This article emphasises the need to move away from the notion of quick fixes and instead focus on becoming a better version of one's organisation, by exploring the importance of understanding and leveraging organisational DNA.
In conclusion, digital transformation requires a deep understanding of one's organisation and the value it creates for customers. Rather than copying competitors or other industries, success lies in building upon past achievements and current capabilities to create a better future. Each organisation must make choices based on its unique context and ensure a strong alignment between customer value creation and delivery.
The Shifting Landscape of Digital Transformation
The pace of digital trends has accelerated in the past 15 years. Social media, big data, advanced analytics, and smartphones have transformed interactions, marketing, and consumer access. Digital technology has opened opportunities for new strategies and business models. Being a leader digital or lagging behind is evident in customer experience and personalisation. Success is measured by customer behavior and brand affinity, not just transactional data.
To design the organisation of the future, we must understand our organisational DNA in creating and delivering value to customers.
We often look at successful digital transformations to learn from them. Giant corporations execute their strategies with massive success. We analyse their approaches, build frameworks, and apply them elsewhere.
Challenging the Myth of Best Practices in Digital Transformation
While we can learn from competitors and digital leaders in terms of practices and solutions for leveraging technological opportunities, we should not rely on them as quick fixes.
Despite the availability of best practices and off-the-shelf solutions, it is important to recognise that these frameworks might not guarantee immediate success within your organisation and technological landscape. While they offer a starting point and can help structure transformation projects, they often lead to outcomes such as a lack of value realisation, scope changes, extended timelines, cost overruns, and organisational readiness challenges.
Under Armour: Organisational DNA as the Core of the Customer Value Proposition
Under Armour's success story revolves around their successful transformation by refocusing their customer value proposition on their core brand values of supporting athletes and high performers and creating a narrow definition of their competitive field and core audience.
During their digital transformation, Under Armour faced challenges from consumer trends in the apparel industry, such as athleisure wear. Additionally, they struggled to leverage their activity tracking platforms as a competitive advantage despite significant investments. However, instead of diversifying their product portfolio, Under Armour persevered and stayed true to their DNA of enhancing performance.
Through partnerships with sports leagues and professional athletes, Under Armour symbolised their commitment to their core values and resonated with their target audience. They also formed the foundation for their extensive ecosystem of offerings in community building, education, and entertainment, both online and offline. By leveraging the focus on performance and the community around professional sports, Under Armour diversified their customer brand experience.
By shutting down Endomondo, Under Armour could focus on delivering a comprehensive performance-focused user experience through their flagship platform, MapMyRun and MapMyFitness, with smart product connectivity giving Under Armour access to more detailed performance data.
Under Armour successfully utilised their community and first-party data to develop products tailored to the needs of their core customers, aligning with their key values. Their investment in the digital customer experience, including app connectivity and digital showrooms, further enhanced their competitive edge by creating an omnichannel experience further leveraged through their brand communities.
The Under Armour case demonstrates that successful transformation begins with defining the arena in which a company wants to compete. By doubling down and refocusing on their core customer value proposition, Under Armour transformed from an apparel company into a tech company, delivering a coherent omnichannel experience centered around enhancing performance. Their ability to create a strong customer experience and community based on their values highlights the value of organisational DNA as a crucial source of competitive advantage.
Amazon: Leveraging Existing Capabilities as a Source of Opportunities
When considering transformation, it is important to examine both the customer value proposition and the organisational implications. Amazon's success in growing their advertising business provides an example of leveraging existing capabilities and forming strategic partnerships. Despite a slowdown in the digital advertising industry, Amazon achieved over 21% growth in 2022 by prioritising the customer and continually improving the customer experience.
Amazon's advertising success can be attributed to various factors, including partnerships with entities like the NFL and Pinterest for increased ad placement. However, a holistic view of Amazon's strategy reveals a customer-centric approach. The company's belief in prioritising the customer is symbolised by the empty chair reserved for the customer in every Amazon meeting. This commitment is translated into action.
