- Digital transformation is not just about sales and service interactions.
- Across all industries, products design is ripe for digitisation.
- Foxtel’s recent launch of Foxtel Now is one example of digitising the product.
Over the last 20 years we’ve seen the commercialisation of the internet unfold. In that time, various themes have also come and gone. The headline banner of ‘digital transformation’ first emerged with the promise of improved customer experience and productivity gains for organisations, all on the back of digitising customer sales and service interactions.
Put simply, enabling interactions to be carried out digitally was easier and in many cases preferred by the customer, resulting in greater satisfaction or a higher Net Promoter Score (a measure of loyalty). For the organisation, this meant hiring fewer customer service team members and often reducing the size of their contact centres, with the promise of bottom-line cost savings.
We’ve now evolved well beyond digitising customer interactions from just a sales and service perspective. Whilst there are variations across industry, the overwhelmingly majority of bank transactions, flight bookings, share trades and bill payments now take place digitally (in the case of banking, mostly on a smartphone).
Beyond digitising sales and service
When we take a look at market disruption, one of the common themes is that the digitisation taking place goes deeper than just the interaction itself, or the channel. This is not just about enabling a connected channel experience with customers, or improving the online ordering process. It extends to rethinking the product itself, and therefore the overall business model required to support that.
Your next digitisation journey must address dated, high-effort product design.
Banks were the early movers in addressing service transactions and online banking paved the way for other industries. Consumers grew comfortable adopting digital channels and today they overwhelmingly prefer them. I cut my teeth at NAB in the late ’90s, when we launched internet banking. However if we take a look closely at the banking landscape, what has actually changed in the core product design to be more customer centric?
The mortgage market, for example, is still dominated by brokers. UBank is one of the few banks in the market trying to simplify the customer experience – recently reducing the number of questions in its application from 144 down to 28. However, the reality beyond UBank for most consumers is that they experience first-hand a bank-led process riddled with paper forms, complexity and ultimately a journey where they are forced to conform to the bank’s way of doing things. I’ll stand corrected, but perhaps the most innovative thing that’s happened in consumer mortgage product design in the last 20 years is the offset account. Scary, isn’t it?
Digitising your products: stop saying ‘if’, start asking ‘when?’
Adobe made the bold decision in April 2012 to transition from selling shrink-wrapped DVD software boxes to running a subscription service (SaaS). This was the launch of Creative Cloud, its suite of creative desktop products that included Photoshop and Dreamweaver, which became available only as downloads on a membership basis.
With the company currently worth US$64 billion¹, that decision is now vindicated but at the time, it was enormously contentious. The year following the launch of Creative Cloud, Adobe revenue dropped by over 30%². Fast-forward to today, over five years since the changes came into effect, Adobe shares³ are now trading in excess of four times that of April 2012.
In the last week, Australian company Foxtel announced more than just a new brand and logo4. The incumbent subscriber-TV giant quietly snuck Foxtel Now into market: a fully fledged way for customers to get Foxtel without the satellite or cable.
Plenty were quick to critique Foxtel Now, making direct price comparisons to other streaming video on demand (SVOD) services, or dissect the early app experience. I very much commend the subscriber TV monolith for taking the step to digitise its own products – knowing full well that cable cutting isn’t just a US trend.
What Foxtel has done is pre-empt its own disruption. Many may ask why this wasn’t done earlier; they may assert that Foxtel’s competitors are still better, or suggest that it’s made this move too late. They’re all potentially valid lines of thinking; time will tell. What we can’t say is that the strategy to digitise its product is wrong.
Australia’s transition to the NBN high-speed broadband network is reaching more and more households each week, data limits are on the up and telco mobile network advancements such as LTE-B, which enables more powerful broadcast capabilities across mobile devices, are being rolled out. Market forces such as these mean the future is a lot brighter for Foxtel with an end-to-end digital model.
Which ties will you cut?
Organisations like Foxtel that are showing this kind of transformational leadership will start to create gaps between their traditional rivals and – even more importantly – close the gaps with disruptive pure plays.
The discussion around Foxtel Now should be much less about price comparison with Netflix, and much more about how Foxtel can be better, faster and cheaper than ever before.
It’s time for all business leaders to stop saying ‘if’ and start asking ‘when?’. Our role is not just to focus on having a good half or full year, it’s to create a sustainable, profitable, long-term business.
Our success can’t rely on history and inertia, it’s about being relevant for the connected world we live in today – this is more likely to be determined by what unfolds after we move roles than during our time in the chair.
1 Market cap as of May 2017. Source: www.forbes.com/companies/adobe-systems/
3 NASDAQ: ADBE