3 principals of digital simplicity
Central to your digital strategy should be the vision to “simplify the business”.
In the haste to become competitive in the digital economy, companies are building new customer systems such as CRMs and expanding their websites. These digital efforts are certainly visible, however it is a false veneer unless this is coupled with a significant simplification initiative as all of these good intentions can actually make the business less competitive.
We all know that new systems cost money to implement and maintain. As per normal business process the cost is justified in the business case ROI, often through increased online sales or brand awareness. However, without a focused (and funded) effort on simplification, your costs to do business increase as your operational drag gets heavier.
As part of the evaluation of any new initiative the business needs to ask itself “If we start doing this, what are we going to stop doing?”
A simplification program is always tailored to the company. However, there are at least 3 basic principles that should be applied as you deliver your vision.
1. Identify the Value
New competitors to your market don’t arrive with your internal overhead. New market entries have the advantage of simple processes and systems. This results in a significantly lower cost to service the customer. Your website might be able to compete but unless you have reduced your cost to do business you are always going to fall further behind.
One of the first steps is for cross functional teams to be established to undertake ruthless organization-wide reviews of old procedures, duplicated governance and legacy red tape. If something doesn’t explicitly add customer value or, even worse, weakens an offering, then it needs to go. From a technology sense this may include retiring entire IT systems or merging platforms before or while you build your new offerings.
Simplicity in technology and processes leads to speed, flexibility and success. It is the key to market and business competitiveness. To continue to compete, established companies will need to simplify by stopping and turning things off. Smart businesses reduce IT spending by decommissioning legacy systems and simplifying their technology environments but, critically, also address their processes. Take a strategic approach and work backwards from your customer personas to determine which IT systems are adding real value.
2. Apply Solutions Holistically
Significant rewards await companies that can step back and apply their digital investments in a holistic way. If customer-facing teams need a new system, then perhaps the evaluation needs to include whether or not it can deliver operational improvements across the full value chain. Perhaps the same products that Sales use can be easily be adopted in Procurement or HR. You reduce your operational drag costs but also start benefiting from sharing the same data.
Looking across your supply chain and integrating your products, services and processes with customers’ digital information delivers the real benefits of digital. When used well, digital expands the improvements delivered in one part of an organization across the whole value chain.
You have a new cutting edge product but also the added advantage of realizing benefits across the entire business.
3. Size Doesn’t Matter to a Silo
Larger companies realise the value of a digital transformation. However, they face a much harder road towards digital integration. This is because they usually have more entrenched practices and well established business leaders who have been very successful in controlling functionally independent silos. Often, they don’t want to give that up. Companies that want to compete in the new digital economy cannot operate within internal silos. C-suite executives must come together and lead the way in laying down a strategy and execution road map to accomplish this.
Small and medium-sized enterprises (SMEs) have an advantage in terms of agility, size, and flexibility to seize the gaps in the digital marketplace and transform their organizations. However, with the benefit of lower price barriers to entry for SaaS they run the added risk of increasing complexity and creating their own legacy systems very quickly. They rapidly get big company problems at a much smaller cost.
They need to take the same approach as big business when they implement new systems – what can we stop doing? Don’t race ahead and buy new products because they claim to do amazing things and you can afford them – use your size advantage to take a holistic view early and create systems that share their benefits across the entire business.
Don’t take a fashionista approach to digital transformation. Look holistically across your customer supply chain, identify waste and spread your investment across the pain points that will provide a return from analytics, automation and digitization. Reducing operational drag and using analytics to identify waste and new opportunities will always provide a greater return than a big website spend.