What is digital transformation?

Joe: Hello and a very warm welcome to the sixth episode of The Digital Brew. Today. I’m here with Ashley Friedlein from Econsultancy and we’re talking about digital transformation. Ashley, thank you for your time today. As my older brother, we’ve literally known each other all my life, so I obviously know you very well but perhaps you can give us a quick introduction to yourself.

Ashley: Yes. I’m the founder of Econsultancy and also president of Centaur Marketing which is Econsultancy, Marketing Week, Creative Review, Design Week and The Profile Group.

Joe: OK, brilliant. So, digital transformation… I know that we’ll talk about what Econsultancy does in that field perhaps a little bit later on you know thinking about topics for The Digital Brew I often find myself doing buzzword bingo and I think there’s a real risk that ‘digital transformation’ is one of those buzzwords. I mean how do you personally define digital transformation?

Ashley: I define it quite simply as a company’s journey towards becoming a digital organisation. That then of course begs the question of “what do you mean by digital organisation?” In my view a digital business is one which has two things; firstly, it focuses on the customer experience, irrespective of a channel actually, so not just digital. And secondly, has a digital culture. And I further then go on to describe what I think a digital culture is, and I think there are seven key attributes and I probably won’t remember that all but I’ll try! Customer-centric, data driven, makers and doers – such as test, experiment build and learn, transparent so that’s transparency and openness, collaboration, learning, culture, and agile. So that’s the seven.

Joe: So that’s quite an interesting blend because actually a lot of it’s people and culture and some of that, perhaps, is tech and so it’s technical kind of enabling ways that we work. I think and again we’re probably going to talk about the differences between sort of technical sort of platform level ways that business is being forced to change and the make up of modern business teams and I think historically maybe we just talked about marketing teams but I think it is now business leadership. Do you think that it’s the Internet that has driven stuff? Is it the Internet that has transformed the way we do business? Is it as simple as that? Is that a bit too simplistic?

Ashley: I think it’s largely – in terms of what’s brought about this excitement or buzz around digital transformation – it’s yes, broadly the Internet. I mean you know you’d include in that mobile telephony, for example, which may not be IP based – they might be cellular. But with the Internet and related technologies, data is obviously a big part of that, and big data has been a previous buzz word obviously so data driven businesses and marketing and the connectivity that IP Internet protocol and related protocols have provided. Yes, I think that’s been the change in both society, technology obviously, business models. I think the other big thing probably is globalisation which is sort of related I guess because obviously it’s fundamentally global. But, just more connected business generally, global competition that is also bringing about, forcing some of this digital transformation.

Joe: That’s the interesting thing. I think, certainly my experiences at Browser Media over the years, we’ve seen… reticence is the wrong word but real sort of borderline fear from some sort of senior management about, you know, really quite seismic changes in the way that business operates. Do you think people are forced to do it? Are we now at a point where people acknowledge there is no option but to embrace it and to become the agile global business that digital facilitates?

Ashley: Not necessarily. I mean if you are a doctor or a vet or a nurse or a cleaner… I mean there are still quite a few jobs and we might get on to robots and AI and what they might do in some of those jobs. But there is still quite a few areas of the economy where you can see how digital would or could play a part in terms of having a website, having digital booking or reservation systems, or mobile apps to support some of those things, but where it’s not a huge part of that business. But, for most businesses large businesses, international ones and even some niche businesses who are increasingly selling internationally by the Internet then, yes, I think it’s it’s both an opportunity and a threat because if you don’t keep up with those things then you do risk getting left behind or marginalised or just withering away to nothing.

Joe: But I think even the local doctors, the local plumbers all that all those things – and I agree with you – but equally, there’s an argument that now people won’t use the Yellow Pages to find them so that the way that they market themselves, I think that has changed a lot and, you know, there’s very few organisations now that don’t have at least a website and I think that for me is transformation at the most elemental level. I think the interesting thing is just the way that you do business is changing and that’s kind of supply chain management. It’s everything, it’s recruitment it literally touches pretty much everything. So for me, it’s very much a cultural change. Technology is an enabler, but the most successful businesses will be the ones that embrace it and sort of grab the bull by the horns and kind of go with it. One of the biggest challenges and I think it still remains is the recruitment of teams, and I know that over the years you’ve done quite a lot about defining the ultimate model of the team. Interesting work, but presumably that’s ever evolving.

