Customer value innovation is what should drive your business transformation

Don’t be intimidated. You don’t have to fear that disruption will leave you behind and send your customers to the competition. Instead, you can chart your own path to digital business transformation and gain mastery in creating customer value. The tools and methodologies to make this happen are available, proven, and affordable.

Let others get disrupted. You perform controlled, value-driven change management.

In manufacturing, transportation, the public sector, professional services, and many other industry sectors, the talk of disruption is unceasing. If it’s not happening right now, it’s imminent. If it’s underway already, it won’t stop soon. Competitors and innovators using advanced digital technologies are revolutionizing business models and making inroads where established services and ways of thinking dominated for generations.

While business leaders know that they need to deal with the aggressive aspect of disruption, that’s typically not what they want to realize in their own organizations. If they need to prepare for digital business transformation, they hope it can be accomplished in gradual, controlled manner, without alienating their long-time customers and trading partners – but in time to capture the innovative momentum and compete against the disruptors.

That kind of approach is certainly practical and promising. Digital transformation is not about purchasing more of the latest technology products, but making more strategic, connected use of those that you already own, and making sure the company is unequivocally focused on delivering value to its customers. As Forrester points out in its recent report, “To maximize the impact of digital investments, business and technology leaders must learn to value such investments through the eyes of the company’s customers.”

Digitally enabled services need to deliver measurable results

Something as mundane as a systems integration can support your digital transformation and help you launch digitally enabled services. For example, if your typical product is a complex, expensive machine that for most customers is business-critical, you can gather live data from the machines you place on customer sites.

You can connect that data to the engineering, manufacturing, and asset management capabilities within your ERP infrastructure. As a result, you can offer customers predictive maintenance services along with collaborative, individualized innovation of new or enhanced functionality. It’s a classic case of digital transformation or Industry 4.0, bridging physical objects and digital data in cyber-physical systems. Even better, this doesn’t even have to get expensive. In the modern, public enterprise cloud, standard systems integrations, business analytics, and almost any conceivable software capability is readily available and highly affordable on a subscription basis.

Forrester notes that a “classic ROI calculation” is not always practical or even helpful for digital investments. However, you need to ensure that your activities and investments are worthwhile and yield the results you look for. That means you have to assess the outcomes one way or another. There may be intangible aspects to the digitally enhanced customer experience, for example, but it should have a measurable impact in terms of customer retention, repeat business, referrals, improved NPS score, larger transactions, profitable collaborations, service contracts, and other aspects of the business relationship. Establish metrics that matter and measure what makes sense, or it may be very difficult to keep your digital transformation initiative on track.

Customer value rules

From our own experience, we agree with Forrester on the holistic aspect of digital transformation. Digital transformation of your business may provide measurable value to your customers in clearly defined areas, but refocusing the organization to accomplish this involves everybody on the team and all business processes.

In accomplishing this, the customer value is what matters most, not so much what you think of the benefits and advantages of your product or portfolio. If you create software products, your process for building and evolving them may need to change, using other, more efficient approaches and a new way of validating outcomes.

If you design and manufacture industrial machines, your ultimate goal is to enable your customers to keep their end customers happy. Your unique value comes alive in that enablement, and the best possible machinery with innovative features and your engineering IP is a part of it. So are the value-driven customer interactions by the sales and service department and the way your maintenance technicians handle their schedule and serve the customer during their onsite appointments.

Care to share your transformation journey? Send me a note at cbosch@to-increase.com.