OVERCOMING THE BARRIERS - Interactiveinfo.interactive.com.au/rs/198-SYI-248/images/Overcoming the... · Overcoming the barriers to transformation // Getting STARTED ... is critical

OVERCOMING THE BARRIERS TO TRANSFORMATION

The digital era has unleashed a plethora of new technologies and services at a seemingly ever-increasing rate. And while many have proven beneficial in their own right, their application to business processes has generated new innovations with broad ramifications that would have been difficult to foresee just a decade ago.

While this has been great for customers, through enabling greater choice and improved customer experience, it has created an immense challenge for the traditional organisations within these disrupted markets. Many have found no choice other than to fundamentally transform their own operations to compete on this new playing field.

This in turn has enabled a new breed of startup companies who are seeking to not just create new business models, but to totally disrupt existing ones as well.

Overcoming the barriers to transformation // INTRODUCTION

INTRODUCTION

Overcoming the barriers to transformation // INTRODUCTION

Recently Interactive brought together thought leaders from across the Australian business landscape to discuss the challenge of digital transformation, along with the barriers to its execution and their strategies for overcoming these barriers.

Participants included representatives from a variety of industries, including startups like AirTasker and Sendle as well as more established brands like Flight Centre and those under the L’Oréal Australia umbrella.

Overcoming the barriers to transformation // Getting STARTED

While all attendees agreed with the need for transformation, the drivers to do so can differ depending on an organisation’s industry sector and maturity.

While the familiar pressure to stay apaceor ahead of known rivals in terms of products and service offerings remains, most organisations now are anxious regarding the potential for an outside entity to disrupt their market with something completely new.

But whether that external threat emerges or not, many are being driven to transform by the rising expectations their customers.

This is especially true for business-to-consumer organisations, whose customers now enjoy greater choice thanks to online commerce. This is especially true for those who sell to the younger ‘digital native’ demographics.

Getting STARTED


We do a lot of research into Millennials, and there is an absolute expectation that there will be something ‘new and different’, constantly. That speed is ever-increasing, and is not going to go away.– Joanne Norton, Consumer Insights Director, L’Oréal Australia.

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But while the need is very real, finding the motivation to engage in genuine transformation can be difficult, with one of the greatest retardants to true transformation being organisational culture.

For startup organisations, having a culture that is comfortable with transformation is critical to their ability to generate and monetise innovation, as often their ability to create value – which is often the basis for their very existence - is predicated on their ability to transform a market or industry.

For traditional organisations however, reward structures are often built around simply doing a better job of whatever the organisation is already going. While this might prove viable in markets where all participants are innovating at a similar rate, it is weak stance when it comes to engaging with disruptive outsiders.

The startup mentality is about opportunity, fearlessness, embracing the customer, and taking away their pain and frustration. Whereas within established companies, their underlying attitude is often one of self-preservation. Companies that are moving quickly and getting traction are iterating really fast, because they are not bound up in process and aren’t fundamentally nervous about the implications of change.

– Craig Davis, Co-founder and CMO, Sendle.

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”Overcoming the barriers to transformation // Getting STARTED


Even startup organisations feel the pressure to constantly innovate. The relatively low barriers to conception for startup organisations now means that any good idea is quickly replicated by competitors.

This is driving many startups to themselves look at ways to accelerate processes of development and testing, to out-iterate would-be competitors. And that in turn puts even more pressure on traditional organisations to keep up.

A culture of innovation is a factor many startups fight hard to retain, and is often coveted by traditional organisations that are seeking to transform.

Achieving this cultural outcome generally requires commitment and direction from the very top of the organisation, accompanied by a clear vision the organisation can align itself around.


Many organisations, if not most, are still very occupied with the operations, they are locked in to what they are doing, and these processes stifle where innovation can take place. Having a vision allows the people to be innovative, because they can see where the organisation wants to be.– Paul Keen, CTO, Airtasker

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While the startup narrative often describes daring newcomers taking on – and beating – traditional organisations, statistically this is rarely the case.

Traditional organisations generally enjoy significant advantages over would-be new competitors, in terms of brand equity, infrastructure, and market knowledge and skills. But these same assets can also serve as impediments to driving real change.

It can be more challenging when you have legacy systems

in place that aren’t able to scale. To rip them out and not impact

your current operations and the service experience you are giving your customers is the challenge.

- Catherine Power, General Manager IT, Baby Bunting.


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While legacy systems undoubtedly complicate the process of transformation, they can also provide a base of functional capability that can be built upon to create new products and services.

This has certainly proven true in banking, where for many years legacy core banking systems have underpinned the creation of highly-advanced online services.

While discussions of technology-driven transformation often take place within the technology function, there is a growing realisation that transformation is a task that encompasses the whole organisation.