Ashley: Yes, I think you could look across a common way of thinking about business or changes across strategy, people, process, and technology. And if you think of digital transformation applied to those, the strategy piece is often around business models, new markets, possibly pricing and new operating models and things, which the strategy consultants tend to work on. The people is, you know,  the talents and skills and things which we’ll come back to. But that’s an area where we do do a lot. Some of that’s training but some of that is culture and mindsets or ways of working and thinking. Agile’s clearly part of that process. Agile’s very obviously part of that, so the actual rhythm of a business, the way that it operates, becoming less linear perhaps, less rigid and static and more fluid and iterative. And then technology, obviously is the whole underpinning enabling technology. But yes I mean it’s interesting I think within digital transformation a lot of people perhaps mistakenly or often some senior management more traditional thinkers, maybe, see digital as technology and really only that – possibly data, systems and IT.

Joe: And sometimes just marketing as well. It’s the website and the marketing of that website.

Ashley: Yes. And I think marketing has been at the forefront of digital because it’s customer facing. It tends to move quite quickly. Sales, maybe customer service, are the things which touch the customer. But it’s now touching of course all of the employees. So the way in which they work, how do you track millennial talent? You know the way in which they want to work is is different. The device things they use in communicating. So that’s engaging employees is part of it. And then all the back office – you know finance and H.R. and logistics and offices and everything is being impacted by digital.

Joe: Yes, I agree. It’s interesting I mean there’s roles like CIO that didn’t exist not that long ago, and CEOs – traditionally the route into that role was often the FD role – very much financial, which is numbers and it’s still data and it’s business performance. But seeing more and more people coming up into the kind of the lead role via marketing because I think marketing led the way in embracing the technology, embracing perhaps a different way of thinking. And I guess, for me and again you know this is particularly true for us and search, it’s very data-driven. And I think that tradition, maybe not what you normally think of as a marketer doing lovely fluffy campaigns and great strap lines, beautiful designs but actually having ROI metrics behind that or having real raw data sitting behind that. And that’s something which we as an agency we’ve struggled to recruit that funny sort of hybrid character who’s creative – so, you know, likes words, likes messaging, likes understanding customers or our customer’s customer and marrying that up with a kind of geeky stat level, sort of, nerd and that to me really is the kind of successful digital marketer achieves that.

Ashley: Yes I think that there has been a lot of talk in the past about T-shaped skills so T like that [gestures hands] capital T, where someone has a broad set of skills so that might be soft skills communication and working in teams and things. And then a deep specialism, so they would be, you know, a technologist or a marketer or whatever. There was a phrase I’m not sure whether I invented it or not to be honest – I think I probably stole it from someone else – It is a pi-shaped marketer, so pi as in the Greek letter. But you know so you’ve still got that broad base of skills but you’ve got the sort of left brain and right brain thing, so that’s the mixture of the data analytical technical bit and the the other side – I never remember which side of the brain is which – but they’re more creative, emotional, the more sort of traditional I suppose what people would think of as a marketer… customer insight and empathy and things like that so that’s often the interesting thing in digital marketing is that you ideally need both. And sometimes the risk is some digital people maybe or technologist are too far down purely data and miss the fact that we are still, as humans, motivated by all sorts of things like you know vanity and we’re not rational creatures actually even though we like to think we are. So there’s still the room you know the big idea or the creativity within marketing is just as or arguably even more important than ever. But it’s just that there’s also this other, you know, data logic, algorithms, programmatic bit which is also extremely important.

Joe: You’re absolutely right. And I’ve had a sort of personal battle I guess against a lot of bid-management technology, you know, promising the world, but I’ve just rarely seen a platform that truly embraces the subtle nuances of language that’s incredibly hard. And I think, yes, they’ll get there at some point, but changing whether an ad shows at 7 o’clock on Friday because that’s historically been performing, yes that’s worthwhile, but not nearly as good as increasing click through rates by just subtle tweaks in language. And as you say it’s reaching out to that human emotion which is not binary. And different people will react in different ways and I think the binary bit of that jigsaw is analysing the data but you’ve got to then marry that up with creativity.

Ashley: And quite a lot of data driven stuff is retrospectives i.e. it is based on past behaviour or things that have happened not on what might happen. So with artificial intelligence things, maybe this will change and predictive analytics and things promises to try to address that, but still often humans might be better at, you know, hypothesising about what if ‘this’, or ‘what is that telling us’, or we know that the weather has been particularly one way, or the competition has done this, or there’s been a terrible disaster in the news, or there’s a whole load of things which the data will tell you retrospectively but it’s quite hard to. you know. predict it or act on it to understand that context.

Joe: So I think most of those predictions of the future are based entirely on the past. So if you look at weather forecasting, if they know that if various clouds are forming, the likelihood is it’s going to rain in four hours time. But if there’s a freak event that hasn’t happened before but the local farmer has an inkling then we can’t, kind of, beat that. So Econsultancy as an organisation, what do you do? I’ve seen a lot of stuff coming through Econsultancy about digital transformation what is, you know, give me the pitch, what can Econsultancy offer?

