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Setting Digitization Priorities: Contexts, Communities, and Capabilities

Premise: Digital business decision making is a team sport. Business leaders must employ a simple framework for setting priorities, given all the product, channel, functional, financial, and customer experience complexities.

For 50 years, enterprises have used information technology to digitize business. Codifying practices, documenting processes, and automating tasks with software has transformed accounting, human resources, logistics, and other functions. Today, enterprises are trying to digitize customer and market engagement, but these efforts don’t follow the traditional recipe. Digital technologies, including mobile, big data, cloud, and IoT provide powerful new paths for customer-facing applications, but they also heighten the risks of failure. To add to the risks, digitizing customer engagement invokes expectations and passions from leaders in sales, marketing, product management, service, and fulfillment. Powerful software tools make almost anything possible, but to build executive consensus about digitizing engagement, IT leaders must work with other business leaders to answer three “do” questions (see Figure 1):

  • What should we do differently? Customers seek value at all moments. For example, if your website doesn’t help them evaluate your offer, you’re not in the running when they choose to buy — even if you offer the best product or service. Knowing why and when customers choose to engage your business, or abandon it, across the entire customer lifecycle is the first step to knowing where and how to apply digital technologies to win in markets.
  • Who are we going to do it with? Your customers are special because they share a solution: Your solution. Historically, customers had few connections to each other, except for user groups that periodically would get together and share best practices. Today, your customers connect through an expanding array of digital tools, and they are weaving themselves into powerful communities that can make your business better — or worse. Knowing your customer communities is crucial to capturing opportunity now and sustaining engagement over time.
  • How are we going to do it better than anyone else, every time? A business distinguishes itself through offerings, engagement, and operations. Digital technologies open a world of options for knitting these activities together into a vibrant, plastic business. But they must be embraced and embedded into business capabilities that consistently deliver better results at competitive costs. The digital choices you make will determine if you can attract the customers you want to engage and keep them over extended periods of time.
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Figure 1: The 3Cs of Setting Digitization Priorities

Context Answers “What” Questions

Context is a term familiar to any developer of mobile applications: it’s a set of options available to a user to do something on a device. The concept of context also is crucial to customer engagement: engagement contexts are the set of options available to a customer to do something at a particular moment in a market. As customers gain market power, their range of options increases and they can be more discriminate in what they choose to do. For example, a customer that breaks their phone has a range of options for doing things to replace their phone. They can go to the web, or visit a store, or talk to friends to discover about different phones and plans. Once they evaluate their options, they can buy online, from a branded store, or from a big box electronics outlet. Then, they can configure their phone to suit their situation with different apps, services, etc, and starting using their phone — until it stops performing according to their needs, at which point they can fix it or start over again. In each case, the customer is entering an engagement context — discover, evaluate, buy, configure, use, and fix — and choosing which party they want to engage in that context at that moment (see Figure 2).

The question for your business, then, is what contexts do you want to use digital technology to enter into with customers? Clearly, “buy” is a context that every business wants to enter in their segment, but getting the chance to engage in a buy moment is getting harder as customer options and power. But in the digital era, in which customers prefer certain types of digitally-enhanced engagement and ultimately are the party that chooses who to engage, you have to decide how to make the context options you present to customers attractive. Every experience in today’s market must be a source of value to a customer, or they won’t choose to engage you.

Customer journey modeling provides a framework for envisioning contexts that customers enter as they seek to satisfy needs. The beauty of digitally-enhanced contexts is that you can scale to just about any level you want. The downside is that if you model and deploy contexts poorly, you can scale bad business up very quickly. The executive choice from a digital perspective is “Can we make the context options we present to customers more attractive by using digital technology so that they engage us?”

Figure 2: A Standard Customer Lifecycle Based on Customer Contexts

Community Answers “Who” Questions

When groups of people connect to do the same thing — enter into a common context — they create a community. A community typically shares common values, ways to create identity, goals, and means to achieve those goals. For example, the Facebook community shares a context — stay in touch with friends — and it’s tooled to make it easy for Facebook members to connect and stay in touch. The Uber community also is based on a circumscribed context: Get a ride. In the case of Uber, drivers enter into the “get a ride” context to provide the ride; customers, to take a ride; Uber, to apply its digital technology to broker the ride, collect fees, and pay drivers. Indeed, when someone implores you to not get “Uberized,” they’re telling you, “don’t let someone else use digital technology to do a better job of contextually serving customer journeys in the markets you want to serve.”

The link between context and community is tight. Your business is comprised of multiple communities, including functions and partnerships, each a response to the different contexts your business has entered or wants to enter. Your success at defining the contexts your business will serve will determine how successful you are at engaging the communities crucial to sustaining your enterprise. Communities based on digital technologies are especially sensitive to context decisions. Why? Because digital can be expensive to set up, but cheap to operate and scale. Your executive team must decide if digital technology, applied to facilitate some context, will provide differential value to the community that emerges around your chosen contexts.

Business Capabilities Answers “How” Questions

Knowing what you’re going to do with whom implies a set of actions your business will have to take to be successful. Business capability modeling helps decisions makers envision the activities a business must perform to succeed. All businesses feature relatively standard accounting, human resource, and other operational capabilities. The challenge is customer engagement capabilities, which can vary greatly, even within the same industry. Operational capabilities are largely digitized, but what about engagement capabilities? Which customer-facing capabilities do you want to digitize? Again, in the case of Uber, almost all activities are performed digitally. Physical activities are performed by partners, in this case, their community of drivers. Uber’s capabilities, then, generally are implemented as digital assets, in the form of software, analytics, and sensors.

The challenge in today’s markets is that customer engagement is not process-driven, at least not in the traditional sense that there are “correct” ways of doing things. Markets are highly dynamic, which demands that capabilities be highly responsive. This is a crux of digital business: the behavior of software, using sensor data and analytics, can maximize a business’s market responsiveness, if it’s well designed. Over the next few years, the technologies for modeling human behavior, translating those models into software that provides excellent experience, structuring runtime elements into packages that are simple to manage, integrate, and commercially deliver, and measuring results will advance dramatically.

Action Item. Business is a commitment to communities that can be better — or worse — served by digital technology. Design digital engagement based on context, community, and capability.

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