Lean Management plays a significant role in putting in place processes, capabilities, and tools to improve how businesses operate. But, the Digital Age has increased both the opportunities for businesses who know how to react and the difficulty of getting it right.

Tasks performed by humans are now more complex be it accessing information in multiple formats from multiple sources or responding to changing market and customer dynamics at an ever-increasing speed. As an increasing number of tasks become automated or taken over by cognitive-intelligence capabilities, companies need to learn from lean management. Like a sprinter who needs all her muscles to be finely tuned and working in concert to reach top speeds, fast-moving institutions must have a system to continually synchronize strategies, activities, performance, and health.

Many organizations understand the need to change how they work and have embarked on numerous initiatives, yet few have been able to get beyond isolated success cases or marginal benefits. Most companies recognize the need for a Next-gen Operating Model to drive their business forward their Digital Transformation initiatives. But, how they develop it makes a big difference.

The Next-gen Operating Model

There are 4 core pillars of a Next-gen Operating Model. Putting these in place will ensure its successful implementation.

1. Autonomous, Cross-functional Teams. The first pillar is focused on empowering the team to own products, services, or journeys. Having autonomous, cross-functional teams, organizations can become nimble in building skills across their teams. They make anchor hires for key roles, set up rotational and train the trainer programs, and commit to ongoing capability building and training for key roles.
2. Flexible, Modular Platform. The second pillar is focused o supporting a faster deployment of products and services. Having Flexible, Modular Platforms will enable technology teams to better collaborate with business leaders in assessing which systems need to move faster.
3. Connected Management System. The third pillar focuses on driving a culture of continuous improvement that cemented on customer needs. A Connected Management System will ensure that Management systems are evolving to create feedback mechanisms with and between various operations and teams.
4. Agile, Customer-centric Culture. The fourth pillar is focused on speed and execution over perfection. Having an Agile, Customer-centric Culture is critical to success. It leads the change from the top and builds new ways of working across organizational boundaries. When functions and teams collaborate, effective time to market to reduced as well as operational risk.

The path to building up the Next-gen Operating Model follows well-defined approaches to guide organizations. These approaches will be every organization’s guide to operating model transformation during the first 12 months.

Following the 4 Critical Approaches to Operating Model Transformation

The 4 critical Approaches to Operating Model Transformation works well when there is a broad and top-down organizational mandate for change. Before anything else, organizations must make sure that the change mandate is in place so that the entire organization is aligned with the proposed change.

One of the 4 Critical Approaches is the Innovation Lab. The Innovation Lab is a dedicated unit set up to be entirely separate from the historical culture, decision-making bureaucracy, and technical infrastructure of the main business. It hatches new business models in an informal setting. It is best used when there is a need to move very quickly in response to market pressures.

Mastering these various approaches will enable organizations to better go through the Operating Model Transformation in the most effective way with the greatest impact.

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Businesses are getting increasingly complex and so are customers’ expectations. Digital organizations are digitizing their critical Customer Journeys at scale to outperform competition. These organizations are using Digitization to create streamlined journeys, which result in more agile IT units, quick delivery of new products, and improved Customer Experiences and Engagement.

But before embarking on digitization and streamlining Customer Journeys, organizations need to transform their products, processes, legacy systems and technology, and culture to become truly digital businesses.

Streamlining multiple Customer Journeys concurrently requires integration of existing systems, building new capabilities, and deploying existing competences in a different way. Specifically, it entails embracing the following 5-phase Omni-channel Customer Journey Design approach that is critical for improving Customer Experiences and accomplishing higher Customer Engagement:

1. Develop Enterprise Customer Experience Story
2. Prioritize Technology Transformation Projects
3. Develop a Flexible Ecosystem of Technologies and Platforms
4. Adapt Principles of Strong, Agile, and Lean
5. Be Adaptive in Performance Management

Now, let’s talk about the first 3 phases of the Omni-channel Customer Journey Design approach.

