17 Aug 2015
To become “digital", we need a few of those too – ASAP and preferably with cool call-signs preceded by hashtags and @ symbols.
"Most of the advice on what makes digital successful has nothing about the capabilities you need to actually make it work."
Maxim Sharshun & Stephen Reilly, Engagement Manager & Director | PwC Strategy
Sounds easy. Except it isn't. Most of the advice on what makes digital successful has nothing about the capabilities you need to actually make it work. Furthermore, typical digital solutions focus too quickly on one thing when, in fact, the secret to digital is recognising that, like all great business skills, it is about combining a multitude of factors.
Big data might be the violin section of this orchestra, but you are going to need the whole band to make beautiful music.
This is the first of a four-part Strategy& series looking at how to define and implement a digital strategy that recognises the capabilities required, both in-house and externally sourced, to realise the big benefits of digital: customer-centricity; data-driven decision-making; faster and cheaper processes; agility and speed-to-market.
These articles will focus on the superannuation industry as a case study but the insights and techniques can be applied in most parts of financial services and many other industries.
Superannuation has recently attracted a lot of attention as it struggles to cope with change on regulatory, competitive and technological fronts. Digital, and the capabilities and benefits it entails, will be a key component in the strategy of the organisations that survive and thrive over the next decade.
PwC's 2014 Superannuation survey revealed a striking swing in the CEO agenda. Up until recently superannuation players were focussed on member engagement, products and operational efficiency.
Now, digital strategy has jumped the queue to become the second most important issue for CEOs, with 42 per cent of respondents (from 9 per cent in 2013) calling it a strategic priority.
Seeing the growth in member activity, increasing churn driven in part by ongoing account consolidation and declining employer-led acquisition, funds' CEOs are looking for new ways to attract and retain customers. The digital space is an obvious place to search for solutions. We are observing a perfect storm of customers willing to use and self-serve via digital channels and the industry encouraging digital take-up to drive down the cost and enhance customer experience.
We have seen two extremes in how the superannuation sector drives a digital agenda: some tend to spend time “admiring" the problem and slowly planning long-term transformations, while others jump to a multitude of tactical solutions without fully understanding what the problem is.
In the current fast paced digital environment decisiveness and agility are key to success, however understanding the issue and planning are equally important. Companies can make the right bet once or twice, but cannot base a winning strategy on the gut feel alone.
The first step in effectively translating a digital aspiration into action is to clearly define the point of departure – that is, understanding the problem that we should solve. Often companies focus on one of the two perspectives of the current state.
Truly customer-centric players tend to emphasise a customer lens looking for gaps in the digital channel quality, experiences in the digital journeys or offering. The product or efficiency oriented players look inward, searching for capability gaps, operating model or cultural issues. While neither of the two is sufficient on its own, in combination they create a solid base for digital transformation.
Strategy& has developed a comprehensive diagnostic approach that looks at both sides of the digital equation. This approach has already helped companies in making the critical first step on their digital journey.
At first, companies should take the customer lens on the issue, benchmarking their customer interactions and experiences against best in class. In analysing experiences, the companies should look for inconsistencies and pain points across channels and products that are likely to impact customer acquisition, cross-selling or loyalty. It is also important to look beyond experience and evaluate the outcomes that we are creating for customers and how digital channels enable or hinder those.
Next, companies should carefully look inside – again using best in class as a benchmark. Most of the customer-facing issues can be traced back to the gaps in capabilities, operating model constraints or aspects of corporate culture.
For example, take a superannuation fund that experiences stubbornly high repeat calls related to status checks on claims. This issue will likely reflect in the customer experience dimension, e.g. poor expectation setting for the processing time at lodgement or lack of proactive email or SMS notifications on claim progress. From the fund's perspective it may be caused by limited UX/UI design and testing capability, inefficient sourcing with IT vendor unable to deliver status notification functionality at a reasonable cost, or highly bureaucratic decision-making culture hindering innovation and continuous improvement.
In our experience, benchmarking against leaders across all segments gives the best forward looking indication as industries quickly learn from each other and gradually converge on digital experiences and capabilities. This, however, does not mean that the solution involves becoming a “Google" in your category by excelling in all-things-digital. Selecting the right digital model and setting optimal targets for uplift involves trade-offs and conscious choices.
Alignment on the current state is critical but it is only the first step on a long journey. The next item on the CEO's digital agenda is translating the enterprise strategy into the digital target state vision and choosing the right model for harnessing digital opportunities...
…to be continued…
This is the first article in a series of three that outline the Strategy& approach to defining and implementing digital strategies. The following articles will outline the approach to choosing a digital model, defining the strategy and designing a transformation program to bring this strategy to life.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
17 Aug 2015
22 Apr 2015