Digital transformation can be defined as the use of third platform technologies in creating competitive advantage and value through new business models, new offerings as well as new relationships. According to IDG communications Inc., connected devices are on a steep increase and the number of IoT endpoints will reach at least 80 billion by 2025.
But as much as digital transformation entails the adoption of new technologies, it is actually more of a culture and change management issue than a technical task. 33% of organizations that participated in a recent survey admitted that cultural issues were to blame for their reluctance in adopting a digital-first approach.
Deloitte also contends that digital transformation is driven by strategy rather than technology. Whichever the case maybe, it is indubitable that digital transformation is tantamount to the success of any company. It is through digital transformation that companies can use technology to take advantage of the voluminous benefits of AI.
Here are some practical reasons as to why digital transformation matters for your company.
The “always on” customer communication/service channel
The biggest change in customer service in the digital age is that customer service never sleeps. If data from Bain & Company is anything to go by, 89% of businesses believe their competitors are doing better than them because of better customer service. This puts a new demand on every company to rethink their customer service approach.
Customers expect to get timely response and feedback to their queries irrespective of the time of day. It gets even more complicated for global companies that have to serve customers across different time zones. AJ Agrawal, a renowned advisor to Fortune 500 companies, believes that the “always on” customer service model doesn’t mean you must always be “on.” It means you must put in place a system that will enable you to respond to customer queries as fast as you can.
Most companies are now adopting a multi-channel approach to ensure fast and reliable customer service. This creates another complexity in the process because there is a need for a seamless interaction to provide a unified experience to the customers.
Let’s take an example of a customer who visits your twitter handle with a question about your service and then a day later, decides to follow-up on email. If the customer experience personnel decide to call them back, it is important that they have access to the twitter message as well as the email in order to get the full picture of what the customer needs.
When a customer uses multiple channels to talk to your firm, they assume they are talking to one person even though this is rarely the case in most organizations. The company should put measures that will ensure the customer doesn’t have to keep explaining where they left off. Ticketing is one of the ways this is implemented in modern organizations. A customer is given a support ticket and all related queries are added to a single thread until the query is marked as solved.
Employee empowerment with operational intelligence (AI)
The 2018 PwC CEO survey revealed that most CEOs (23%-51%) were still unsure of how they could leverage AI to better their business. Well, one of the best ways to achieve that would be to empower employees through various digital tools. A good example is how Tesla improves employee engagement in driving its innovation agenda. Tesla apparently realized that engaged teams are 30% more productive and they help reduce safety issues in their designs by 62%. They, therefore, developed a dashboard where employees can anonymously post feedback on their concerns.
Another practical example is how H&R Block combines human brainpower with cognitive computing. Because reading and synthesizing a 74,000 tax code is a tall order, H&R have adopted a Natural Language Processing system for analyzing tax documents. This equips the employees with invaluable insight and helps them give their customers the best advice on deductions, credits and maximizing of their refunds. Customers who visit H&R Block are given their own screen from which they can follow their Tax Pro as they take them through their info like deductions, credit, etc. This helps to give the customer confidence in the process and increases the chances of customer satisfaction.
Walmart is a huge company and it makes sense that its human resource policy document is 250 pages long. No one would be patient enough to go through such a long document. On realizing this, OUR Walmart labour group decided to create the “WorkIT” app which provides instant answers to any question related to human resource policies. Questions that cannot be answered by the app are transferred to a human expert for personal response.
These three examples serve to show how AI can empower employees and thereby make them more productive in the business process. Any company that is still lagging behind as others hop into the digital transformation craze is clearly missing out.
Data Driven vs. Data Informed
We live in a digital era and data is the new oil. That explains why companies that deal in data like Alphabet, Facebook, Microsoft, Amazon, Apple etc. are growing in leaps and bounds. But even as we develop systems to collect, analyze and interpret data, it is important to ensure that we do not confuse being data informed with being data driven.
Let’s take an example of a company that decides to do some digital marketing on Facebook or Google. The ads will most likely result in more clicks, more visits, and more revenue. A data driven process would immediately infer that the strategy is flawless and it should therefore be scaled for even more revenue. But a data informed process will seek to study more metrics by asking if there are any counter metrics. For instance, even though the clicks and sales are up, the metrics might also reveal an increase in the bounce rate.
