Updated: Oct 5
by Jack Gantt
It’s telling how much a 44-acre block of city can reinvent itself for new cultures and economies over the course of a century. The materials stay mostly the same. Historic buildings still stand. The same industrial-grade metal structures still uphold a 35- foot tall rail-line overlooking the waterfront. The cobblestone streets haven’t changed either. Now, they’re just more often trampled by a fleet of Jimmy Choo’s than by a fleet of trucks packaging and shipping out fresh meat to local residents.
New York City’s Meatpacking District, which was once an industrial hub made up of 250 meatpacking plants, is today considered one of New York City’s most glamorous destinations to experience culture. Luxury retailers occupy each corner. Sought out restaurants pack out before releasing their patrons to the streets to explore the vibrant, iconic night-life. Art stays alive, in both museums and public expression. It’s an example of successful transformation and as such, the perfect setting for a night of visionary conversation on business design and transformation.
A quick search for “digital transformation” on Google Trends shows the term’s quickly increasing prevalence since 2016. While this, on the one hand, means it is probably great buzzword ammunition to impress in meetings, leadership must accept it as a strategic imperative.
The three main characteristics defining this disruption-fraught operating environment are ubiquitous data, unlimited connectivity, and massive processing power. Ubiquitous data means that there is nothing you can’t know – no mysteries about who your customer is or what they want. Unlimited connectivity means there is access to everybody, everywhere and finally, massive processing power means that businesses can and should generate important insights from all that data and connectivity that humans simply can’t. Together, they have created a new realm of possibility that fundamentally changes consumer and business experiences.
Market leading businesses are well versed in these three areas and use them to their advantage; businesses that are disrupting categories have been built on them.
TO BE FUTURE READY, INCUMBENTS MUST DELIVER EXPERIENCES THAT MATTER.
In shifting their focus, incumbents need to set high standards and aim for experiences that truly set them apart. Future ready businesses provide their customers exceptional and memorable experiences, and they constantly improve and innovate these, informed from a wealth of data and customer feedback. They are modular and agile and have responded to their customers’ needs and wants by creating new ways of working, employing new talent, providing new channels, and bringing value through an eco-system of partners and platforms.
Kentucky Fried Chicken turned around their brand by building this way, cultivating a loyal and valuable customer base through a meticulous focus on customer-centricity in all aspects of their service. Since 2016, they’ve built out an omni-channel experience with a larger global footprint than Target, Wal-Mart, and Costco combined, boasting expansive home delivery, self-service kiosks, and multi-channel click-to-collect ordering that accounts for as much as 98% of purchasing in certain markets. The result has been a brand that is relevant, easy, and distinctive in its category. While just three years ago the company was closing thousands of locations, today they are opening a new store every 6 hours. Additionally, since the turnaround, Yum! Brands’ stock price has more than doubled from $52.50 to $117.50. That’s growth via an experience that matters.
To achieve something similar, there needs to be a substantial change in marketing, organization structure, and technology. Marketing needs to become more omni-channel and experience based, driven by meaningful data. The structure of the organization, channels and supply chain as well as talent processes, people activation, and culture must be reconfigured to match the ‘experience’ now expected from consumers. And, of course, the technology needs to be purposefully wired to deliver and elevate the experience, as well as inform in real or near real-time.
KFC is more of an exception than the rule. Right now, only 48% of marketing professionals believe they can deliver an exceptional customer experience. In fact, only 22% of consumers believe that brands are capable of delivering on such a promise. This gap signals that the need for substantial improvement on the journey towards being future ready is critical for all brands.
THERE IS MORE THAN ONE WAY FORWARD.
The path forward can be daunting. There is no fast route to transformation; it takes time, energy, and organization-wide perseverance. As we have illustrated, it is a necessary journey for all incumbents to take, or they risk becoming a casualty of disruption. No company is exempt from creating and executing a strategy to advance.
Depending on your organization type, industry, and current state, there are multiple paths forward. MIT CISR has identified four key pathways to Future Ready, all of which require considerable effort and the ability to pull the whole organization together to achieve it.
Pathway 1: This route moves towards an industrialized state before investing in customer experience. The businesses that choose this route generally invest in transforming the organization to become more efficient first, discarding legacy systems and structures before embarking on customer centricity. This path is especially at risk if their competitors’ services and brand offer more appealing experiences.
Pathway 2: Here, businesses add features and channels to support customer centricity, and may attract new customers that are initially unprofitable, thus reducing margins and putting strain on the financial performance of the organization. However, once a strong experience is established, organizations can ramp up efforts in efficiency to move towards profitability.
Pathway 3: This is typically the most popular approach. It creates a roadmap with small changes in both directions, providing improvements in customer experiences while at the same time driving efficiencies. The key to success here is to make sure the whole organization is aligned around the same direction at any one time, or efforts and investment will fall flat.
“We do believe transformation starts in the board room with a top down approach, but we also believe that for this to be successful, you have to get everybody in the enterprise on board- and you do that by working collaboratively with a lot of different people and partners.” —Carla Hendra, Ogilvy Consulting
Pathway 4: This is chosen when the organization deems it too difficult to change and decides to create a new ‘Future Ready’ company. This choice may see the eventual demise or significant reduction in the original business as it fails to meet the needs and wants of modern consumers. The acid test is if the new organization can sufficiently out-perform the old business to manage all stakeholders.
Click here to receive the PDF version of the the full paper: email@example.com
Please put “Future Proofing your Business” in the subject line.