Why do we need to track customers when we know what they buy?

Digital Mortar is committed to bringing a whole new generation of measurement and analytics to the in-store customer journey. What I mean by that “new generation” is that our approach embodies more complete and far more accurate data collection. I mean that it provides far more interesting and directive reports. And I mean that our analytics will make a store (or other physical space) work better. But how does that happen and why do we need to track customers inside the store when we know what they buy? After all, it’s not as if traditional stores are unmeasured. Stores have, at minimum, PoS data and store merchandising and operations data. In other words, we know what we had to sell, we know how many people we used to sell it, and we know how much (and what and what profit) we actually sold.

That stuff is vital and deeply explanatory.

It constitutes the data necessary to optimize assortment, manage (to some extent) staffing needs, allocate staff to areas, and understand which categories are pulling their weight. It can even, with market basket analysis, help us understand which products are associated in customer’s shopping behaviors and can form the basis for layout optimization.

We come from a digital analytics background – analyzing customer experience on eCommerce sites we often had a similar situation. The back-office systems told us which products were purchased, which were bought together, which categories were most successful. You didn’t need a digital analytics solution to tell you any of that. So if you bought, implemented and tried to use a digital analytics solution and those were your questions…well, you were going to be disappointed. Not because a digital analytics solution couldn’t provide answers, it just couldn’t provide better answer than you already had.

It’s the same with in-store tracking systems; which is why when we’re building our system, evaluating reports or doing analysis for clients at Digital Mortar, I find myself using the PoS test. The PoS test is just this pretty simple question: does using the customer in-store journey to answer the question provide better, more useful information than simply knowing what customers bought?

When the answer yes, we build it. But sometimes the answer is no – and we just leave well enough alone.

Let me give you some examples from real-life to show why the PoS test can help clarify what In-Store tracking is for. Here’s three different reports based on understanding the in-store customer journey:

#1: There are regular in-store events hosted by each location. With in-store tracking, we can measure the browsing impact of these events and see if they encourage people to shop products.

#2: There are sometimes significant category performance differences between locations. With in-store tracking, we can measure whether the performance differences are driven by layout, by traffic type, by weather or by area shop per preferences.

#3: Matching staffing levels to store traffic can be tricky. Are there times when a store is understaffed leaving sales, literally, on the table? With in-store tracking we can measure associate / customer rations, interactions and performance and we can identify whether and how often lowered interaction rates lost sales.

I think all three of these reports are potentially interesting – they’re perfectly reasonable to ask for and to produce.

With #1, however, I have to wonder how much value in-store tracking will add beyond PoS data. I can just as easily correlate PoS data to event times to see if events drive additional sales. What I don’t know is whether event attendees browse but don’t buy. If I do this analysis with in-store tracking data, the first question I’ll get is “But did they buy anything?” If, on the other hand, I do the analysis with PoS data, I’m much less likely to hear “But did they browse the store?” So while in-store tracking adds a little bit of information to the problem, it’s probably not the best or the easiest way to understand the impact of store events. We chose not to include this type of report in our base report set, even though we do let people integrate and view this type of data.

Question #2 is quite different. The question starts with sales data. We see differences in category sales by store. So more PoS data isn’t going to help. When you want to know why sales are different (by day, by store, by region, etc.), then you’ll need other types of data. Obviously, you’ll need square footage to understand efficiency, but the type of store layout data you can bring to bear is probably even more critical than measures of efficiency. With in-store tracking you can see how often a category functions as a draw (where customers go first), how it gets traffic from associated areas, how much opportunity it had, and how well it actually performed. Along with weather and associate interaction data, you have almost every factor you’re likely to need to really understand the drivers of performance. We made sure this kind of analytics is easy in our tool. Not just by integrating PoS data, but by making sure that it’s possible to understand and compare how store layouts shape category browsing and buying.

Question #3 is somewhere in between. By matching staffing data to PoS data, I can see if there are times when I look understaffed.  But I’m missing significant pieces of information if I try to optimize staff using only PoS data. Door-counting data can take this one step further and help me understand when interaction opportunities were highest (and most underserved). With full in-store journey tracking, I can refine my answers to individual categories / departments and make sure I’m evaluating real opportunities not, for example, mall pass throughs. So in-store journey tracking deepens and sharpens the answer to Staffing Gaps well beyond what can be achieved with only PoS data or even PoS and door-counting data. Once again, we chose to include staff optimization reports (actually a whole bunch of them) in the base product. Even though you can do interesting analysis with just PoS data, there’s too much missing to make decision-makers informed and confident enough to make changes. And making changes is what it’s all about.

 

We all know the old saying about everything looking like a nail when your only tool is a hammer. But the truth is that we often fixate on a particular tool even when many others are near to hand. You can answer all sorts of questions with in-store journey tracking data, but some of those questions can be answered as well or better using your existing PoS or door-counting data. This sort of analytics duplication isn’t unique to in-store tracking. It’s ubiquitous in data analytics in general. Before you start buying systems, using reports or delving into a tool, it’s almost always worth asking if it’s the right/easiest/best data for the job. It just so happens that with in-store tracking data, asking how and whether it extends PoS data is almost always a good place to start.

In creating the DM tool, we’ve tried to do a lot of that work for you. And by applying the PoS test, we think we’ve created a report set that helps guide you to the best uses of in-store tracking data. The uses that take full advantage of what makes this data unique and that don’t waste your time with stuff you already (should) know.

