Let’s continue the discussion of digital transformation (DT), but we will take a different perspective today. As some of you might know, I’ve always had a keen interest in human behavior. I’ve published many articles on gamification, behavior economics, and its application in the business world. Since DT is typically a multi-year project with many stakeholders and complex human factors, perhaps we can apply a little behavior economics (or even gamification) to this transformation process.
However, DT is also a journey that starts with the adoption of some technology to transform some part of your business, where should you start? We’ve already learned that a customer-centric DT strategy is crucial to paving the road to success, but there are still many parts of a business that could interact with customers. How should you phase this multi-year project? Where should it end up? These are the questions we will explore over the next few posts. Today we will focus on choosing the right starting point.
If you missed the previous blog posts on this topic, I recommend reviewing some of the background materials before moving forward. The related blog posts can be accessed here:
Engagement is Hard, Enlistment is Even Harder
From the 4-gears model, we know that business must learn to spin the engagement and enlistment gears in order to survive the digital disruption. So it’s natural for practitioners to start spinning these 2 gears right from the beginning. There is nothing wrong with this. Many digital visionaries have already gone down this path, and they are enjoying the fame and glory from their success. But it really takes a visionary who have a strong conviction (which is rare) to pull this through. However, most business people are pragmatists and conservatives. How should the majority of the businesses (~68%) tackle DT?
The answer is simple: don’t start with engagement or enlistment, because these 2 gears are relatively new compared to acquisition and monetization. Most enterprises have a natural tendency to resist jumping into something new that they don’t fully understand. Although many brands (even the conservative ones) understand the need to engage, many practitioners are still being held back. Here are some of the most common reasons for their resistance.
In addition to the common objections for diving in with engagement, enlistment often faces a few extra challenges of its own.
To overcome all these challenges within a traditional company is truly a herculean effort, and that is why those who did it deserve the fame and glory of heroes.
Where Should You Begin Your Digital Transformation Journey?
If your DT efforts were dismissed, perhaps your organization isn’t ready for prime-time engagement and enlistment yet. That doesn’t mean you should just sit and wait, because the price of doing nothing may be the end of your business. So this is where you need to apply a little behavior design or gamification to drive the adoption behavior of your organization.
One of the most powerful behavior-driving principles for large groups of people with disparate motivation is the concept of baby steps. In fact, this principle is so crucial that it’s one of the core tenets of successful gamification. The idea is simple and has 2 phases. First, if you want an organization to adopt something new and unfamiliar, it’s best to start from something that they already know and are already doing. The next phase involves building a ramp for your company to advance towards the final behavior outcome, and we will cover this in the next post.
If the final behavior is for your company to learn to engage and enlist your customers (which they haven’t started), then you should not start with these 2 gears. The fact that they have not started engaging or enlisting by now means that these 2 gears are probably too challenging for your organization. You must start with one of the gears they are already spinning—acquisition (marketing) or monetization (transaction).
In theory, it doesn’t matter which gear you choose to begin your DT journey, since the 4 gears is a loop anyway. In practice, however, it’s a lot easier to start with acquisition for several reasons:
Digitally Transforming Your Acquisition Gear
Now that we have chosen to begin your DT journey with acquisition (i.e. marketing), how should you transform this business function digitally? I wish I could to tell you, but unfortunately, this is unique for every business. More specifically, it depends on your vision of what DT really means to your brand. And this can be very different for every organization.
Now, you might recall from the first vlog entry of this mini-series where we discuss the 3 most important failure modes that must be addressed at the beginning of every DT project. Addressing these failure modes has led to the 3 initial ingredients that are crucial to the long-term success of DT projects:
Since we are beginning the DT journey with acquisition, we must make sure these 3 ingredients are present from the get-go. This can often be established with the 3 sets of questions below:
If the answer is “YES” for all the questions above, then the DT of your marketing operation is on the right track.
Starting your DT journey by engaging and enlisting customer is often difficult (though not impossible) for most of the traditional enterprises. Because these 2 gears are relatively new compared to the acquisition and monetization gears, many DT practitioners still get pushed back when starting with the engagement or enlistment gears. We can apply the principle of baby steps to increase the success rate of this challenging transformation process. This is accomplished by starting with the acquisition gear (i.e. marketing), because most companies are already familiar with marketing and are already doing it.
How you transform your marketing with digital technology is specific to your business, but it must contain the following 3 success ingredients:
Picking the right place to start is an important first step. Next time we’ll build the ramp that enables your company to take baby steps toward the final behavior outcome—thriving in today’s digital economy. And that will require all 4 gears (i.e. acquire, engage, monetize, enlist) to spin in sync.
Michael Wu, Ph.D. is Lithium's Chief Scientist. His research includes: deriving insights from big data, understanding the behavioral economics of gamification, engaging + finding true social media influencers, developing predictive + actionable social analytics algorithms, social CRM, and using cyber anthropology + social network analysis to unravel the collective dynamics of communities + social networks.
Michael was voted a 2010 Influential Leader by CRM Magazine for his work on predictive social analytics + its application to Social CRM. He's a blogger on Lithosphere, and you can follow him @mich8elwu or Google+.
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