Take yourself back to the frightening days of March 2020. Do you remember staring at your computer screen, after six straight hours of Zoom or Teams calls?
That’s probably when it hit you: The days of in-person meetings were gone for a long, long time. From there, did you realise that the shift in meetings barely touched the surface of the new digital world?
COVID fundamentally changed countless aspects of our lives. From a business perspective, COVID took traditional business models and threw them on their heads.
Consider how the digital world has accelerated since COVID: A survey of business leaders found that 97% of business leaders believed COVID would accelerate their digital evolution by at least five years. 97% of IT professionals claimed their businesses experienced significant digital change, and 89% of businesses said COVID showed them the need for a more agile and flexible IT infrastructure.
Big businesses and massive models no longer counted as markers of success. The evolution that once occurred yearly was now occurring weekly. Simply put, no one was ready.
Now, years after the outbreak of that strange new illness in China, the simple truth is that businesses have had to take digital acceleration they were planning to complete in years and accelerate it at a previously unheard-of speed.
Many businesses struggled to adapt to the new business world: In the United Kingdom, 400,000 businesses closed by October 2021. In America, that number reached 700,000. However, some businesses found success and profit in the new business universe, driving economic growth and creating an atmosphere that adapted to change.
This information begs the question: What drove the success of these businesses? What created a model of failure? In many cases, you can find the answer by looking at both whether a business successfully made a digital transition and how it made that transition.
Inside-out or outside-in?
There are two different approaches to digital transformation: inside-out or outside-in.
Inside-out transformations involve a company examining where they are from a digital perspective: what they don't have, where the potential for expansion exists, and how the rest of the marketplace reacts. Once businesses have a comprehensive inventory of what they need to do, they move forward and apply technological solutions. Examples include companies creating chatbots to enhance the customer service experience or updating their online ordering system to allow customers to order more with greater convenience.
Outside-in transformation takes a different tack. Instead of starting by focusing inward on a company's own needs (or lack thereof), a company will concentrate on a specific value, like improving a customer experience. They then orient their digital transformations around that value rather than the perceived internal need.
The main difference? The digital transformation approach is driven by a desire to positively disrupt the customer experience rather than enhance some internally perceived need. This approach enhances the ability to improve a customer experience, not just use technology for technology's sake. In other words, this approach concentrates on the customer’s real needs, not the bells and whistles that the customer may appreciate. This approach demands deploying brand-new technology or using technology in incredibly innovative ways that businesses have not previously explored.
The challenge facing inside-out transformations
Inside-out transformations are often seen as safe, gradual ways of embracing change. For risk-averse businesses, this makes sense. After all, who wants to spend thousands or millions on risky innovations that may present entirely new complications? What happens if you get the data wrong or simply don't want to expand the resources to ensure you get the information about what your customers want?
Here's the challenge: Digital transformation needs to be bold. You can't confuse bold with blind risk. However, half-hearted digital transformation — a digital transformation that meets your needs rather than your customers' — simply won't do. And it certainly won't do years after the outbreak of the COVID pandemic, which has shown that virtually every business can succeed in a digital world, provided their business model and customer experience provide for customers' needs.
The perspective is an important one. Inside-out digital transformation often fails to meet bold change that is customer oriented. Instead, they move cautiously and often fail to properly anticipate customer needs. That's not to say that businesses should be reckless, and there is no question it is possible to make a digital transition that falls flat on its face. Consider the experience of massive businesses like Hershey or Hewlett-Packard. These businesses attempted to change internal and external systems. By failing to plan properly, consider the customer experience, and manage internal systems, these companies cost themselves hundreds of millions of dollars.
A common thread in failed inside-out transformations is a failure to consider the need to learn. Companies must prepare properly by having internal systems that enable them to pivot.
No matter its size, every business needs to change. Furthermore, all changes — even internally-facing ones — must ultimately be tied to customer demand. That demand must be qualified, quantified, and measured.
Inside-out transformation also often relies on the idea that there is a single bullet, a magic program, or one change that will simply revolutionise a business.
Outside-in knows this isn't the case: Digital transformation works best when it concentrates on customer experience and organisational structures, not just the technology itself.
The COVID-19 impact
COVID-19 was a societal accelerant. In other words, COVID took trends that were happening already — positive and negative — and made them happen even faster. It fundamentally altered how our society operates and forced businesses to adapt at a breakneck pace. Unfortunately, many businesses got their adaptation wrong by failing to pivot with the necessary speed or orientation.
The businesses that succeeded during COVID were the ones that realised they had to concentrate on customer needs and experiences, not just their internal orientations. These businesses figured out that the customer experience, not the raw technology itself, would make or break their success.
Furthermore, many businesses found real benefits in the deployment of resources. Businesses pivoted to automated processes, built a more resilient supply chain, and ensured they could measure customer behaviour, even when they weren't physically face to face.
If any upside of COVID-19 exists, it is that businesses have figured out how to evolve at speed to a new era.
Organisations that learned, adapted, and measured success based on the success of their customers have found a new way forward. Businesses that did not were shown the door by their customers. This reality creates entirely new metrics of success, but ones that can better fulfil the fundamental goal of meeting and exceeding customer expectations.
If you haven't reassessed your digital experiences, you are living on borrowed time. The right time to pursue impactful digital change was yesterday. The second-best time is right now.
We know that the concept of an outside-in digital transformation is frightening and that the stakes are high. Building the right roadmap can be challenging and requires expert information. Are you looking to take the next step but need help doing so? Reach out to us today to learn more about how we can help you build the digital transformation that your business needs.
Photo by eberhard grossgasteiger: Image