The Four Ps of Digital Transformation
Digital transformation is the key to achieving business agility. The Four Ps of Digital Transformation present a simple and effective approach to delivering digital change.
In the middle of the 20th century, the term Marketing Mix was introduced by Neil Borden, and it quickly became a popular tool for discussing marketing strategy. A decade later, professor at Michigan State University E. Jerome McCarthy devised the four Ps of marketing - price, promotion, product and place - to further simplify the theory.
Over five decades have passed, and the scale and pace of advances in digital technology has made digital transformation a key strategic objective for both commercial enterprises and government agencies.
Smart organisations have already begun to take notice - IDC notes that companies who have embraced digital transformation are 26 per cent more profitable than those that haven't.
"We are no longer a bank," says Michael Corbat, CEO of Citi. "We are a technology company in the financial services industry."
Initially, building digital capability has had a marketing focus, but today digital transformation touches every part of the business from sales to operations, through to HR and finance. But understanding where and how to make deliverable progress can be challenging for organisations. Fundamentally digital should allow us to deliver better products and services faster, understand our customers better, help us engage our people and streamline our processes.
Borden and McCarthy's work in marketing theory made complex notions about strategy much more accessible, so why couldn't the same approach be applied to fit with the challenges of the digital era?
Introducing the Four Ps of Digital Transformation
The Four Ps of Digital Transformation are an adaptation of the original Four Ps of marketing. They reduce the complexity of digital transformation to four readily accessible components: People, Process, Platform and Product.
In order to build momentum in digital transformation, organisations need to understand how these components fit together and have a strategy in place to gain traction in each area, as well as governance to help achieve an overall cohesion.
The individual components elements are important, but the crucial factor is the cohesive whole.
Research from the MIT Sloan Management Review and Deloitte found that just 15 per cent of organisations at the early stages of digital transformation have a coherent strategy in place, compared to 80 per cent of those considered digitally mature.
For example, a business may have robust technology platforms, a secure position in the market, and talented, experienced people in teams with reasonable digital experience. However, if their fulfilment processes are overly complicated, then delivering customer-centric products and services will be extremely challenging.
The critical success factor of any digital transformation is people. Developing a culture of digital innovation and establishing effective design and delivery processes will ultimately determine how successful an organisation is. This isn't something that just happens organically - it takes active encouragement from senior leadership, a dedicated sponsor, budget, discussion and agreed measures of success. If there are gaps in understanding or experience then external consultants can help provide mentoring and leadership to help get teams established and functioning cohesively.
Defining and communicating a compelling Employee Value Proposition (EVP) will help attract and retain people with real digital talent. Good candidates are spoiled for choice in today's digital market, so your business needs to clearly communicate the reasons that a potential candidate should choose your business instead of a competitor. In addition to hard benefits like salary, softer supporting factors like opportunities for continued development, career progression, flexible working, and a compelling company digital vision are important.
The goal of any business transformation - digital or otherwise - is always to deliver a better customer experience. Reviewing operational processes is the first step towards becoming a digital business. Simplifying business processes can help to optimise the customer journey and deliver products and solutions more quickly.
Digital technology allows organisations to automate, simplify and streamline their processes to deliver a better customer experience. Complex processes can be mapped and simplified, in readiness for digitisation.
Product and software development processes are also benefiting from new techniques such as continuous delivery, automated testing, rapid prototyping and agile development methodologies - digital capabilities which need to be seeded throughout all levels of the organisation.
As transactions move to digital channels, businesses also need to consider the changes to the support processes that will be required to deliver a positive customer experience.
Successful digital transformation that really makes an impact on processes and customer experience can only occur with the support of modern platform tools.
Cloud technologies provide the agility and scalability that enable today's business to compete. Migrating certain business systems and processes to the cloud - most commonly through a hybrid cloud strategy - is an important early step, with integration of legacy systems into new platforms possible once a suitable cloud infrastructure is in place.
Developing an effective API strategy and framework enables your business to leverage the reach of your partners, customers, suppliers own digital ecosystems.
Solnet has developed its own innovative platform to help organisations digitise complex business processes and create rapid prototypes of digital experiences, assisting organisations making the transition.
The goal of digital transformation is to deliver a better customer experience by providing your customers with more relevant and engaging products and services. Your customers should be included at early stages of the design process in co-creation workshops, prototype reviews, product innovation brainstorming and focus groups.
Today's digital consumer has already developed their individual digital ecosystems around them. It's a competitive space. Your digital products must be designed within the context of the other digital properties that your customers are engaging with on a daily basis. If your digital products do not offer the simplest way for your customers to achieve their specific goal, they will quickly shift to a competitive offering.
Digital Transformation Governance
Governance of the Four Ps of Digital Transformation is really important.
Digital change won't gain any real momentum if activity is happening in functional or geographic silos. By having a clear strategy and roadmap in place focusing on People, Process, Platforms and Products your organisation will gain traction and see visible results.
Each of the four Ps comes with its own challenges, but leveraging digital to improve how an organisation performs is a more realistic goal now than ever. Digital transformation has reached a level of maturity amongst those in the field, and techniques and best practice methodologies have been formulated to assist organisations.
Working with trusted partners, businesses are able to make use of the experience and knowledge of digital transformation experts to help achieve real momentum and deliver real business value.