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PODCAST

The State of Digital Transformation in 2021 with Omar Akhtar

Episode outline:

  • Altimeter Research Director Omar Akhtar talks about his most significant work and its impacts.
  • What is a "transformation management office" and who should be involved in this department?
  • Akhtar defines "digital maturity" and what organisations can address to achieve it.
  • How does digital maturity become a metric when selecting the proper technology stack for business operations?
  • We learn some effective strategies in dealing with resistance to cultural change.
  • What is an "agile content system'?
  • What are some of Altimeter's predictions on digital transformation in 2022?

Show notes

How “digitally mature” is your organisation? Have you transformed your company’s processes and practices to improve the experience of both your customers and employees?

In this episode of Cocktails, we talk to Altimeter’s Research Director, who shares with us their predictions and findings on digital transformation and digital marketing trends; why we should create a transformation management office; determining your company’s digital maturity; the intersection of sales and marketing in the digital age; and how to create a more agile content system.

We also get a sneak peek at their most recent work – The State of Digital Transformation in 2021 – and how the trends of today will impact the near future.

Transcript

Kevin Montalbo: Welcome to episode 48 of the Coding Over Cocktails podcast. My name is Kevin Montabo. Joining us from Sydney, Australia is Toro Cloud CEO and founder, David Brown. Good day, David!

David Brown: Good morning, Kevin!

KM: All right, let me introduce our guest for this episode. Our guest for today is an industry analyst at Altimeter, a Prophet Company where he publishes research and advises companies on digital marketing innovation. His recent areas of focus include content strategy, data-driven personalization, customer experience technology and multi-channel marketing. He is also researching the new field of augmented and virtual reality.

He has frequently served as a moderator and speaker in conferences and panel discussions on the above topics, and has been quoted as a technology expert in leading publications, including National Public Radio, CNET, Forbes, Digiday, TechCrunch, and the San Francisco Chronicle.

Joining us today for a round of Cocktails s is Omar Akhtar! Hi Omar, great to have you on the show!

Omar Akhtar: Hey, thanks for having me on!

KM: All right, so we did a little bit of research. Of course, you being a Research Director in Altimeter provides research and advisory to leaders so they may better understand the intersection of technology and business as they move forward. As the current Research Director at Altimeter, can you tell us about your most significant research accomplishments and their impact?

OA: Yeah, absolutely. So, when Altimeter was founded, it was really this idea that digital disruption is going to be something that occurs over and over again. I think back in 2008, we were just seeing the beginning of social media and cloud platforms, and there was this idea that things were going to change quite drastically. And so Altimeter was founded on the principles of recognizing disruption before it happens to companies and helping companies recognise what that disruption means for them, and then getting ahead of it with guidelines, frameworks. 

And then the third part of what we do is we try to go out there and and create benchmarks for what “good” looks like when it comes to topics like digital transformation, social business, digital marketing, try to find out what good companies are doing in their practices so that companies can: A, stack themselves up against them and say, “Well, this is how good we are. This is how far we have to go,”; and B, use that as a way to chart their path forward. 

So, I would say that if you look at our most significant research, we've really tracked with the big trends that have happened over the last 10-15 years. The first big piece of research published by Charlene Li, who is our founder, was about this idea of “social business” - the idea that social media is a lot more than just people talking to each other. It's this idea that companies could actually use social media to drive their business. Now that idea seems pretty obvious now, but back then nobody thought of it. They thought it's like using people's telephones or them talking to each other and trying to create a business out of it. 

But that was her idea back in the time, that companies like Facebook, Twitter, Google, they were creating this way that companies were talking to each other and there was something that people were talking to each other and there was a way that companies could use that to their advantage in a way that didn't seem overly creepy but seemed a lot more organic. And since then, Brian Solis took on this idea of digital transformation as a whole, which was this idea that everything that we do now has a digital component to it. Again, this seems pretty obvious now, but back in 2013, 2014, it was a pretty big idea to say that companies can't just go piecemeal by just getting online or just saying that we are now on the internet. They have to radically transform the way that they exist from their business model, to the way that they talk to customers, to the way that they innovate their products. 

