How to achieve sustainable change at pace
August 17, 2018
To remain competitive in today’s constantly changing environment, business leaders need to ensure that customers can interact with their business anywhere, anytime. The customer experience needs to be frictionless for businesses to transform their customers into advocates. A key way that businesses can deliver outstanding customer experiences is through implementing innovative technology solutions that deliver high value to the customer and serve as a convenient and frictionless point of brand interaction.
In recent years, switching costs for consumers have become negligible in many industries, leading to a decrease in brand loyalty. While there are a number of forces at play, advances in technology are playing a significant role in fueling this decline. The pace of technology change places intense pressure on companies to change and evolve, and businesses that move too slowly are at risk of losing once-loyal customers to competitors.
Ten years ago, new businesses were facing tens of thousands of dollars in startup costs. Today, you can build a profitable startup with as little as $100. All you need is a MacBook Pro, a credit card, and a comfy cafe.
As a result, the tolerable timeline for ROI is shrinking. A three year ROI is no longer viable – your concept can be overtaken much quicker than that. Businesses need to be looking at an ROI that can be measured in months rather than years. But this is not how enterprises have evolved to act.
The world and people’s expectations are changing so quickly that your business will become extinct if it doesn’t evolve at the same pace. But to change in the right way, you need to understand what your customers want before they do and offer it to them in a way that makes it too good to refuse.
For example, by combining data from their rewards database with their insurance car crash database, Woolworths learned that customers who drink lots of milk and eat lots of red meat are very good car insurance risks compared with those who eat a lot of pasta and rice, fill their cars up with petrol at night, and drink spirits.
But it's not easy for organisations to anticipate customer needs, let alone move quickly to test, launch, and commercialise new products and services at scale. A slow internal IT department is a common pain point for enterprises, preventing them from realising these changes quickly.
As part of digital transformation, organisations need to embed the tools, processes, and culture into their businesses that enable meaningful change at pace. We call this approach Continuous Value Delivery (CVD).
Our approach – Continuous Value Delivery (CVD)
CVD is about enabling organisations to implement systems of continuous change that support their desire to be truly customer-centric. While many organisations may say they are customer-centric, CVD allows these companies to quickly and repeatedly change their behaviour and implement changes that improve the customer experience in a meaningful way.
CVD is a cycle focused on people, systems and culture, with five key steps. Typically, organisations may be good at one or even two of the five steps; however, it’s difficult to be good at all 5 steps all of the time. Bringing these steps together is what enables disruptive change at pace.
5 Steps to CVD
Critical to ideation is fostering a culture of creativity across every facet of the business and making time for innovation outside of ‘business as usual’. Ideation requires a dedicated focus; it’s not just something you do when you have spare time.
The goal of ideation is to rapidly generate ideas and do so without judgement. These ideas may originate internally or externally, they may focus on incremental change, or result from a flash of brilliance.
The point is to generate as many ideas a possible so you can start experimenting with customers to identify which ideas have legs and should be pursued.
Ideation requires you to challenge yourself to do things differently and think about your business in a different way. Here, we take a design-led approach to ideation, working with our clients to understand the challenges that they are trying to address, focusing on the end user, and helping the user achieve their goals. Ideation sessions bring this context together with potential solutions, drawing on best practice in User Experience and emerging technologies to find new approaches to meet business needs.
2. From idea to working MVP
In this step, you need a willingness to fail – but fail quickly, and do so without damaging your brand or your relationships with customers. A willingness to fail means a willingness to take risks and experiment.
Dominos has been a pioneer in driving innovation and digital transformation of their business. Part of Dominos’ approach to innovation is their DLAB, where they transform ideas into reality. With DLAB, internal projects are turned into what they call ‘pretotypes’ or minimum viable products (MVPs), which are then tested with consumers. The pretotype approach allows for concepts to be tested live to gather feedback and evaluate whether an idea is worth full commercialisation.
This sort of experimentation requires a shift in organisational mentality. Learning to fail fast saves resources (both time and money), and reduces the risk that a product will tank when it hits the market. Failing fast and often also means that you can learn quickly, as it allows you to build feedback loops into your development processes and help create success. It also helps foster creativity, as by generating and testing more ideas, you have the ability to test concepts that may be uncomfortable or unknown, you free up your process from the fear of making mistakes.
3. Building an enterprise solution
While it is relatively quick and easy to deploy and test a ‘pretotype’ via digital channels, what happens if your idea takes off? Can you scale it rapidly? Can you deliver new products or services in a governed, controlled, secure, and resilient environment? Even the greatest products will fail if they can’t be reliably deployed at mass scale. If you revert to long cycle time processes to mass deploy your offering, your idea may have been overtaken by a competitor by the time you are able to bring it to market.