The transformation of Amazon's advertising business is a triumph because it builds upon the company's existing digital capabilities. Through the Amazon Marketing Cloud (AMC) and its integration with Amazon's DSP, Amazon has created a foundation for tailoring offerings to meet advertiser needs. AMC can be seen as the operationalisation of the reserved chair in the meeting, now occupied by the advertiser.
Not only does Amazon provide added value to advertisers, but improved targeting with AMC also enhances the personalisation of the customer experience across advertising spaces. By effectively leveraging their existing data capabilities, Amazon has created a complementary offering to its core business. Partnerships have expanded the scale and diversity of advertising space available through Amazon Ads.
Through these initiatives, Amazon has established a near-ubiquitous presence, being present wherever the customer is, both online and offline. AMC has become a tool for increasing the relevance of this space.
Reflections on Best Practices, Risks, and Organisational DNA
While not all companies have the same scale as Amazon and Under Armour, the conceptual learnings from their success stories are still applicable. It is important to let go of the idea that there are quick solutions or off-the-shelf best practices that can mitigate risks in transformation.
Transformation inherently involves risk, and instead of simply copying external examples, organisations should focus on becoming a better version of themselves. There is no one correct answer for what this improved version looks like, and there can be multiple scenarios for successful outcomes. However, realising the value of transformation requires actively managing decisions and their implications.
The cases of Under Armour and Amazon highlight two essential elements in the DNA of an organisation. First, there is the centrality of creating added value for customers. Second, there is the organisational fit of the operating model in delivering that value. The interconnection between these two strands must be considered in every decision. Choices made in one area will have implications for the other, and actively managing these interdependencies is key to achieving a successful transformation.
Charting the Path to Transformation: Defining Ambitions, Mapping Dilemmas, and Designing the Roadmap
To guide your transformation, it is crucial to have a clear understanding of your business ambitions. Define the purpose of the transformation and formulate a strategy for creating value for your customers. Consider the potential rewards and the likelihood of success. One common dilemma is choosing between creating significant value for a few or lesser value for a larger audience. Make concrete choices to differentiate yourself in the market and develop a conceptual blueprint for delivering this value.
Once you have outlined your value proposition and delivery blueprint, identify the dilemmas they pose for your desired transformation. Decide whether platform ownership should be placed in the business or IT, determine which parts of the organisation will facilitate various capabilities, and consider whether to partner for certain capabilities or build them in-house for long-term independence. Each choice will have organisational implications, and it is essential to map these implications for your operating model.
Ensure that you fully understand these implications as an organisation to make informed decisions that align with your long-term strategy. Successful transformation requires commitment to managing these implications and focusing on organisational fit and feasibility. Design your operating model based on complementary capabilities creation supported by the right platforms. Tailor your choices to your organisation and its DNA, prioritising customer value creation and delivery. It is easier to configure technology within an existing organisation than to organise people around a specific platform choice.
To achieve a successful transformation, you must address not only the business challenges but also the organisational ones. Create a comprehensive transformation roadmap based on your chosen target operating model. This roadmap should include onboarding new platforms, upskilling employees, collaborating with external partners, aligning key performance indicators (KPIs), establishing the right governance, and transforming ways of working. Additionally, consider the importance of sensemaking to inspire support and commitment from those affected by the change. Develop a transformation narrative that communicates the significance of the change, bridging the past and future success of the organisation.
Avoid simply copying your competitors or leaders in other industries. Future transformational success relies on past achievements and current capabilities, elevated to create a better organisation. Transformation is about enhancing your organisation and creating value for your customers. You have the choice to create value for a broad audience or focus on providing exceptional value to your core customers. This is your first decision among many during the transformation journey, and it should be based on your unique context.
At Responsive, we take pride in supporting the brave individuals and organisations that take risks to create value for their customers. We can help you navigate the dilemmas you face and tailor a transformational roadmap to your specific needs and the needs of your customers. Our goal is to help you become the champion of your own success by building the customer experience of the future.