However, there is also a parallel realisation that the actual work of transformation will take place through technological enablement. That in turns puts greater pressure on the IT function to both have its underlying processes in order, and to have the capabilities to deliver.

Overcoming the barriers to transformation // Everyone’s RESPONSIBILITY

Everyone’s RESPONSIBILITY


Historically, IT was blinkered and was not seen as a critical aspect of the business. And today that is totally not the case. If you don’t have IT sorted, you don’t have a business. If your IT practitioners don’t have a seat at the table and aren’t involved in the planning and direction of the organisation, in about five years the organisation is not going to exist, because you are not going to have the tactics required to respond to market conditions. We are an enabler, but really we are about bringing tactics.

– Matt Day, Chief Information Officer, Langs Building Supplies

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But if the technology function is to take a prominent role in transformation, it cannot do so in isolation from the rest of the organisation. This means that for effective transformation to take place, the technology function must be working in close alignment with other key functions within the business.

Transformation in Flight Centre Technology is not just

about operations. It is about every aspect of technology -

procurement, asset management, security, support – its everything.

And collaboration becomes key to making everything happen.

– Michelle Willis, Enterprise Operations Manager, Flight Centre Travel Group


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Another area where organisations have struggled to develop their program for transformation has been in the creation of the business case. If the proponents of transformation are unable to show the return on the value of their proposed investment, then the program is unlikely to receive the go-ahead. Understandably, it is hard to create a business case for an investment that is otherwise untried within its market – although ironically this is often the exact proposition that would-be disruptive startups present to their venture investors.

Hence it is vital that any proponents of transformation also have the skill to discuss market dynamics and tell a story of how transformation will help the organisation chart a path forward.


While established businesses are usually far more circumspect than startups in terms of how they spend their funds, one technique that is proving viable is the creation of a separate incubation group, with responsibility for creating and developing new ideas through to a proof-of-concept stage.

We have an ideas incubator that is separate from the business.

It is very much long-term focused, and therefore the

expectations are very different for delivering bottom-line business

growth. That ideas incubator has the space and the room to fail,

and to do quite amazing things that otherwise a normal business unit

wouldn’t be able to do.

– Joanne Norton, L’Oréal Australia

Overcoming the barriers to transformation // An appetite for RISK

An appetite for RISK “

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It is this acceptance of failure that truly sets startups apart from traditional competitors. While traditional organisations are often driven to transform by startups, it is worth nothing that the vast majority of startups fail before they come close to having real impact, and even many of those that do create genuine change do not go on to become sustainable businesses.

Of course, most established organisations would find it difficult to stomach significant losses, and rarely have cultures that embrace the concept of failure to the extent that startups do. Hence the incubator model can give permission for innovators to fail without significant financial risk to the organisation overall.


It can come down to the culture that you have in the company, and whether they are willing to take a risk.

– Con Pazios, STA Travel

Another change that traditional organisations must make when embracing transformation is in where the transformation actually takes place. While many have succeeded through innovating in their products and services, increasingly they are being rewarded for improvements not just to the things they sell, but for the overall experience they provide. With increased competition making it harder for organisations to differentiate on goods and services, transformation of customer experience is receiving more attention.


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When you look at the most successful companies out there in terms of innovation, they are really focused on providing a differentiated customer experience. Understanding of who is the customer, what worries them, what delights them, and what causes them frustrations will be key to developing an excellent experience. A few years ago, we adopted Lean Start-up, an agile methodology and customer driven innovation approaches within our business. We have implemented a customer journey platform that proves that money invested in improving the experience definitely pays off. The customer experience work is never done. Most recently Australian Unity has adopted the “Human-centred design” approach to understand customer and employee pain points at a deeper level so we can continuously improve our customer experience.

– Tahir Tanveer, CIO Australian Unity

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While transformation is often discussed through a technology framework, whether an organisation succeeds or fails ultimately may come down to one very simple and human factor – attitude.

For me it is all about not being complacent, continuing to

innovate, and continuing to bring new offerings and keep up with

your game. Disruption? That just keeps you on your toes.

– Mick McBride, Portfolio & Project Manager (Digital), Australian Unity

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Overcoming the barriers to transformation // CONCLUSION

CONCLUSION

Industry disruptors do more than just deliver incremental improvements. Those organisations that are capturing the attention of their industries are the ones that deliver something fundamentally different – and better – than their competitors. For any traditional organisation that wants to compete in this new world, it is vital therefor to take on the attitudes of a disruptor and think about now just what is practical today, but what is possible into the future.



So don’t just catch up, get ahead. Don’t just do now what everyone else is doing to be part of the game. Skip the now, and do the next.– Catherine Power, Baby Bunting

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OVERCOMING THE BARRIERS - Interactiveinfo.interactive.com.au/rs/198-SYI-248/images/Overcoming the... · Overcoming the barriers to transformation // Getting STARTED ... is critical