The Digital Transformation Roadmap that Anyone Can Follow

Dec 7, 2015
7 Min Read

When you’ve been involved in business operations for more than four decades, you’ve learned a thing or two about strategies and how to put them in place.  A veteran shares his wisdom and best practices for digital transformation that makes sense – even for those outside IT.

Eric Clemons, a professor of operations, information and decisions for The Wharton School at the University of Pennsylvania, often begins any advice he offers on digital transformation by couching it in terms of history.

So, if he’s asked about his opinions on digital transformation, he will talk about how he’s been in computing since the 1960s, and all the developments in technology he’s seen since then. Or, he may reach even further back and question how a caveman would react 12,000 years ago if someone told the early human about agriculture.

Um, surprised? Confused?

“Exactly!” he says.

That’s how those outside IT may think when they hear about digital transformation, he says. They may not understand it and perhaps are even a little afraid of what it means. Further, just like a caveman hearing about agriculture for the first time, they may not really understand the huge impact it will have on their lives, he adds.

Clemons emphasizes that the digital transformation taking place today isn’t just happening in a couple of departments of a business, but is completely overhauling the structure and strategy of an entire business.  While that may be an overwhelming thought for some organizations, Clemons says it doesn’t have to be as long as it’s broken down to a series of “manageable” steps and leaders realize that it isn’t so much about technology as it is information.

“Digital transformation is really a different way of thinking,” he says. “It’s just enabled by technology.”

A recent Strategy&’s analysis finds that 16 bellwether sectors, such as aviation and utilities, must not just embrace new and unexpected forms for digitization and technological innovation, but must also use them to reform their current business models. Change is coming quickly, but many business leaders and their organizations are unprepared for them, the analysis finds.

One of the ways that companies can begin to adopt transformation -- and help their employees embrace it -- is by having each one understand what it means to have the “right” customer, Clemons says.

For example, in the late 1980s, Citibank wanted to become “America’s bank” and get more customers. But Capitol One took a different approach, and “decided they didn’t want lots of customers – they wanted the right customers,” he says.

While Citibank followed the economies of scale, Capital One identified the perfect customer: the high-volume, high-balance person who carried $5,000 to $10,000 on a credit card and never completely paid it off. With finance charges, it was possible to make that customer 150 times more profitable than the average customer, he says.

Capitol One saw immediate success and soon became a household name because the digital transformation was woven into their strategy, Clemons explains. Using profitability analysis and data-mining techniques, they were able to figure out who was willing to transfer their balances for a lower interest rate, who could be cross-sold another product and who would be interested in a car loan.

Clemons explains that while many leaders or employers may feel they don’t know the first thing about digital transformation, it often can be more beneficial to have them think about what they do know about their customers and their processes. Many will be able to say they know what works and what doesn’t, and it’s through that information a digital transformation can take place.

For example, restaurants worry that a bad Yelp review can hurt the business. But if each employee is more perceptive, a server might immediately respond to a customer who appears to dislike an entrée and offer something else. That certainly mitigates the chances that the person feels compelled to post a bad review.

“You cannot buy reviews online, but you can change what a customer wants to write,” Clemons says. “If you don’t intervene, they may  write something you won’t like.”

That's how employees acting as “chief perception officers” can make a big difference in digital transformation, he explains. Being in the trenches gives them a critical view of processes that cause problems, or helps them avert a potential disaster. They can help leaders identify the outdated ideas that need to be dropped, he adds.

“It’s not about focusing on the technology, but on the information that’s available. Among your employees, who knows what to do to keep a customer happy?” he says. “There are certainly times when employees can think of workarounds that others of us miss.”

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