Ashley:  I mean a part of it’s just thought leadership I suppose. As in we write about, speak about, think about it as we are now because you know people want to understand and grapple with it and things. And so that’s in the editorial and sort of event side of what we do. But in terms of the work we do, it’s mostly around – well for starters it’s mostly related to marketing or digital marketing. As we said, that isn’t the only part of digital transformation. And mostly it’s related to the people and process bit. So we don’t do strategy consultancy, we don’t do technological implementation. We are about giving people the skills and capabilities to do digital better – digital marketing in particular and e-commerce and all this data driven stuff. So it’s equipping your teams and people with the abilities and knowledge and skills to actually do this stuff. So we both talk about it conceptually but then, you know, empower and enable people….

Joe: So, you’re not really going head to head with the Accentures of the world the McKinseys – are they typically more, kind of, theoretical strategic stuff whereas yours is the people element?

Ashley: Yes, I think we… is competes the right word? But on the thought leadership-y bit, I’d like to think that the originality of our ideas and our thinking and our data and stuff is just as good as an Accenture or a McKinsey and things… Forrester and Gartner and people like that and we’ve seen them sometimes adopt, I think, some of our thinking and our research certainly. In terms of actually what they do, the Mckinseys of this world and the Bains and BCGs tend to still focus on the strategy consulting bit which is not just digital it’s business stuff. They tend to work for the CEO still, maybe the CFO. The Accentures of this world and, you know, the IBMs and things are broader management consultancies, they’re actually competing more directly with those strategy consultancies now. They’re also competing with the digital agencies through design and build and creative and media even, in some cases. So we often work with either of those people to be honest, and I know we don’t compete with them, but the bit we tend to do… they might be doing some big 3-5 year change management programme for 10 hundred million…

Joe: So you’ll help to implement….

Ashley: … Yeah, so at the people level, when it comes – you’ve got your strategy you go “yes, we see this digital transformation stuff but actually executing on that.” So yes, there is maybe a whole load of systems tech bit which someone like Accenture might do, integrating your front end systems with your call centre, with your CRM and your SAP finance stuff. All the wiring and plumbing and stuff. But we typically… the education capability development bit around the people and that includes things like, for example, organisational design. So what should your marketing function look like? What skills do you need? How might you structure it? What are the job titles? Let’s write the actual job descriptions. Let’s talk to HR about how you recruit these people, how do you keep those people, how do you pay those people? And then there’s the actual skills so we have, you know, products services where we can audit your digital capability at an individual and an organisational level, we can benchmark that against your peers or the market generally. We can design a program then to try and up-skill those people over time. Remeasure, see what’s changed.

Joe: That’s another question – how do you measure the impact of what you do? Presumably that benchmarking gives you a very easy way of actually measuring the success of that?

Ashley: I mean it tends to get measured either just on essentially a knowledge level which is testing what people know at its simplest level. Also in terms of the employee’s feeding back which is more of a qualitative insight into how they feel about their levels of knowledge, how they feel about, you know, how much they can perform their role well, before and after. There are also things around employees getting talent and keeping talent. So some of this is about keeping talent, as you said at beginning, talent is a really tough thing. And then obviously ideally correlating an increased digital capability with increased performance, so better business results. Now that might be, you know, we’ve had customers… it’s even as simple as someone coming on a paid search training course and go on away and save themselves a million pounds a year, because they were bidding wrong basically. Or email marketing, that they were you know not cleansing the data properly or they were getting blacklisted by certain ISP that they didn’t even realise. So there’s a lot of practical stuff like that, where you get very direct value and then often speaking to the individuals themselves and the HR people we get feedback from that.

Joe: I’m sure, and I think to be successful, any true digital transformation programme – and it is a programme, it’s always going on – I think the key there is, yes, you can train individuals in specific roles; you can get that example where the PPC guy realises he’s doing it wrong and fixes it. The real problem there is relying on individuals. I think the successful transformation is when senior management get it, they have a very clear understanding of what’s needed as a business and then you’re creating roles for individuals rather than creating the roles for that individual. And it’s difficult and I think traditionally the kind of board level, they don’t get it as much as perhaps the millennials that are coming up now. You know, they’re so used to digital, it’s just the way they do it. It’s kind of easy and they say it’s so straightforward and they’re not scared of learning new technology, they love new technologies, they don’t like the status quo but that’s hard. And you know the old sort of CEOs come up through the FD route, you know, it’s a big ask and you can see why it’s sort of threatening. That’s why the kind of service you can offer to help organisations through that journey, there’s a lot of ways of getting it wrong so if you can steer them to the right place, that has to be a good thing.