This might mean the users are not getting a good experience so the process will need to be refined before scaling it up.
Being data driven means you look for a common ground where human expertise and computer-generated data are both applied in the decision making process. For instance, when a pilot is flying the plane, he will rely on the sophisticated controls to do his job. But at the end of the day, the pilot will have to rely on their expertise when making critical decisions.
Similarly, good decision making in the business environment can’t happen on autopilot based solely on data. Decision makers rely on data to move with agility but they should not take their expertise out of the process.
Operational assistance with AI
Human-Machine Interaction (HMI) technologies like chatbots, Augmented Reality, and Virtual Reality are an important part of the digital transformation process. These technologies can be used in the creation of innovative interaction models where humans interact with the digital systems to improve the workflow or present data in an immersive environment.
Even though autonomous systems have their place, they are not best suited for solving high-level business questions. Operational assistance with AI can help in the following ways:
- Observing the world – AI can look through years of data related to the company or specific problem from both internal and external sources.
- Reasoning – the AI receives literal questions and works out the best answers that would solve the problem at hand. For instance, in an oil drilling expedition, the question of whether a lease allows them to drill in a given location can be answered.
- Recommendations – AI can help in making justifiable recommendations to users. For instance, Starbucks implemented an AI that recommends an upsell that is related to what a customer bought.
- Exploring hypotheticals – AI can help a user to explore different scenarios in order to inform them of the best decision to make. For instance, AI can use data to guestimate the return on investment on an oil rig before the drilling commences.
Assistive AI can help the human user to make quicker decisions by using existing data coupled with user input. However, these systems only make recommendations but the final decision rests with the human expert.
Remaining agile and customer focused while growing big
Agile innovation methods have had a huge impact on technology and the entire business process. According to McKinsey & Company, firms that remain agile or those that become agile over time will do better financially than the ones that do not. We have seen huge leaps in AI and machine learning in the last 5 years.
As this trend continues, there is a need for managers who can ensure their organizations remain customer focused even as they grow bigger. The following are some tips that can help managers to attain this.
- Promoting an experimentation culture that is focused on improvement of the customer experience. The team must be inspired to keep trying new things. They should also fail and learn faster in order to know what works and what doesn’t.
- Look at the bigger picture – as you think of the short term benefits, remember to plan and document for the long-term goals as well.
- Clarify roles – As your company gets agile, take time to re-clarify the roles of your staff. Change in the company will most likely result in evolved roles so make sure everyone is up to speed
- Embrace problem solving – create a culture where conflict is addressed openly. An environment of clarity, trust and confidentiality will help to ensure this is attained.
- Invest in the team – It is proven that the companies that invest in their teams eventually rise to the top.
Becoming big without losing the personal touch
– or regain the personal touch
Frank & Oak believe so much in maintaining a personal touch with their customers that they include a handwritten note in every shipment. That truly sets them apart from their competitors. Initially, the founders would write all the notes themselves but now the company has grown too big and they wouldn’t manage to do it anymore – but they still include the handwritten notes which are now done by their staff. This is perhaps the best illustration of how you can grow your company without losing the personal touch.
The human element is the missing link in most AI-driven capabilities. Business owners must think of creative ways of augmenting this important missing element without which the personal touch will have been lost. For instance, in a small business environment, it is possible for a sales agent to remember all their 10 customers by name. But once the business starts to grow, it wouldn’t be humanly possible to remember the hundreds of customers an agent interacts with.
However, with the right tools, the human touch can be restored in the process. Neiman Marcus says they found a way of maintaining their personal touch even though the Neiman Marcus Group has grown tremendously. They use AI to stream content to their AI-Powered devices and that helps them to stay way ahead of their competition.
Digital transformation will continue to transform the business process for the better. Even though some organizations are resistant and skeptical about it, they will eventually be forced to jump on board as their competitors who have embraced the change starts to eat into their market share.
The reluctance by most companies reinforces the thought that digital transformation is driven by strategy more than technology. With the right strategy in place, AI adoption will be achieved in business without necessarily disrupting the business process. However, the status quo will in most cases be the first causality. Every business owner must be willing to take the risk of change in order to take their business to the next level.