Introduction to Digital Leadership Webinar
Okay, welcome everyone, thank you so much for joining us for today’s webinar. My name is Alexander Doak and I’m the director of customer success at CX Workout. CX Workout is a Boston based customer experience design firm and a subsidiary of the service profit chain institute. Very briefly, at CX Workout we provide a combination of software, research services, and design consulting that helps our clients achieve measurable results in about half the time over traditional methods. Today we are presenting a webinar titled, “The New Digital Leader” presented by Joe Wheeler.
Just a little housekeeping before we get started. If you do have any questions during the presentation, please type them into the question box in your GoToWebinar control panel, I’ll bring them up during the presentation and we will also have time for your questions at the end. Please do be sure visit our website to sign up for our newsletter and of course we would be delighted if you could join our next webinar on July 25th, titled “Three Ways to Turn Your Data into Experiences.” Now without further ado I would like to introduce our presenter today, Joe Wheeler. Joe is CX Workout’s president as well as the executive director of our parent company The Service Profit Chain Institute. Joe is the co-author of two books on the subject of customer experience, managing the customer experience, and the ownership quotient. Joe, over to you!
Digital Transformation and Digital Leadership
Hey Alexander, thank you for that introduction and welcome to everyone joining us from all over the country. So good morning or good afternoon. As those of you know who have attended previous webinars, our goal is a simple one. We appreciate the investment you are making in terms of time to join us and you know we really try to make sure that each of you will leave with at least one idea that a practically insight or a practical tactic you can take from joining us today.
So our objectives are pretty straightforward, so let’s dive right in. We’re going to start by understanding these five domains of digital transformation. And as we review those think about what the implications are for leaders. In each instance I’m going to try to give you an example of what best practice looks like. If we have time today I’m going to touch a little bit on a new capability that we’ve developed in collaboration with professor David Rogers from Columbia University based on his best selling book, the Digital Transformation Playbook.
Now some of you may have read a Linkedin Article I wrote The New Digital Leader which was inspired by our work with Professor Rogers. And in fact, the reason why I phoned him up right in the beginning was we had done a project for a client who had invited us in to help them redesign their omnichannel customer experience. And one of the things I noticed when we interviewed the top 45 managers of this very big company was there was no consensus what Digital Transformation meant, and how that was different than digitization. You know, building a web app, improving containment measures, things like that. And what I really liked about what Professor Rogers, his message in the Digital Transformation Playbook is this point about, that digital transformation fundamentally is not about technology. But it’s really about strategy. And in fact he would go on to say it’s about leadership as well.
And if it’s about strategy the’re basically five domains that we’re going to talk about today that are really the elements of digital transformation. The first one is about customers. The second is about competition. The third is about data, how we’re all thinking and try to understand data as assets vs information. How we think about innovation in the digital age is fundamentally different. And then of course how we think about value and value proposition.
New Customer Interaction Models
So let’s dive right in and start talking about customers. So as you can see from this slide, the transition that happens when we think about customers is this notion of customers as passive targets to dynamic networks. And let me explain what I mean by that.
I don’t know how this model is, Hahaha! It’s about as old as business itself. But you know, for many, many years all of us have kind of made a career out of mass production and kind of the mass market model. So the concept was, what was you product or service? Who were you target customers? How did you identify, measure, even segment them into addressable groups? And the big opportunity there was economies of scale. How could you drive customer adoptions and repeat purchase and those things? At the lowest reasonable cost, and drive loyalty and repeat purchase. But today that’s fundamentally changed.
And one of the things that like is the way Professor Rogers thinks about the customers today is the way he describes the new customer network model. So in this model, the firm is still the central actor in terms of the creation and promotion of goods and services, but the role of customers is just much more complex. And this is partly due because of the impact that digital platforms have that allow customers to interact, to publish, to broadcast, and really shape brands and the reputation even more than the brand themselves. So customers are just as likely to connect and influence each other as they are to be influenced by any direct communications from the firm. And it’s funny, I remember chief marketing officer for a client we worked with told me this a couple years ago. He said, “Joe, you know, in this world where so much of your brand reputation and perception is shaped by the market and social media, direct communications almost becomes more important because that is your once source you can control the message.” But the truth is thinking about customers as nodes in a network has a lot of value. Because it directs you in terms of thinking about how will you engage customers as a network. How do you observe their network interactions? Understand their perceptions and responses, and how can they articulate sometimes unmet needs? So this notion of understanding and even co-creation with customers, which of course is our mission, is at the center of this.
Digital Leadership Case Study – Domino’s Pizza
Now, a company that’s a fantastic example of this idea of understanding customer networks is Domino’s Pizza. Now, I’m willing to bet a few on this call old enough to remember what Domino’s value proposition was back in 1987, which was: 30 minutes or it’s free! Remember, they built quite a big business on that value concept. Well Domino’s digital transformation was really founded on three key initiatives.
- The first one was the notion of creating a digital platform for consumers. So, you could order a Domino’s pizza in literally any number of ways, from an Apple Watch, to your Google Home, this focus on taking complete friction out of ordering has been a pretty intense initiative. There’s even an app where all you need to order a pizza is just open it, and in fact there’s a ten second countdown window just in case you opened it by mistake and need to cancel it.
- The second one was just digitizing operations. So this includes a multiple of initiatives. In Australia for example, Domino’s set up a dedicates division called Domino’s Robotic Unit. And basically they worked on autonomous delivery vehicle. In New Zealand Domino’s completed the first delivery of commercial food by drone anywhere in the world. And in the US, actually around the corner from my house, they developed these high tech delivery vehicles they called DXP. And in these vehicles they built like over warming for something like 80 pizzas and special areas for sodas and salads.
- And then finally they really worked hard, because they are in the franchise business, to share this technology with their franchisees. And in fact, one of the powerful things about Domino’s is, for the most part, they use a common point of sale system, which in that business of course with franchisees, gives them a lot of leverage.
Results of Successful Digital Transformation
So you can see on the screen that this Domino’s anywhere API allows order process to become absolutely transparent and simple.
Look at the impact. Back in 2010 Domino’s percentages of sales from digital ordering was about 25%. Funny enough, still ahead of the industry, which the industry average was around 20%. As of 2016, and I honestly don’t know what their number is today, I’m sure it’s north of 60%, but I don’t know what it is. But that’s pretty extraordinary. In fact, their chief digital officer said that when more of your sales are coming through digital channels, you are a by default an e-commerce company. So pause for a second: if I said for a second, which would you rather have stock in, Domino’s Pizza, or say Google, or Tesla?
Well before you answer that, think of this. A present of $1,000 invested in January of 2010 would be worth, as of 2017 March 23rd, $21,000. So that’s more than Netflix, more than Tesla, more than Amazon, more than Apple, even more than Google. And their CEO Patrick Doyle, said they are as much a tech company as we are a pizza company.
… to be continued. 10:20