Phase 1 — Develop Enterprise Customer Experience Story

Creating a Customer Experience Story calls for setting up a Customer Experience team. The Customer Experience team begins by identifying the critical factors and main concerns in their customer relationships. Around these themes, they, then, carefully outline the experiences customers may come across during each and every interaction they have with the company in the form of a story. The Enterprise Customer Experience Story is unique to every company and provides a summary of the strategy, brand, and positioning in workable terms.

Next, the team identifies the journeys that are able to effectively deliver the factors and features critical for the customers utilizing digitization. Each journey should be critically analyzed to assess its significance, cost advantages associated with scaling it, the governance and technical impediments, and the availability of adequate financial and leadership resources to manage it. Thorough analysis of Customer Journeys yields a plan of action that aids in creating prioritized journeys.

Phase 2 — Prioritize Technology Transformation Projects

IT Transformation is typically the most challenging and resource hungry among other change initiatives. For instance, designing a mobile app is simple, however, it’s the linkage of the app to all the channels customers use and its integration with the back-end systems that is complicated.

To undertake Digitization, companies should avoid digitizing each journey separately — as it fosters internal silos — and investing heavily in Internet or mobile-channel IT. A better approach for the organizations is to rather prioritize the IT initiatives to enable smooth transformation of IT architecture with the addition of more customer journeys. Standard IT components are reusable across different journeys.

Phase 3 — Develop a Flexible Ecosystem of Technologies and Platforms

An important consideration for digitizing core journeys and scaling digitization is to link your IT systems with the technologies and platforms working outside the firm. These external systems provide the organization several advantages, including quick access to new customers, data pools, and capabilities.

Next-generation integration architecture should be designed in such a way that it should support open standards, dynamic interaction models, and curtail security threats. Progress in cloud computing and technology infrastructure has made quick and easy access, management, and operations of infrastructure resources possible — including networks, servers, databases, programs, and services. The skills needed to manage these technology ecosystems include DevOps experts to supervise integration of development and operations, enterprise architects, cloud engineers to manage software and cloud-computing, data scientists, and automation engineers.

Interested in learning more about the other key phases of the Customer Journey Design approach? You can download an editable PowerPoint on Omni-channel Customer Journey here on the Flevy documents marketplace.

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In this age of digital disruption, how can organizations engage customers, increase Customer Loyalty, and achieve profitable growth?

Today’s customers are better informed, better connected, and more demanding than ever before. CEOs are now concerned about Customer Loyalty and they recognize that mastery of the customer agenda is essential. In fact, global leaders of successful businesses recognize that creating a customer-centric, digitally-transformed business is a top priority.

Almost every market is experiencing a fundamental change. Consumer expectations have shifted and digital technologies are making the biggest impact on businesses large and small since the start of the information age. Ultimately, businesses need to navigate the challenges of digital disruption and find new ways to create economic value and drive growth.

The challenge today is what it takes for organizations to be a Customer-centric Organization.

Unraveling the 6 Core Capabilities of a Customer-centric Organization

A Customer-centric Organization must have 6 Core Capabilities to compete in the Digital Age. In this global time, customer-centricity ceases to be a differentiator. It has become a matter of survival.

The first 2 Core Capabilities are Customer-directed. These are Customer Strategy and Customer Experience (CX).

1. Customer Strategy. The first core capability, Customer Strategy is focused on addressing changing customer needs and behavior. It involves the development of a clear view of customer behavior and intentions using data and analytics. Customer Strategy can be applied in several ways. It can be used to refine and develop a proposition or even inform major investments in new media content.
2. Customer Experience (CX). Customer Experience (CX) is that core capability that generates a significant competitive advantage – a double revenue growth against industry counterparts. It is being able to respond to customer needs balanced with understanding the values customers bring to the enterprise. The world’s most advanced customer businesses often undertake customer journey mapping and experience design which are critical to executing customer-centric change.

The second 2 Core Capabilities focus on front office capability and across the enterprise value chain. These are Sales & Service Transformation and Connected Enterprise.

