Capgemini's Scott Clarke talks with with MIT Sloan Management Review contributing editor Michael Fitzgerald about the impact of digital transformation and the reception of the research in the market.

1. JA N U A RY 2 0 1 4
Your Digital Journey Is
Being Mapped by Your
Customers
Scott Clarke (Capgemini Consulting), interviewed by Michael Fitzgerald

2. MIT SLOAN MANAGEMENT REVIEW
Your Digital Journey
Is Being Mapped by
Your Customers
At heart, digital business is about people, not tech, says Capgemini’s
Scott Clarke.
S
SCOTT CLARKE (CAPGEMINI CONSULTING), INTERVIEWED BY MICHAEL FITZGERALD
cott Clarke has been the point person in North America for the research Capgemini
Consulting and MIT’s Center for Digital Business are conducting on digital transformation. In his role as Customer Experience Practice lead at Capgemini Consulting, Clarke
focuses on what digital technology contributes to the dynamic between company and
customer. He says that companies seeking transformative effects from their digital activities often start with the customer, then spread into other areas like process
improvement and business model innovation. He spoke with MIT Sloan Management
Review contributing editor Michael Fitzgerald about the impact of digital transformation and the reception of the research in the market.
What was the reaction to the research originally, and how has it changed?
When we started this journey three years ago, digital transformation was nothing more than a “buzz” term
for many clients. For others, it had snowballed into an all-encompassing concept that represented broad elements of the company but lacked a clear vision and definition.
Now it has become more real for organizations, as opposed to an abstract concept. Conversations with clients tend
to be a lot more focused on tactics and immediate results. There’s a lot more emphasis on the metrics and ROI of the
digital journey. We’re seeing a lot more focus on governance, on what it means for the inner workings of the organization, and on how different business units can work together to drive the digital advantage.
Why are things changing?
Organizations recognize they have to be in the game. It is becoming a strategic necessity for organizations trying to
deal with the demands and opportunities of the new global economy. Companies know that competitors are starting to leverage the power of digital and don’t want to be left behind. The ones that understand it realize that, whether
or not they have invested in digital at an organizational level, the people that really matter, customers and employees, are already embracing digital in their own way. It’s a matter of responding to that demand.
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tally mature segment of companies, what the
research refers to as “Digirati”, this also involves
combining predictive analytics with a decisionmanagement capability to effectively automate the
high volume of small customer-related decisions
that organizations need to make every day.
What we try to communicate is that digital is not
about the technology at all. It’s about the people that
use that technology — your customers, your partners,
your employees — and their ability to make quicker
and smarter decisions as a result of this technology.
In the current environment, the customer is much
more empowered, sophisticated and demanding.
Companies have a massive opportunity to work
with customers to create a new set of capabilities
and experiences. That’s what we try to help our clients understand. Digital is a significant paradigm
shift in how you do business. Some companies get
that better than others.
Is there still a lot of perception that it’s
just buzz?
I don’t think that’s the case. It’s become a matter of
prioritization. Companies understand they need to
start to automate and integrate systems, doing more
for less, creating more efficiency in business. Companies tend to get nervous when they see it as a
bigger umbrella term, “transforming the business.”
Transformation scares companies. It always has. In
the past, transformation was often associated with
large IT implementations that drove little ROI to
the business, at least not that could be accurately or
reliably measured.
Digitally mature companies tend to prioritize a
number of guiding principles. It is the prevalence of
these principles in the way that companies interact
inside and outside their organization that sets them
apart from companies who are at the lower end of
the digital maturity continuum.
These principles include collaboration — the ability to engage with communities inside and outside
your company, to co-create solutions to common
problems. At the heart of this is co-ideation and coinnovation — working together to create better
outcomes and solve tougher problems.
The question is, what are the business benefits?
That’s where it gets challenging. Nobody has put
forth a incontrovertible set of industry-specific
benchmarks, to say, “If I’m a chemical company or a
[communications company], and I invest in these
new business practices, what can I expect to see and
when?” When articulating the business case for digital there is the usual debate over causation. Are
profitable companies more likely to invest heavily in
digital capabilities or do companies become more
profitable because they invest heavily in digital? Our
research has shown that in fact both are true but the
business case still needs further quantification.
Then there’s integration. This includes the integration of channel capabilities in order to allow
customers to move seamlessly from channel to
channel without disruption or loss of information.
It also includes the integration of processes and systems, breaking down traditional organizational
silos to enable a more unified and holistic approach
to the market. Also, transparency. As we move from
the age of information asymmetry to the age of information democracy, it is paramount that
organizations maintain an open dialogue with their
employees and customers. Organizations need to
be transparent in not only communicating the decisions they’ve made, but also, why they made them.
The other challenge is nobody really wants to own
this in a company. It is risky; it is massive; it is a significant shift in organizational structure and
culture. There is no Steve Jobs in a lot of the companies we talk to. They get it, but they don’t want to
own it. They try to do things in small increments in
order to show momentum and govern the process
tightly. Once the benefits start to take form, they
often look to expand the initiative across additional
areas of the business. But it’s a slow process.