It was a whole range of digital transformation and I think that's been the umbrella that Altimeter has stuck with. So under digital transformation, we looked at the transformation of marketing, the transformation of customer experience, the transformation of sales, but it all comes down to this overarching ambition to keep charting what digital transformation means. And that really has shifted over the last few years.

DB: You've written about digital marketing, the convergence of digital sales and marketing. Tell us about that. How do you guys see those disciplines’ convergence?

OA: So, I think this really came about in a large way with B2B companies. But now it's spilling over to B2C. So, if you can imagine that in the past, it was the marketers only got to do brand work and say, “This is the brand and advertising,” and all that and the sales people and B2B companies were responsible for actually those 1:1 conversations. But then as things progressed and the market got a lot better at communicating with customers, they started to harness a lot more data. So now marketers, as you're probably aware, can do that 1:1 marketing. They can send those personalised emails, they can change the web experience depending on who you are, they can reach out to you on social media, they can do all these things in various specific, targeted ways that only sales people were able to do. 

Now, sales people have a choice. They can either jump on board that ship and share in the wealth that comes with it. Or they can have conflict. And in my experience, we're still in the conflict stage of that: because marketing and sales have access to the same tools and the same audiences, it's really difficult to say, “Well, where does marketing end and sales begin?” And so the paper that we're looking at is exactly that, which is to say that these are five or six points where there's either going to be collaboration or conflict between sales and marketing. 

And few of those are things like prospecting. Who gets to prospecting, who gets to do the initial reach out, who gets to own the content that the customers see, who gets to do lead scoring which is to track how engaged the customer is and who gets to look at the final control of the data and then post-purchase. Who talked to the customer after that? Is it marketing still? Is it sales? Is it customer service who does that? 

So, in our experience, the really good companies have embraced that conflict and said that, “Look, we're going to do it our way and there isn't really a best practice template so much as it is that you have to recognise that there is going to be this conflict of collaboration and you have to see what works for you.” But I will say that the companies that are taking this on head first have seen a lot of great results from it. They've seen that their sales force is a lot more engaged, they’re a lot more digitally savvy. They're no longer just people picking up the phone or showing up at your house with a briefcase of products trying to sell you stuff. They're doing a ton more work in collaboration with marketing. 

And that means just better content and a better experience for the customers too, because they get recognised across marketing and sales rather than being handed off in a way that feels kind of disparate or jarring. So it's still a nascent field. We're still seeing a lot more development there but we're seeing companies that are taking a really great lead in pioneering this collaboration.

DB: Yeah, it's interesting how a lot of the concepts you've talked about are fairly commonplace in the SaaS industry. They've developed those marketing models and sales models and provide clear boundaries between marketing, qualified lead in a sales, qualified lead in the handover process and areas of responsibility and customer success management and all that sort of stuff. Are you finding that they are less mature in certain industries than maybe some areas, like SaaS pioneering some of these sales models?

OA: Absolutely. It works really well for SaaS because they're all using the same digital channels to talk to people. Where it gets complicated is in places like finance and health care, where there's a very clear demarcation between the marketers and the sellers and maybe even people that are account managers or post purchase, which is a whole other breed of people. So it's definitely a lot of work to do.

DB: In the 2021 Digital Trends and Predictions Webinar, your research suggests that digital transformation has become a discipline and department. So, the concept of this department is interesting. You advise organisations to create a “transformation management office” as the phrase. Tell us about the role of this department in the organisation.

OA: So, that would be kind of a best-case scenario. A transformation office would be amazing to have. In practice, it's really difficult to do and a lot of companies won't make the investment to do it. So, one thing that we've seen in the latest research and what I can tee up for you, we're releasing it later in October, is the State of Digital Transformation 2021. What we found was that there is a clear difference between companies that successfully digitally transform and companies that kind of had average results. And the number one difference was  that it didn't matter whether they had a transformation office or not. What mattered was that the CEO is leading the charge as opposed to Chief Digital Officer or a Chief Transformation Officer or Chief Experience Officer. 

