored to my needs”.se things.”

Digitalization has made it simple for everyone to buy from virtually any supplier around the globe

New partnerships and products:

• Integrated with a company, specialising in office communication technology

• Designing custom-made office furniture fit for modern office communication

• Table tops seamlessly integrate with touch screens

• Meeting participants wirelessly connect smartphones or laptops

Shared vision:

• A necessary reinvention of its business model

• Could not be supported by decades-old structures and processes

• Workshops to develop a shared vision for the company’s future and to foster inter-departmental alignment

Reengineering processes:

• Started on a journey to reinvent its inner workings in 2016

• Modern management skills and structures

• Adopting and adapting Agile methodologies

• Self-governed teams with less command and control

Renewed customer focus:

• Closer collaboration

• Identify what problem their new meeting tables are actually supposed to solve

• Turning their account managers into product owners and internal client representatives

Shared vision:

• Already moved a long way

• But not without challenges

• Recognition that there’s still a long way to go

Get ready for more change:

• It’s only just begun…….

• Need to get fully fit for the changes, challenges and opportunities ahead

Innovation:

• Rise of the digital assistants and voice search

• Powered by AI (with people sitting behind it)

• Echo or Alexa or Google Assistant

• Google Assistant already in 100 million devices

Return of the easy button

Innovation:

• Using artificial intelligence technology to allow customers to order office supplies via voice and text

• Using a digital version of its "easy button“

• Teach IBM’s Watson to accurately and reliably respond to many requests that their clients have on a day-to-day basis

Business benefits from getting fit for digital:

Look better and feel better Attractive to customers & employees

Stay mentally sharp Keep innovating; stay competitive

Become more productive Be more efficient and effective

Faster reactions and agility React faster to opportunities

Improve circulation Better business flow & teamwork

Combat the effects of aging Stay relevant to connected customers

Get fit for digital business:

• If you haven’t started the transformation journey in earnest

• If you are still in the exploration phase being tactical

• Lace up your metaphorical trainers

• Warm-up your team

• Get strategic and get fit for digital

Live better, longer

Survive and thrive

Thank you