1. Sales & Service Transformation. As the third core capability, Sales & Service Transformation is essential to becoming a customer-responsive business. This is a newly digitized and fully integrated front office capability that can attract, engage, acquire, and continually engage with customers. With the modernization and transformation of front office functions, Marketing, Sales, and Service teams get to have better ideas on how to work together more effectively. This leads to a full end-to-end Business Transformation.  A core concept to Service Transformation is the development of Service 4.0 capabilities.
2. Connected Enterprise. Focused on delivering differentiated Customer Experiences, Connected Enterprise is an architecture of fundamental capabilities that work across the Enterprise Value Chain, from back office operations through customer-facing interactions. The application of Connected Enterprises has led to companies experiencing an increase in annual revenue and a positive return on investment.

The third 2 Core Capabilities are Data & Analytics and Digital Transformation — your company’s response to a highly demanding digital market.

1. Data & Analytics. The fourth core capability is Data & Analytics. This core capability is focused on creating actionable insights that drive profitable growth. With the use of Data & Analytics, it can uncover patterns of customer behavior, relevant social media influencers, and channel preferences. It is useful in personalizing propositions, channels, marketing communication, and the experiences offered to customers.
2. Digital Transformation. The sixth core capability, this is the core capability that can power new ways to engage customers, optimize operations, and transform products. Digital Transformation is delivering the right customer and digital technology. With the advent of virtual reality, augmented reality headsets, the Internet of Things, AI, and cognitive computing, it has changed the way customer-centric companies engage customers. Digital Transformation is not an overnight event. This is a series of incremental steps, each delivering a concrete business advantage.

Developing the 6 Core Capabilities is no easy task. It can be pretty challenging. Companies need to have a good handle of its key challenges and the right approaches to mastering the 6 Core Capabilities. When this is achieved, the high road to global competitiveness is achieved.

Interested in gaining more understanding of these 6 core Capabilities of a Customer-centric Organization? You can learn more and download an editable PowerPoint about the 6 Core Capabilities of a Customer-centric Organization here on the Flevy documents marketplace. There is a series of 3 presentations – Part I, Part II, and Part III that discusses all 6 Core Capabilities.

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The constant advancement in technology has raised the expectations of customers in terms of their interaction with companies.  This digital disruption is also forcing businesses to develop new capabilities and explore innovative ways and means to deliver improved Customer Experiences.

Organizations can overhaul their Customer Journeys by embracing latest digital insights and practices.  To develop a truly exceptional, breakthrough Customer Experience, organizations should work towards adopting 7 key imperatives:

1. Develop Customer Empathy
2. Design the Complete Customer Experience
3. Reinvent the Customer Experience
4. Lead the Way with Industry Rules
5. Become an Agile Organization
6. Continuously Improve and Iterate
7. Foster a Culture of Collaboration

An organization does not need to execute all 7 of these imperatives—it varies from case to case depending on the circumstances, market, and customer requirements.

Let’s, now, discuss the first 4 imperatives in further detail.

Develop Customer Empathy

Many firms use surveys and face-to-face interviews to gather firsthand customer insights to enhance their Customer Experiences.

However, when designing Customer Journeys—in addition to customer data—companies need to understand their customers’ behaviors deeply and put themselves in their customers’ shoes.  This entails knowing the complexities the customers face during various journeys and developing new ways to understand Customer Journeys—for instance, by making researchers accompany customers while shopping, by asking customers to report their activities and provide feedback as they interact with various offerings, and involving customers to provide their input on early versions of proposed offerings.

Design the Complete Customer Experience

Most people consider that design pertains only to good artwork, outlook, and appearance of products.

However, it involves not just the look and feel of a product but also the way it operates.  To render breakthrough Customer Experience, companies need to fundamentally shift the way design is perceived—not just the user interface design rather designing the overall Customer Experience.

Great Customer Experience design encompasses crafting every interface the customers have with the provider from the minute they consider a purchase.  It warrants enrolling all people that can make a difference to the customer (especially from the operations and IT units), mapping out customer touchpoints, and transforming fundamental systems and processes.