It was really important that the CEO and even the board of directors were directly involved in setting the transformation agenda. And so what I would say now is, a transformation office is great but it has to be a transformation office that has some teeth to it, that has some backing and resources from the top executives. It can be a transformation office that kind of floats at the mid-level and it's kind of a conglomerate of folks from different departments in those cases that we've seen become very ineffective. So there's a difference there.

DB: And so the messaging coming from the CEO as opposed to a Chief Digital Officer or related type of role is that the effectiveness of driving the messaging down through the organisation, the authority of the voice. What is it that made the difference?

OA: So two things. The first is that you really depend on the CEO to take the company forward. Everybody else in the company is tasked with doing their day-to-day operations and even playing catch up in a way. If you think about transformation initiatives, the CIO is focused on modernising the technology infrastructure. The Chief Digital Officer is focused on getting things online and making sure that the products work. With your marketing officer, it’s just trying to pay last year's numbers. Same thing with sales. 

The CEO is the only one who can really look ahead and in order to enact a transformation agenda, it has to come from someone who's looking ahead, who's creating some sort of a purpose for that transformation. Purpose-driven transformations work. Transformations that are in service of catching up are average results. And so it's because the CEOs have the foresight of where they want to be. Good ones do, at least. And then CEOs also are the ones that can devote the resources that ultimately a good transformation agenda needs.

DB: I mean without creating any spoilers for this research as it is not released yet, were there any surprises in there, in your findings?

OA: I wouldn't say surprises but it has confirmed a lot of hypotheses that we had had for the last few years. And I think now is the time where we've actually been able to collect enough data for 10 years of digital transformation to come out and say a lot of the stuff that we thought before is actually coming true and I'm happy to share a few of those which won't come as surprises to people, but it may confirm something that they've always thought of and they can take and move forward. 

So we've seen clear differences, as I mentioned before, between those that had great results with the transformation and those that didn't. Again, leadership was key. But the other thing was that successful companies really devoted a lot of time to experience: both the customer experience and the employee experience, compared to average performers that were more likely to devote their investments to modernising IT as well as creating efficiency and processes. 

Not that they didn't focus on CX And EX as well. It's just that it wasn't as much of a priority as it was for more mature companies. And so that's a really key differentiator, it’s that when you're transforming the company, you usually come into it with this idea of modernising IT. And as you should and that's typically what digital transformation is meant for in the last many years. But doing it in service of something that is customer-facing is what we've seen has the biggest results. 

And so that was a big eye opener for us to say that we've been talking about customer experience and the importance of that for the last few years. But this really shows us that there's a clear difference between people who are catching up with people who are driving ahead. So that was probably the biggest one and the other one was the emergence of data and analysis. So successful companies were far more likely to devote resources to managing data and I think average companies for whatever reason: lack of resources, lack of the right skills, lack of the right personnel; are not as focused on data. And that's a really, really key thing. 

And again, as you're aware, you know at Toro Cloud, data is a difficult thing to deal with, especially getting it from multiple sources into a single place. Integrating it is a really, really difficult challenge. And companies that are still just trying to catch up with modernising their IT infrastructure can't afford to do that and there's a real gap there for them to leave ahead. 

So, those are the things that we saw coming down the line and now more than ever, we're really seeing that experience was always a priority. But if you're not focused on data in 2022, you're really gonna fall behind the pack

DB: On that data, there's a couple of things I wanted to ask you about. I didn't want to interrupt your train of thought there on that data initiative and the analysis of data. Should organisations be looking at certain roles to facilitate that analysis of data?

OA: So you could have a Chief Data Officer and certainly you've seen a few companies do that. I would say the exact role is less important as the organisation. So it really pays to have some sort of a centralised data function. So, that doesn't mean that all the data stays in one department. What it means is that there's one department that is overseeing the data strategy, that is saying, “Look, this is how we do governance. This is how we protect privacy. This is the protocol for integrating data from another party into our party, into our first party ecosystem. This is how often we back up to the data lake,” or whatever it might be. It's really important for there to be somewhat of a central consensus. 