But how do you deploy a test with minimal investment and still be in a position to scale provisioning if/when demand takes off? And how can you reduce the cost, effort, and time it takes to go from MVP to enterprise solution? Being able to achieve this is a key step to realising change in a continual cycle. You need to know that you have a system in place to scale your MVP into an enterprise-grade offering with mass market potential if the initial signals from customers are positive.
A reliable, high-performing backend infrastructure is key to ensuring that new products will succeed at scale. At Arq Group, we provide our clients with Managed Services solutions that allow brands to scale their products and support continuous change.
An example of these services in action can be found in Campbell Arnott’s, Australia’s largest biscuit company. To celebrate 150 years of operation in Australia, Arnott’s planned to launch a new website project and wanted to provide their customers with an outstanding digital brand experience. We used a DevOps approach to provide an AWS cloud hosting solution that would ensure the website launch was a success and worked with Arnott’s to implement a forward-thinking solution that would ensure the same ongoing reliability across all of Arnott’s digital channels. By consolidating more than a dozen web servers into a single AWS solution, Arnott’s was able to reduce overheads and can now more easily implement and scale their digital offerings.
4. Continual operation & feedback
What’s right today isn’t necessarily right for tomorrow, and changes in customer preferences can occur very quickly. Organisations that continuously observe customer behaviours, capture feedback, and then respond quickly are best positioned to gain an advantage.
Continuous improvement is the ongoing effort to improve products, services, or processes. Improvements can be incremental or breakthrough, however, what’s critical is that customer feedback is captured as an input to an organisation’s continuous improvement process. That process must be part of a system that identifies, evaluates, and implements change to the customer experience.
When it comes to operating and managing the platforms that support a customer’s experience, most organisations assume that everything will be OK. However, leading businesses adopt a contrary view that ultimately systems will fail, and deliberately induce failure in the process to help build resilience into their products.
The poster child for such an approach is Netflix and Chaos Monkey. Netflix reasoned that at their scale, it was guaranteed that servers would sometimes suddenly fail without warning, and in the process create service problems. So the best way for Netflix to build resilience into their systems was to proactively seek to induce failure and bring the pain of that failure forward.
At Netflix, Chaos Monkey randomly chooses production servers and turns them off during business hours. Knowing this, Netflix engineers build in redundancy and automation processes designed to withstand these incidents with no impact to the customer experience. As a result, Chaos Monkey is a highly effective tool for improving the quality of Netflix’s service.
5. Actionable learning
Actionable learning is about making decisions that are data-driven in real time, and with a focus on looking forwards rather than backwards.
One example of actionable learning is a customer who needed to scale their digital platform to support 8 million concurrent users. What we discovered was that not all visitors required real-time access to critical incident information. So instead of scaling the platform to support non-critical visitors – based on locality – these visitors were diverted to an alternate platform with a different set of performance KPIs.
Similarly, in retail, the dramatic changes observed in shopper behaviour in recent times present an opportunity for retailers to provide an enhanced level of customer experience to outperform their online counterparts through the use of real-time product and shopper behavioural data.
For example, Wifi installed in shopping centres can track new and returning visitors, observing which stores are visited, in which order, and for how long. The systems will also track which websites are being visited. This data could be used to track an individual’s brand preferences, identify price comparison shopping, and inform them of targeted promotions in-store or via their mobile devices (whether that be a smartphone, a tablet, or a wearable).
Common stumbling blocks
Putting CVD into practice is challenging for a number of reasons:
- It touches all aspects of the organisation
- It requires a change in mindset and behaviours
- It requires a change in business process and methodologies
- It has to be underpinned by a series of enabling technologies
While implementing CVD may require some change management, the outcome will have far-reaching and positive effects on the speed with which your organisation builds, tests, and scales new products and services.
We believe that CVD is not an option, but a necessity. CVD enables the ingredients of innovation to be realised within an organisation. It allows you to come up with an idea, test it with real customers, and, if successful, commercialise it.
Most organisations can do 1 of these steps well, but achieving disruptive change at pace requires you to do all of these steps, and implement them as an end-to-end system of innovation and change.
We have worked with some of Australia’s leading brands to develop and implement cloud and managed services solutions that support CVD, and was recently named a Challenger in the 2017 ‘Gartner Magic Quadrant Public Cloud Infrastructure Managed Service Providers, Worldwide’. To find out more about our CVD approach and how your business can benefit from CVD, get in touch and talk to one of our Innovation Experts.
Author: Steve McCormick - Director, Architecture and Project Delivery.