Reinvent the Customer Experience

Improving current Customer Journeys enables achieving incremental cost reductions and quality enhancements.

However, to improve Customer Journeys there is a need to shift the way Customer Journeys are perceived—from merely addressing the issues in a Customer Journey and streamlining a process to completely transforming the entire Customer Experience.

This should be done by carefully deliberating on and thoroughly analyzing all journeys from a customer’s perspective, drawing inspirations and studying benchmarks from other industries, and addressing customers’ needs.

Lead the Way with Industry Rules

Financial institutions are, to this day, quite cautious of utilizing technology to verify customers’ identification documents for deposit account opening.  Compliance teams at these institutions often resist the efforts to transform customer account opening journeys, as they exercise extreme care to ensure regulatory compliance.  Some banks make the customers fill their applications online but ask them to visit a branch with the completed paperwork, resulting in a cumbersome Customer Experience that is no longer acceptable as we enter the Fourth Industrial Revolution.

Leading organizations strictly adhere to laws but demonstrate to the regulatory authorities how technology has helped them break the status quo surrounding regulatory compliance and develop innovative solutions to manage risks and compliance better.

Interested in learning more about the other imperatives key to developing a breakthrough Customer Experience?  You can download an editable PowerPoint on Breakthrough Customer Experience (CX) here on the Flevy documents marketplace.

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“All you need is your own imagination
So use it that’s what it’s for (that’s what it’s for)
Go inside, for your finest inspiration
Your dreams will open the door (open up the door)” Madonna

Madonna is a perfect example of reinvention. A very versatile actress, Madonna has the ability to adapt to new trends; someone that can send a lesson to companies struggling with their own digital revolution.

In this digital age, change is rewarded while being static is being punished. Companies must be open to radical reinvention to find new, significant, and sustainable sources of revenue.  Incremental adjustments or building something new outside of the core business can provide real benefits and, in many cases, are a crucial first step for a digital transformation. But if these initiatives do not lead to more profound changes to the core business and avoid the real work of re-architecting how the business makes money, the benefits can be fleeting ad too insignificant to avert a steady march to oblivion.

Discovering Digital Reinvention

Reinvention is a rethinking of the business itself.  Based on a Digital Quotient Research, reinvention requires significant commitment. First, the investment must be aligned closely with strategy at a sufficient scale. And second, digital leaders must have a high threshold for risk and must be willing to make bold decisions.

Digital Reinvention is not a throw-it-all-out approach. If you look at Apple when it moved from a computer manufacturer to music and lifestyle brand, it has reinvented itself while continuing to build computers.  Likewise, this is the case with John Deere.  John Deere is the brand name of Deere & Company that manufactures agricultural, construction, forestry machinery, and others. It continued to sell tractors and farm equipment while reinventing itself into a creator of online services for farmers.

Digital Reinvention is an innovative approach to laying the foundation for future growth while continually pushing improvement targets.

Approaching Digital Reinvention

Digital Reinvention will put new demands on leadership. Hence, an organization must have a strategic approach to Digital Reinvention: The 4Ds of Digital Reinvention.

1. Discover. The primary goal of Discover is to develop a tight business case for change based on facts. Organizations must discover what your digital vision is based on where the value is. This will shape your digital ambition, strategy, and business case.
2. Design. Designing, creating, and prototyping breakthrough experiences is the main focus of Design. It is reinventing and developing new capabilities and breakthrough Customer Journeys.
3. Deliver. This is the third phase where organizations need to gather speed and scale necessary for reinvention. Its primary focus is to deliver and develop a network of partners who can rapidly scale your ambition. There is a need to activate an ecosystem to rapidly deliver at scale.
4. De-risk. The 4^th D, it is focused on structuring the change program, resources, and commercial model to reduce operational and financial risk. It is essential for senior leaders to focus on structural and organizational issues that can hamper the organization’s ability to manage cyber risk.