And if you think back to the earlier days of marketing, what we really advocated for was someone who had control over the content because everybody's creating content and it paid to have somewhat of a central body, even if they weren't creating everybody's content. Having kind of the central governance model of where the content headquarters. For the same reason, we advocate having a data headquarters inside the company so they can make all these decisions that the lines of business or different departments don't have to make on their own.

DB: The second success factor you mentioned was the experience, and you mentioned customer experience and employee experience. I wanted to dive into that employee experience. What was the differentiator you're talking about there with employee experience?

OA: Well, I think one of the big things was the pandemic. So, companies that had focused on employee experience from the start, and in this case employee experience meant a few things in employee satisfaction. And it also meant where employees were able to communicate with each other using the right tools. Were they able to be productive? Were they able to work remotely if they could? And so, that was a huge consideration that really blew up in the COVID-19 pandemic. 

So, companies that were in a better place for that leaped far ahead of everybody else. And so what we really say is that when we think about our employees, you have to think about them in the same way you think about customers. Think about their journey when they show up to work. What's the first thing that they click on that has to do with the company? What kind of data do we capture in our employees that can help us optimise their experience while being at the company? 

So what's important to them, all these practices that were put in place for our customers, we should be doing for our employees as well. That's been a big source of returns for companies.

DB: Of course it wasn’t just about communication and facilitating communication by electronic chat channels or the like for remote work. It’s also access to systems and resources. Right? And of course, data integration and data management, being able to access the right resources to the right people became a critical function overnight because you weren't on the company network and you had to overcome those issues. 

And so, there were a whole bunch of technology challenges associated with exposing data securely right down to the right people, providing a single view of the data. And I think all this boils down to that, into that employee experience, in creating a good digital experience with employees as well. I think it's often overlooked because we talk about digital transformation, creating new digital products and services, which is very customer-centric and the customer experience which is obviously key to the business growth. But a big part of this, in our experience, has been that employee experience as well. 

OA: Absolutely, it's been absolutely crucial.

DB: So, your same study stated that digital transformation is the strategic adoption of digital technologies and practices that increase digital maturity. This concept of digital maturity is something which is measurable. How do organisations become more mature?

OA: So, every time we do this study, we look for what are called “markers of maturity,” whether it's digital marketing or customer experience. And there's a few things that we always look for. In this year, a real mark of maturity is the ability to handle data from multiple disparate sources and the ability to use artificial intelligence to help enhance that data and gain insights from it, the ability to automate communications, the ability to personalise automated communications, the ability to map a customer journey across multiple touchpoints - not just the department that you're in charge of, having a culture that's flexible, that's agile, that's adopting processes at a speed that allows for innovation, having an ecosystem that goes outside of the company. 

So, having a network of data or having a network of apps or having a network of sellers that go beyond the company and having some sort of formal process to deal with them; those are old markers of maturity. So, if I were to boil it down, it all starts with... If you look at what's the core, at the center of all these practices, it's really data management. It's the single biggest differentiator between digitally mature companies and not so digitally mature companies. 

A couple of years ago, if you had asked me this question, I would have told you that the difference between digitally mature companies is really based on presence. How digital are they in their presence? Are they reaching customers on the right social media channels? Are they communicating with them in real time? Are their websites organised in a way that's customer centric rather than product centric? That was what digitally mature meant back then. It's very data focused and I would say convergence focused. 

So, convergence means recognising things that were previously separate are now coming together. So when we talked about earlier, marketing and sales and service coming together is one thing. Product and experience and innovation coming together is another convergence outside. So, let's say, hotels partnering with credit card companies to share data and do joint targeting convergence between complementary companies or convergence between different industries, recognising that and moving for that is another market maturity that we're seeing.

DB: We talked a bit about the success factors associated with digital transformation. What about preventing successful deployment of digital transformation in organisations?

OA: So the single biggest challenge was budget and you know, I think that's no surprise there. Everyone who's involved in digital transformation will tell you that there's never enough. And so, that continues to be a problem because the results from digital transformation take a long time to surface. You can get some results in a year, but typically it takes about 3-4 years before you really reap the benefits of it. So, for a long period of time, digital transformation efforts are seen as a cost center. And when something is a cost center, along comes a COVID-19 pandemic and you know what happens to cost centers there. 