There’s also rational decision-making — the ability
to make decisions based on facts and figures rather
than intuition and experience. For the most digi2
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lems. Companies will begin to shift their focus
away from simply attracting highly profitable customers to building and connecting intelligent
communities, inside and outside the organization.
Can companies still get transformation with
tentative steps?
They can, but it’s always going to be difficult to
achieve this one function at a time. For instance, if
you want to develop a single view of the customer,
you have to break down the distinctions between
different parts of the business, break down the walls
that exist between your customer, your organization and your partner networks. You have to invest
across channels and across business units. This can
only be achieved through top-down leadership and
enterprise-wide thinking.
Did you get pushback from the bankers?
There are excuses rather than pushback. “Oh, we’re
not quite there yet,” or “Disparate systems and processes stand in the way.” There are always excuses as
to why not to invest in digital capabilities. But ultimately the customer is demanding it from the
companies they do business with, and some companies have responded in highly innovative ways.
What we’re trying to get companies to do, when they
embrace digital, is to do so in a way that is sensitive to
the changing environment in which they exist. If we
believe that the digital advantage comes from transforming the way organizations interact inside and
outside the firm, then we must recognize that you
can’t run the digital agenda from the boardroom.
Take Giffgaff, for example. Giffgaff is a budget mobile telephone operator owned by Spain’s Telefonica.
Over the last few years, Giffgaff has become one of
Britain’s fastest-growing networks (more than 1
million customers), which they remarkably manage with a staff of 25. They do this by embracing the
power of the social customer. Knowledgeable users/
customers are not only the front line of customer
support but also a driving force in the running of
the company itself, shaping product offerings, developing marketing materials, attracting new
members and helping to promote the company.
Giffgaff is essentially a company ran by its customers. Customers are rewarded with “payback points”
for the contributions they make to the running of
the company. These points can be applied against
their monthly mobile services, taken as a cash reward, or donated to a charitable cause.
It has to be much more collaborative, open and engaging. It has to be both outside-in and inside-out.
That’s difficult for companies to understand, particularly the outside-in idea. It’s a whole different
way of doing business, thinking of the customer as a
partner, and that’s hard for companies to digest, because that’s not how they’ve grown up. We still want
to do things to our customers and not with them.
I was recently asked by a CMO of a leading bank how
I thought banks and insurance companies would
alter the way they interact with customers over the
next three to five years. My response was that we are
likely to see more and more customers choosing the
companies they do business with, not merely because of the quality of their products and services,
but because of the perceived collective wisdom of the
tribe or community of customers they attract.
We’re seeing it in health insurance, too. Partially in
response to new healthcare reforms, many health
insurers are trying to shift their focus from claims
management to health and wellness solutions. One
way of doing this is by connecting physicians, medical experts and customers in the form of
collaborative communities. The participants in
these communities work together to help drive better health outcomes.
A customer may choose to bank with one bank over
another because they think that bank has a greater
propensity to attract smarter customers. Those
“smart” customers will form part of a trusted network and will work with the experts in the bank to
help the customer solve tougher financial prob-
In the new world of social networks, the sum of the
whole is truly greater than the sum of the individual
parts. These are just a couple of examples of disrup3
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tive approaches to the market that can be
accelerated through digital technology.
age. There is now a broad acceptance that to
compete in the digital world organizations must
find a way to cut through the “noise,” leveraging
those valuable pieces of data “signals” that help to
drive smarter, actionable decisions. More and
more, we are seeing organizations searching for
ways to turn data analytics into a strategic asset.
The research says companies should start
small and then iterate. What’s the difference
between an effective pilot and one that
traps you in a silo?
It comes down to data. Companies who do piloting
well, do it by leveraging an experimental design,
using control groups. It’s critical to use control
groups. You need to get baseline data to start with,
and also to have governance, and have the appropriate executive buy in for the pilots as well. It can’t
be done in silos, and it has to be transparent.
How often does the skills gap come up?
It comes up frequently. A number of analyst firms
estimate that there are between 70,000 and 80,000
too few qualified statisticians in the U.S. alone to
fully unlock the opportunities around big data analytics. You could easily triple that number when you
consider the wide shortage of trained managers and
executives to turn the outputs of advanced analytics
into decisive action.
If you’re going to do pilots, you have to agree up
front what success looks like and how it is going to
be measured. We’ve seen companies invest in a
pilot, and the people running it think it’s successful,
but executives push back, saying it’s not sufficient.
You’ve got to get executive input at the outset about
what it will take to convince them to move forward.
Over the next few years we are going to see the talent competition between Fortune 500 companies
heat up as they try to get the upper hand on the next
wave of qualified mathematicians, statisticians, and
econometricians emerging from business schools
and doctoral programs, not just in the U.S., but
worldwide. We are also likely to see more and more
companies shift large portions of their training
budgets to resolving this skill gap.