Having a good handle of the 4Ds of Digital Reinvention will prepare leaders towards Digital Transformation and new challenges.  It will be able to come up with the right answers to key questions that will arise in preparation for Digital Reinvention. Coming up with the proper answers to these crucial questions can guide companies to reinvent themselves ad stay in the game.

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Digital-savvy startups are disrupting markets and threatening conventional businesses.  They are doing this by utilizing technology to offer new products and services and providing tailored yet uncomplicated experiences for their customers.

Likewise, large traditionally-run firms will have to keep evolving their Customer Experience approaches to secure additional avenues of revenue and to stay competitive.  To accomplish this, they will need to develop capabilities to effectively utilize insights on customer preferences and design offerings as per the customers’ preferences.

Many organizations, today, are undertaking Digital Transformation programs to improve their Customer Experiences.  However, a majority of these Digital Transformation initiatives fall short of securing their maximum value potential due to focusing only on improving specific touchpoints instead of confronting the entire customer journeys—spanning across several departments and channels.

To make their Customer Experience sustainable and to become Customer-centric Organizations need to clearly transform their ways of doing business, operations, and employee behaviors.  It is critical to improve these fundamental support processes before embarking on initiating any Customer Experience optimization initiatives.

Customer Experience optimization facilitates in gaining more satisfied/paying customers, additional value, and better retention rates.  Research reveals that the companies that have higher Customer Satisfaction levels can achieve four times growth in value compare to those that rank lower in Customer Satisfaction.

Customer Experience (CX) Approach to Value Creation

The following pragmatic 5-phase approach to Customer Experience Management and Value Creation is of great benefit to organizations aspiring to enrich their Customer Experience, achieve clear-cut differentiation, and capture the most potential value:

1. Understand What Customers Value
2. Simplify and Streamline Offerings
3. Link Customer Value to Operational Drivers
4. Focus on Most Important Customer Journeys
5. Adopt Continuous Improvement (CI) Thinking

Let’s now delve deeper into the first 3 phases of the approach.

Understand What Customers Value

Ascertaining the key drivers of Customer Satisfaction is the foremost step in improving Customer Experience.  A flawed approach—that many companies still employ—at the onset of a Customer Experience optimization initiative is to reduce costs associated with internal processes and exploring customer pain points.  This doesn’t assist in maximizing Value Creation.

Customer-centric organizations, on the other hand, devote their time in developing a clear understanding of what really matters to their customers.  This helps in deciding where to focus, rationalizing their processes, and creating new experiences for the customers to generate additional value.

Great Customer Experience necessitates much more than just satisfactory interactions.  Customer Satisfaction should be mapped along the entire customer journey—spanning multiple functions and channels—as customers use various channels to communicate with companies before making a transaction.

Simplify and Streamline Offerings

Alongside rationalizing the processes, it is equally important to carry out a detailed analysis of the brands, offerings, and price structures is essential to tap value from Customer Experience.  After all, even the most pleasing Customer Experience cannot offset an unpredictable or exorbitantly expensive product.

Once these fundamentals are in order, organizations should investigate which interactions and Customer Journeys carry the most significance in a Customer Experience; evaluate how the organization is rated in each journey; identify and focus on the operations that need to be overhauled to improve the overall Customer Experience.

Link Customer Value to Operational Drivers

Technology and customer input provides the stimulus to streamline offerings and Customer Experience.  However, the real value comes from linking the Customer Experience to core operational processes.  Seeing journeys from the customer perspective aids in focusing on what they need and linking internal processes, structures, and KPIs to customer facilitation.

This necessitates deeper insights on elements that are of most value to the customer across a journey, pinpointing drivers of business costs and revenues, and—most importantly—inculcating the right mindsets across the organization.  This detailed evaluation of customer journeys facilitates in determining operational improvements that bear the most positive effect on Customer Experience.

Interested in learning more about the other phases of the approach to managing Customer Experience?  You can download an editable PowerPoint on the Customer Experience (CX) Approach to Create Value here on the Flevy documents marketplace.

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