Ashley: Definitely, and I think that the most successful transformations in businesses really, I think, has to come from the CEO ultimately, and then the senior manager. It’s not really a digital problem per say, it’s a change problem and it’s a business cultural problem. And and there are some CEOs or senior teams where they are smart enough to say “look I’m too old, I’m past it, I’m never going to get it, but I understand it’s importance, so I’m going to empower the business in the right way. I’m going to champion it and all that good stuff”. I think the worst case is when people pretend they know what they’re talking about and stifle things and appoint a Chief Digital Officer who leaves after six months in frustration. They don’t really want to change, they don’t really feel comfortable with it, and that –

Joe: … Sort of box ticking.

Ashley: … It doesn’t end happily. [Laughs]

Joe: So what’s the next big thing, what’s the future? what should organisations be preparing themselves for?

Ashley: Well, I think the various buzzy buzz words – augmented reality and virtual reality – I’m not actually that excited about, I mean, outside of gaming and various specific applications, personally. 3D printing, again, has specific use cases. Robotics will be big I think, driverless cars and vehicles generally, I think will be big. But artificial intelligence is the one -which again is a very broad term – is, I think the the technology which, will come out. That Bill Gates quote that we will “overestimate its impact in the short term and underestimate it in the long term.” I mean in five, ten years when you look at what is possible even now, it’s exciting and terrifying what AI will be… can already do actually. I was saying the Google’s deep mine technology – I’ve seen a thing on YouTube recently where they’d taught a little sort of robot thing – just a model really, a two legged one a four legged one – had taught itself to walk and climb over things and all it had been told was you know you’ve got to get from here to here to go and figure it out. So now you think of babies and humans how long it takes to learn to walk, this thing has self taught itself. I don’t know how long it took to do, but the implications of that are, again, say on the one hand really exciting in terms what that makes possible, also a little bit terrifying.

Ashley: Yes – it is terrifying. I had an interesting chat with Parry from Phrasee last week – the last Digital Brew – he is interesting, for an AI company, he was almost sort of pooh-poohing the Terminator style kind of end of the world. But, as you say some of this stuff is starting to happen and it is slightly alarming. I guess I fear for people’s jobs in some of the more interesting applications of AI are doing the kind of routine churn stuff that they can do very quickly and very, very well and that’s scary.

Ashley: I think I’m not so worried about the whole Terminator. I mean I can see how AI could be used in military applications clearly, I’m sure it already is, but it’s less – the Terminator thing – but it is the social impact. I mean, I already have some concerns about you know social media I think can be unhealthy when you look at children. It’s still very early days, but there’s a lot of unhealthy things, our addiction to technology arguably which we’re still kind of working through. But, AI similarly feels to me like it will favour the elite and, and cut out a whole load of sort of mid and junior job roles and functions of things. And so we’ll end up with the rich getting richer, the poor not really having anything, maybe being subsidised by some tax on the rich and everyone in between a bit… it’s going to be hard to learn a skill or craft and grow up through a profession if that’s just been automated.

Joe: Yes I agree. We’ve had some, when I think back over the years of you know running Browser Media, I’ve had some clients I feel relatively uncomfortable with because their proposition for their product basically makes people redundant. It’s sort of automating functions that humans have traditionally done and, yes, it does work and it is more accurate and it saves a fortune. You haven’t got payroll headaches that, you know, but it doesn’t end well for humanity! [Laughs]

Ashley: Well the strange thing is, as I was saying someone recently – it’s a bit like that David Walliams sketch,  “the computer says no,” – where if I’m trying to get something you know, a customer service call… Well for starters I’d rather interact with a screen and therefore a computer because I think that if it says if the computer says something has happened, I believe it. If a human says I have made a note on your record sir I think “well have you?” I don’t know if you have or not frankly. And I bet if I phoned back in a week they’ll say well there’s no record of this conversation. So I, and I actually sometimes think talking to a human about saying “could you elevate this to a machine please?” I don’t want to talk to humans, because, I don’t trust you basically! Whereas at least if it was a chat bot – I mean that’s another sexy area at the moment and they are conversational interfaces I think are really interesting and voice is becoming, I think 20 percent of all Google searches now voice or something I read recently and you know we we look at Siri, Alexa, Echo it’s very popular. So I think actually there will come a time where people will feel more trust… be more comfortable speaking to a machine than a human. Actually, even with driverless cars, you know, you’ll pay a bigger insurance premium to be allowed to drive your car as a human because it will become deemed, you know… Like smoking you know it’s a sort of terrible social thing to go “what, you are going to drive children to school? That’s not very responsible is it?” And I think that’s perfectly you know five, 10, 15 years that’s perfectly likely.

Joe: Big changes. Big changes a foot! Ashley, thanks a lot for your time. That’s great. And anyone wanting help on their digital transformation voyage, Econsultancy is the place to go. Well, thank you very much for watching. I hope you enjoyed that. As always, we are on the lookout for people who want to get involved so if you’ve got any product or service you’d like to talk about, we’d love to hear from you. Thank you.