Do these companies start in a specific area?
Customer engagement and/or operational effectiveness tends to be the most common starting
point. However, where you start depends largely on
the level of industry regulation. In pharma and in
banking, we’re seeing a lot more focus on internal
operations up front. That’s something you can control with limited legal risk. When you’re in a
non-regulated industry, like retail and CPG [consumer packaged goods], it’s much easier to embark
on a pilot initiative around channel management or
customer engagement.
What are the core emerging technologies
you see?
Real-time data analysis, marketing and sales automat i on ( Inte g r ate d Marke t i ng and S a l e s
Management) and collaboration tools are the most
obvious. While not new to the world of customer
management, each of these capabilities is evolving
rapidly in terms of sophistication and usability.
Moreover, many of these capabilities are now moving to the cloud.
When we’re engaged with companies starting the
digital journey, more times than not it starts around
the customer: introducing new digital channels like
mobile or social to the existing channel mix. In addition, we are seeing a much greater investment in
big data analytics.
An even more important trend is the integration of
multiple technologies into complex technology
ecosystems that provide unprecedented enterprisewide capabilities. The ability to manage customers,
channels, information and partners in one integrated system is a critical enabler to driving
Organizations are becoming overwhelmed with the
sheer volume of digital data that they have to man4
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enterprise-wide innovation and ensuring that businesses continue to make decisions and manage
processes better, quicker and more efficiently.
You see management teams not getting it or not prioritizing it. When you start talking transformation,
it scares people. In some cases, it can take companies three to five years to build out the necessary
capabilities. People are being measured on results
next month or this week and often can’t get their
heads around the notion of a three- to five-year
journey. They simply can’t wait for the business
benefits. Hence you have to balance the long-term
plan with short- to medium-term results.
What about social media or mobile?
Social and mobile will continue to grow in importance as key pillars of the integrated customer
experience. Customers want to engage companies
on their own terms — when, where and how they
want. Social and mobile helps to make this possible.
You also need metrics and performance measures
in place that are real to the business and that can
help inform and guide decisions along the way. Perhaps most important, you have to focus on some
core principles of change management, which
apply to both the C-suite and the grassroots. Effective change comes from people knowing what the
organization is striving for and why, what is expected of them, having the necessary skills and
support to act on this knowledge and having the
right motivation and incentive to want to do things
differently. It’s starts with transparency and thrives
on collaboration. Ironically, two of the core principles of a digitally mature company.
Marketing to consumers’ mobile has long been
viewed as something of a holy grail by businesses
— prized but always beyond reach. Recently, however, new mobile technologies have gone
mainstream, making the elusive goal of an alwayson connection with customers firmly within reach
of even the smallest business.
With mobile technology comes the ability to provide customers with real-time, personalized
messaging at a time and place that will deliver the
greatest results. With the focus on location, relevancy and immediacy, mobile technology is already
beginning to change the way that organizations interact with their customers and the way customers
interact with each other.
Five years from now, what do you think digital transformation will mean for companies?
Social and mobile both provide customers with
unique rational and emotional experiences. However, the key is not to think about social and mobile
as stand-alone channels. Companies should focus
on the entirety of the customer experience and how
mobile and social contribute to this experience.
We’re on the brink of something pretty enormous.
We’ll see the greatest improvements around customer engagement and operational efficiency.
Companies can’t do it the way they’ve done it and
continue to drive profit. They need to find ways to
go to market better, quicker and cheaper.
Social and mobile become significantly more powerful when their capabilities are combined with
those of traditional channels to create a differentiated “all-channel” experience. This, of course, starts
with a thorough understanding of the customer
journey and the key “moments of truth” that drive
the greatest value to the customer.
Whatever your industry, the way you engage
your customers (or they engage you) will be fundamentally different in the future than it is today.
Not just at the point of sale but between purchases, and not just for B2C but B2B as well.
We’re already seeing companies trying to engage
their customers in a much more intelligent and
continuous manner. Digital is the best way of
creating that set of outcomes in an efficient and
effective way.
Do you run into management teams not up
to the task of digital transformation?
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Regardless of the length of the journey and the pace
of change you set, you need to have a clear vision of
where you want to get to and how you want to get
there. However, while a roadmap is a critical part of
managing the journey you can’t lose sight of the
quick win, short-term opportunities. You’ll never
get to the finish line unless you deliver rewards
along the way.
Don’t be afraid to celebrate those outcomes with the
customer either. Involve them in the journey. Some
companies have done that well, like Starbucks with My
Starbucks, Dell with Idea Storm, and Procter & Gamble
with P&G Connect. They’ve found ways to turn customers into business partners, which not only drives
innovation but helps to restore a sense of trust and confidence in an increasingly cynical customer base.
Michael Fitzgerald is the contributing editor for MIT
Sloan Management Review on the topic of digital
transformation.
Copyright © Massachusetts Institute of Technology, 2014.
All rights reserved.
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