What digital transformation actually means for marketing departments
Great, another buzzword. Just what we needed.
The term digital transformation has been overused to the point where no-one understands what it actually means anymore.
Besides which, it means completely different things to different people.
Has everyone hijacked digital transformation to reflect their own set of problems?
If you work in marketing, what should it mean for you?
We think that digital transformation is less of a technology stack, and more of a mindset hack.
A mindset that has the customer at its heart.
But before we talk digital transformation in marketing, let’s examine the mess everyone else has made of it.
What is digital transformation, really?
Some thinkers define it as the ‘speeding up of business processes, activities, competencies and models’ to fit with a digital world. (CIO World)
Forbes believe digital transformation is a shift that happens; from promoting your brand - to creating customer ecosystems. It is more about experiences than organisational change.
And some argue digital transformation is a cultural change that enables ‘continual challenge of the status quo’ and ‘getting comfortable with failure.’ (Enterprisers Project)
So as you can see, it’s really simple. It’s about changing processes and activities. Or ecosystems. Or culture. One of those three.
Digital transformation, like so many other buzzwords (we’re talking about you, ‘agile’) isn’t worth the paper it’s digitally printed on.
It could be cultural change, it could be how you operate and deliver value to customers, it could be your business strategy.
The only truth here, is that digital transformation should look completely different for each company.
How much are companies spending on transformation?
How much will this cost marketing departments? In short, lots.
IDC estimates that 40% of all technology spending will go toward digital transformations, with enterprises spending in excess of $2 trillion by 2019.
Despite this, only 53% of companies have a full transformation roadmap (PWC, 2015), and according to IDC, 50% of the Global 2000 (Forbe’s ranking of the largest public companies) will see most of their business depend on whether they can transform by 2020.
Are we running out of time? Over 80% of enterprise decision makers think they have two years before they get swallowed up by the competition (Progress 2016) To top this, 4 in 10 companies will be displaced if they don’t keep up, in the next five years. (Digital Vortex, 2015)
Digital transformation is really important to us all. Despite this, it’s still an unholy, disorganised mess.
Digital transformation projects aren’t going too well
58% of UK companies ‘put off’ following failed transformation projects (econsultancy).
Last year, UK retailers spent £1.5m on failed or cancelled attempts to transform. According to Fujitsu’s PACT research in 1,600 businesses, in retail alone 74% of these projects aren’t linked to business strategy, and consequently fail.
Why all the failure?
Without data insights and decisions based on patterns, digital transformation is guess-work.
A lot of digital transformation is about ‘keeping up with the Joneses’.
Whereas we all know that successful projects need to be well-planned, controlled and with clear objectives.
Some businesses are tempted to make quick wins, adding technology to their existing systems.
But chucking money at poorly defined problems, and hoping for the best, won’t work anymore.
Transformation has to be a wholescale force for the business, not an afterthought.
Even GE, one of the world’s most powerful companies, made a mess of their own transformation.
With poor investment decisions, declining corporate culture and a mismatched strategy, $100 billion was wiped off their stock value in 2017.
Digital transformation projects fail because of fear.
We say, don’t emulate what your competitors are doing, but look deeply into your existing business models, processes, jobs and talent, and find the new edge.
Digital transformation nightmares
GE isn’t the only company to run into trouble in the middle of a digital transformation attempt.
Procter & Gamble wanted to become ‘the most digital company on the planet’ in 2012, but ran into growth problems.
Nike had to halve the size of its digital department in 2014, after its Nike+ Fuelband activity tracker failed.
Ford invested millions in new digital projects, only to see its stock price lag behind.
Changing culture is harder than changing technology.
It needs businesses to lift their heads above the parapet and challenge what they know.
To experiment, get comfy with failure, and walk swiftly away from the stuff that doesn’t work.
How does this affect the future of marketing?
Marketing went digital first, which is the problem
For many of us, marketing has always been digital.
With email, web marketing, SEO, social media and content, marketing was ‘transformed’ a long time ago.
But that’s the problem. Marketing was digital in isolation.
Now, transformation is drawing marketing out of its isolated home, and forcing it to draw new digital links with sales, finance, development, operations and customer services.
In a digitally transformed business, marketing doesn’t own the outcomes.
Actually, marketing is integrated into a wider business effort, where products and services are the main drivers of growth.
Scary stuff, right?
The problems don’t end there.
Because marketing has been online for over two decades, there’s a huge range in the level of uptake in most businesses.
Some companies are totally integrated, whereas others lag behind.
As well as having to integrate with other departments, another challenge that digital transformation poses to marketing is the decision to go in-house, or outsource.
With the growth fancy new digital agencies, where should you turn?
Here’s what a global digital director had to say about this:
“While I wouldn’t like to see digital expertise in silo, there is a need to bring expertise in from the outside world. We can’t repurpose everybody.”
This company is in the midst of a “huge road map in media transformation” and therefore;
“To boost, and boost that quickly, we do need to bring expertise in from the outside world.”
As well as the challenge of changing skills, outsourcing to agencies, and integrating more widely, what other ways is digital transformation changing marketing?
Digital transformation will reshape the way we do marketing.
One of the biggest shifts for marketers is that digital transformation changes our traditional ways of thinking.
Instead of driving customers with broadcast media through the traditional ‘funnel’, transformed marketing is driven by data, powered by automation, and optimised by analytics.
This is about reacting in real-time to each person’s behaviour - altering the conversation and providing new information at each stage of the the buying journey through the use of ‘inflection points’.
The knock-on effect of this is that old fashioned ‘waterfall’ marketing projects are fading, in the face of a more nimble strategy built with the customer at its heart.
Hold onto your hats, marketeers.
Marketing that won with culture over tech
One company that won at marketing transformation is SAP.
By creating a fun, rewarding infrastructure, Chief Digital Officer Jonathan Becher created a company culture that could meet changing customer needs:
In marketing, a new culture of experimentation will help you lead the way.
So how can you follow these models, if you manage a marketing department?
Start by obsessing over the customer experience and build your vision from there.
Instead of focusing on technology, focus on buy-in from the team and a shared goal that you work towards and measure continuously.
“We try to build teams that thrive in an environment with a clear direction, but the details are unspecified. Teams are able to try a bunch of things and fail fast, and hold themselves accountable and measure themselves rigorously.” - Alex Roetter, Head of Engineering, Twitter
The future of marketing, transformed
Instead of old fashioned, expensive campaigns, why not growth hack your way to success?
Set a vision around the customer
Measure progress within the team
Consider investing some of your budget in digital products that wow your customers, and keep them loyal.
Not only will this help your marketing evolve, but you’ll naturally pick up the skills you’ll need to stay competitive as a brand, as a team and as a marketer.
Signed: A True Friend