The growth of digital technology adoption has shaken every industry, but few industries have been impacted as deeply as consumer goods. Cited as one of the ‘least digital’ industries, with only $47 million spent on digital investments in 2014, the industry has been challenged to make the necessary shifts required to stay competitive and relevant to the digital consumer.
What the CPG industry is lacking is digital transformation, but what exactly is digital transformation? Digital transformation is a strategic business response to rapid technology growth. It is a complete reshaping of business models, typically driven by disruption. Disruption can be caused by multiple factors, including emerging technologies, changing customer behaviors and demands, and environmental shifts, whether they be political, social or economic. These disruptions are inevitable, but with the right digital transformation approach, companies can easily adapt to them and keep up with the needs of their market.
Companies leading the way in digital transformation have all followed a roadmap comprised of the following three essentials:
Define a Clear Strategy
In a 2015 Digital Business Global Executive Study conducted by Deloitte and MIT Sloan Management Review, 4,800 executives were surveyed on the barriers to achieving digital transformation. Of those surveyed, 1,248 were from “digitally immature” organizations, meaning businesses in the early stages of digital adoption. 50% of these respondents cited the absence of a defined strategy as the greatest barrier to their business’s digital transformation.
Lack of a well-defined strategy can effect a company’s culture, as well as its operational management. Having organized meetings with all key players of your company to agree on a digital mission and devise a plan for how to integrate this mission across all facets of the company is the first and most crucial step towards digital transformation.
Take Risks & Adapt to Change
Once you’ve defined your strategy, the next step is to take the risks needed to move forward. The Digital Business Global Executive Study found that digitally mature organizations are more comfortable taking risks. This comfort with risk, combined with a mix of collaborative work styles, has been cited as one of the key drivers of digital enterprise innovation.
Determining the appropriate amount of risk to take can prove to be a hurdle for those just embarking on the journey towards digital transformation, but digital fluency doesn’t require master knowledge of technology. What it does require, is the ability to gauge the value a new technology could bring to the organization’s future, as well as determining how the technology would fit into the organization’s digital strategy from a brand-building perspective.
Taking the risk of investing in new technologies is just the beginning though. Companies must also invest in consumer analytics and operational agility, as consumers behaviors and trends are constantly changing and drastically vary from one generation to the next. Organizations must leverage the flexibility of the technology stacks they invest in to better understand and respond to the needs of changing markets.
Evolve your Consumer Journey
In a 2015 Salesforce marketing report, 86% of senior-level marketers said that it’s absolutely critical to create a cohesive customer journey. The use of mobile applications, marketing analytics, CRM tools and content management were deemed some of the most effective tools for driving a seamless customer journey.
As marketing approaches evolve from telling consumers what to think, to proactively working to understand and respond to their behaviors, the digital customer journey is all about responsiveness. To foster the responsiveness that a successful customer journey depends on, real-time consumer data capture is required. Such real-time data capture allows for personalization of future interactions, and insight into where best to place your digital investments.
The road to digital transformation may have incremental steps, but it’s an all-encompassing transformation with a larger purpose—to become more agile, efficient, and customer-centric. No matter where a company is within their digital transformation journey, it all begins with a commitment from the c-suite to make it an operational imperative, followed by the sharing and implementation of this commitment across the enterprise.
By digital enabling your people and processes, it is then that you can best serve your digital customers, as a digital consumer is best understood and engaged by a digital business.
G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Strategy, Not Technology, Drives Digital
Transformation” MIT Sloan Management Review and Deloitte University Press, July 2015.