So it's a bit of a constraint on companies to their credit. Haven't said that they're stopping their digital transformation efforts, but maybe they're not accelerating them at the pace that they may have hoped. So, that was a big challenge. The other one is culture and resistance to change. So when you implement the digital transformation program, you're talking about reorganising hierarchies, you're talking about introducing skills that weren't there before. You're talking about maybe creating products that weren't there before and ways to engage that weren't there before. 

That's going to make a lot of people who don't have those skills and that experience feel very insecure and hence, resistant to change. And despite the progress that we've made with leadership and culture and digital literacy, it is always going to be difficult to enact change in any company, especially one that has such a seismic effect on the way the workforce looks. 

DB: Do you get into effective strategies in dealing with that sort of cultural change?

OA: Well, yes. It's not an area that we have a ton of research on yet, but I can tell you a few things that do work. So, digital literacy programs definitely work. We find that pilot programs, agile processes where testing and learning, building this culture of testing and learning, bringing the data back in that tends to work. It also helps if changes are holistic and not sequential. 

So, one thing that companies have learned is that, because they were so scared of cultural change, they tended to roll out change piecemeal. “Let's just keep it in this department. Let's only do it with this team.” And everybody else is the same. What that does is that actually creates more insecurity between people because they can see this one team getting maybe a lot of attention, a lot of resources, while everybody else is being told to just do what they've always done. 

And so what we found a big change from the few times that we've done this in the past is that companies are enacting their digital transformation programs in a much more holistic manner. So, it's “bring everybody along together at the same time,” which is tougher. It requires more coordination but ultimately, it's a lot more efficient. And also, we’re at the stage where we can't afford to wait on digital transformation anymore. We don't have the luxury of time because there's so much to catch up with given how quickly everything is accelerating. So, doing it sequentially is going to slow everybody down.

DB: You've been doing these, monitoring the digital transformation initiatives in organisations for several years now. I'm guessing you've seen the progress of that. We talked about maturity and where the companies are in that maturity pipeline. Generally, where are we at? I've asked this question to a few of our guests and it's interesting to see their perception within this transformation initiative. Are we getting to the end of it? And if we’re just beginning, where are we at in that timeline of that maturity?

OA: So, that's one question I don't have a great answer for because the truth is I think of digital transformation as anever static goalpost. So, anytime you make any progress towards the goalpost, it changes and it moves. So, I think there are companies that will tell you that they are successful. And I think when we did our study, we found that for the most part - most companies around the world we did the study, sadly not in Australia, but we did do it in China, in Europe and North America - and we found that for the most part, things that were pretty sophisticated maybe three or five years ago, companies were getting pretty good at. 

So personalised messaging, using customer data mapping, customer journeys. But again, that was groundbreaking three years ago and now everybody's doing it. What's groundbreaking now is completely different. And so you're never quite going to reach the end of digital transformation by design, but you can see whether you are ahead of the curve or behind the curve. And I would say most companies right now are slightly ahead of the curve. 

I think the speed at which there's a lot more information sharing now than there was maybe five years ago. And the way that people understand trends and people have gotten better at spotting trends than they may have five years ago. And so I would say they're slightly ahead of the curve. But are we at the end of digital transformation? Probably never.

DB: I know your organisation, in particular, spends quite a bit of time on digital content, marketing and sales. You produced a 2021 State of Digital Content report where you talk about the establishment of the “agile content system.” What is an agile content system?

OA: So if you can imagine in the world that you're in right now, you're probably seeing so much more content in five minutes than  was ever produced in the last 10 years of your life. And it's insane how much content there is over there. And companies can't just compete with their competitors, they're having to compete with Netflix, with Google and Amazon - anybody else that's producing content out there. So, because of that, companies are really forced to increase the production of their digital content. 

It used to be that you could just have a blog or you could just put out a few tweets or just have some fun stuff on social media. But companies are realizing that having great content, especially B2B companies, is a strategic differentiator. And so, what they decided to do is to say that there's got to be a better way to meet the demand of producing so much content. And so doing the research, we realized that there were companies that are doing this well, and were using what we would call an agile content system which is a series of practices that allows companies to scale content at a rapid pace but also have it be high quality. So it's personalised and data driven and achieves goals for multiple departments. 

