As companies look to technology to create a differentiated customer experience, competition may come from surprising, and often unknown, sources. How will you differentiate and delight your customers?
The previous article discussed the alarmingly high failure rate for digital transformations. We also explained that ambiguous definitions of digital transformation across the company are a primary reason for failure. We defined “digital transformation” as “applying technology to deliver a differentiated customer experience”. And we explained why the clear definition across the company is critical to success.
We also introduced 12 aspects of digital transformation to discuss in the upcoming articles.
Today, we look at a second key driver of digital transformation failure. That is not understanding who your competition really is.
Competition in the Digital World
In the manufacturing economy it was fairly easy to identify your competition and there was plenty of lead time for new players to ramp up. That gave us ample time to react, through product innovation, marketing, process improvements, plant modernization, and more.
It’s much harder to identify competition in the digital world. We often are not aware of a competitor until they’ve already taken a chunk of our market share.
Industrial espionage, foreign government sponsored intellectual property theft, and low barriers to entry make it easier than ever for competitors to start and scale their business.
So how can we plan?
Planning for Competition
Jamie Dimon of JP Morgan Chase famously stated that he’s not worried about the other huge banks. He’s worried about the kid in his parents’ basement with the torn up Stanford sweatshirt who can process a loan in 15 minutes when it takes his company weeks.
It’s critical to be obsessed with your customers and to recognize who your competition is or may be.
Strategy is about protecting and extending your differentiators. Ideally, you should seek to differentiate from your competition in three substantial ways. One differentiator is easy for your competition to mimic. Two may take a little longer. But, as I’ve written before, three differentiators are like a moat around your castle, making it very difficult for the competition to get into your space.
As you consider your digital transformation strategy, think about your customer experience and your known competition. What can you do to improve the customer experience in ways that would be prohibitively difficult for your competitors?
Can you provide a uniquely high level of customer service? Do you have international expertise that your competitors don’t? Do you have data that enables you to predict customer needs? Do you have advanced technology that you can leverage, like artificial intelligence and machine learning?
Also consider your customer journey. From discovery of your product or service to engaging with you to ordering and the ongoing customer relationship, where are you diminishing the customer experience and where do you excel?
Working with our clients, we use customer journey maps to track every interaction with the customer. We then rate each interaction as offering a competitive advantage, neutral, or presenting a competitive disadvantage. We then establish a strategy to turn the disadvantages into advantageous differentiators.
Challenge your leadership team and staff to identify three significant differentiators that will delight your customers. Give them one week. You’ll be surprised what they come up with.
Then, build your “emerge stronger”, digital transformation strategy around those differentiators. That strategy may include a customer-friendly app or improved web site. It may cause you to change how you ingest orders and manage your supply chain. Perhaps you can streamline order processing and tracking with improved technology. Predictive analytics may tell you who to target or how to adjust product inventory seasonally. You may discover that IoT enables you to anticipate issues with remote equipment and enable preemptive maintenance.
There are countless opportunities to improve the customer experience. Find the ones that set you apart from the competition and make it difficult for new players to enter your space.
Raise the Barriers to Entry
You may not know who your competition is or may be. But by obsessing over your customers and designing the best possible journey for them, you can at least raise the barriers to entry.
Remember, if you don’t delight your customer, somebody else will.
Make it difficult for your competition. Build the moat around your castle. Focus on your customer experience. Then look at internal process improvements, streamlining your supply chain, marketing, sales, and all other aspects of your business.
Once you implement your digital transformation strategy, drive continuous improvement. Never lose sight of the customer experience. If you listen to your customers, you’ll never get a wrong answer.
A differentiated business can charge a premium, grow faster and sustain its competitive advantage longer as compared with the rest of its industry.
Don’t just digitally transform. Transform in a highly differentiated way to raise the barriers to entry and stand apart from the competition – both known and unknown.
This article covered “Who Really is Your Competition” and “Customer Journey and Differentiation”. Next week, we’ll explain why Digital Transformation is really an enterprise strategy that has to balance culture and technology.
If you’re embarking on a digital transformation, planning to do so, or just don’t want to wait weeks for all of these articles, just email Emily at Emily@WolffStrategy.com and she’ll be happy to schedule a call with me to discuss any or all of these topics.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management and Digital Transformation. Larry has served as CEO, COO, CIO, CTO, chief digital officer, and management consultant for public, private, international, and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues. His methodologies span industries and scale to companies of all sizes.
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