So, the three characteristics of content of an agile content system are: it allows you to create a lot of content very quickly; it's personalised; and it's delivering on business goals that go beyond brand awareness so it's actually driving revenue. And there's five components of the financial content system. The first is you've got to have the right goals and metrics. So, success metrics that go beyond brand awareness or views or likes, something that actually moves the needle. You've got to have the right creation and personalisation tools, so the ability to recognise data and create personalised content. Maybe even use AI to do some content creation. 

You've got to have the right organisation and governance that allows you to create, to have a center of excellence but allows multiple centers to create content at the same time rather than it being bottlenecked in one area. You've got to have the right compliance and review process, which means that it's not just “Here, Mr. Editor,” or, “Here, Mr. Lawyer. Look at our content centred out.” It's got to be a modular content, a quicker process than that. And then finally, you've got to have the right systems to store and back up content. So. using AI for tagging it, putting it in a digital asset management system so that multiple folks can access it. Those are the kinds of things that make up a modern agile content system.

DB: It's interesting, isn't it? I used to talk about how companies produce widgets and like sausage machines are producing those widgets and they got good at it and then they needed to become software companies in order to facilitate producing those widgets and now they need to become media organisations in order to do that to market those widgets that the challenges keep on growing for organisation. Are you finding the changes to the way people are consuming the content and the way they want to consume content developed by organisations? 

OA: Well, initially our hypothesis was that everybody wants shorter content and everybody wants video. So, basically everybody wants Tiktok. What we found is that that's not actually the case. We found that there's a really wide variety of people's preferences and it really depends on the kind of company that they're talking to. So, for example, I'm sure people would love to see this podcast from Toro Cloud or maybe they would like to see a white paper because it's fairly in depth. They've got the time to indulge in it and it gives them some sort of value for the money. 

Now, would they expect the same thing from a Walmart or a Target? Probably not. Or even Coca-cola. From Coca-cola, they want, you know, high flying content. They want excitement and they want brand-focused content. So, it really depends on the type of company you are in, the type of audience you're reaching at the time that you're reaching them. So, for context, I would say that we used to have data saying, “Look, videos that are under two minutes are good and either go very big or very small.” But there's really such a wide variety of ways that people consume their content, that there's something for everyone and the key for companies is to realise what their customers need and and not what the general public needs.

DB: And you mentioned the timing of the content. I’ve seen you talking about there like developing a content funnel for where they are in the journey. The customer journey, is that what you're referring to?

OA: Absolutely. It's extremely powerful to reach the customers with the right content, the right piece at the right time. That's when we've seen it really, really flies off the page, when you are able to recognise when someone is looking for something and deliver it to them in that exact moment, not warranted. That's an email or whether that your website simply is architected in a way to intuitively guess that, those are very powerful ways to reach customers.

DB: There's so much we can talk about. You've researched so many interesting things and have discovered so many interesting trends that are on top of areas of digital transformation, sales and marketing and digital content development. Where can our listeners follow you and listen to what you're writing and researching, publishing?

OA: Yeah, absolutely. You know, follow me on twitter, it's “@obakhtar” or follow Altimeter Group on Twitter. You can also follow our parent company, Prophet. They're the ones that put out a lot of our research.And really, you know, come to our website, Prophet.com/altimeter, where we've got our latest research up there, sign up for our emails. That's the best way for people to get our latest research directly in their mailboxes. 

And invite us to your podcast. We'd love to talk about this stuff. You know, unlike a lot of other research companies, we actually do give our research away for free because we believe that it's open research and it should be going out into the market and creating that sort of discussion so you can download all our research for free. If you come to a website, all we ask is your email address and your name.

DB: That's brilliant. And of course that's “Prophet” with a “phet” not  “fit.” Prophet.com. Omar, thank you so much for your time today. It's been a pleasure.

OA: David, Kevin, it's been my pleasure as well. Thank you for having me. Take care!


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