 

Digital Transformation Dialogues – Part 4 – Creating the Right Culture around Collaboration Tools

[Here’s more from my ongoing dialogue with transformation expert and friend Scott K Wilder. In the last post, we discussed ways to make an older workforce more digitally savvy. Scott ended that post with this: “Personally, I would rather be HipChatted vs. Slacked. But technology sometimes like religion. You have to find out what people are most comfortable with. At Marketo, it was Slack. At Salesforce, it is Chatter. For me, I prefer to be Skyped!. How about you?”]

GA: I’m a reluctant video user. I was always the kid who liked to sit in the very back of the class hunched down behind somebody who played Right Guard on the football team. That being said, I have some issues with chat too. It’s a very interruptive technology. I know that’s it’s super popular with developers – and I see the point particularly in Agile teams. But I always viewed serious code writing as essentially monastic. That may seem ludicrous, but writing large scale software is a real intellectual undertaking – requiring you to hold hundreds of thousands of lines of code in your head and have at least a general sense of how they fit together and what’s there. I’m not convinced you can do that while you’re regularly dropping in and out of chat sessions (or, for that matter, having meetings every 30 minutes). When I was writing large-scale code I pretty much talked to no one. Of course, a vanishingly tiny percentage of people are writing serious code. But I feel the same way about writing – something I do regularly. When I’m writing a piece I care about, I seriously don’t want to be interrupted. So my question really is about protecting culture – you’ve talked about adoption – and creating a culture of usage. I agree that’s important – in fact it’s a far more common failure point. Life being what it is, though, we also have to worry about too much success (and part of adoption is assuring people that culture won’t change too much – even if it will). So how do you create an etiquette culture around collaborative technologies that protects other types of behavior we value? After all, no company wants the family equivalent of everyone whipping out their iPhones at the dinner table…

SW: Ah, now we are getting into a little psychology and ethnography. For me, there are two ways to approach this (business) issue:

  1. Constantly try to understand the different personalities in your company
  2. Consistently establish and communicate company values throughout the organization

In every organization, there are many personality types. Each responds to new challenges in different ways, especially when it comes to adopting new technologies. Individual or team behaviors can be looked at through a Myers Briggs lens. Or you can examine various personas involved.

Ironically, 80% of companies do market segmentation with personas or some other kind approach, but few take the time to do the same thing when trying to figure out how to work with their own employees. Few companies step back and look at the different ways their own people adopt technology. There is often little conversation about how new processes and technologies diffuse throughout an organization. So what’s my point about all of this psycho mumbo jumbo.

Before you can create a culture around the adoption of a new technology, you need to understand the different personality types in your organization. And it helps if you leverage a topography like Myers Briggs, to help understand how people learn or adopt new technologies.

For example some people might prefer to learn on their own either studying a user manual or watching videos before kicking the tires and testing out a new product. Others might prefer to learn with a mentor or teacher to guide them. And others might want to learn by participating with others. The important thing is to first understand how an individual responds and adapt to new ways of doing business.

After you know the different types of people/personalities you are dealing with, you can begin to focus a culture that fosters the adoption of new technologies while protecting people’s values (or how they want to start using the new technology).

Finally, the challenge is getting these different types of people to function on a day-to-day basis with each other. This will be easier if you have provide a comfortable and safe environment for them to learn at their own speed and in their own way.

Secondly, when creating an etiquette culture around collaborative technologies, it’s important to present them to your employees by showing how they map to your core company values (This assumes you have company values). Atlassian, my current employer, has very strong values which are reviewed every time the company works on a project. Some of them include:

  • Don’t #@!% the customer: This statement promotes honesty and transparency. The company knows that their Customers are their lifeblood. Without happy customers, they are doomed
  • Play, as a team: As they say “We spend a huge amount of our time at work. So the more that time doesn’t feel like “work,” the better. We can be serious, without taking ourselves too seriously. We strive to put what’s right for the team first – whether in a meeting room or on a football pitch.”

These are just two of the values. There are others, but each one is used to help keep every employee aligned and heading towards the company’s True North, especially when adopting a new collaborative technology or trying to change behavior across the organization.

Finally, collaboration has no beginning nor end It is a continuous journey that involves multiple parts of your organization.

GA: There’s a lot here to respond to. I’m totally on board with your thoughts around corporate culture and values. Most companies pretend to have values – some actually do. And while I’ve argued in some other cases that you can drive analytics without necessarily having top-down support (though it sure does help), culture building is either hierarchic or anarchic – and anarchic rarely works as a model. That isn’t to say that individual managers can’t create micro-cultures inside a larger organization. They do – and pretty constantly. But those micro-cultures – for good or ill – are always getting worn down and eroded by the broader culture. There’s no place where the impact of senior folks is more pronounced than on setting the tone for this kind of culture building – and, as I’ve argued elsewhere, culture building isn’t done with words. In the beginning was the deed! You can talk “Don’t #@!% the customertill you’re blue in the face, but the first time an executive makes a decision to the contrary, all that talk will be less than worthless (and I do mean less since it creates negative value in the company). That’s one good reason why it’s important to have values you A) actually care about and B) can reasonably live up to.

I’m less comfortable with tests like Myers-Briggs for employee segmentation. I’ve never been confident that personality tests capture anything real. I know they have a lot of fans (and a lot of fans among people whose opinions I respect) – but I’m unconvinced. Sure, we all see ourselves in the results of these tests. But we see ourselves in our horoscopes too. Self identification isn’t objective verification. But I’ll give you the validity of personality types and still question whether it’s a good tool to help drive cultural adoption (and proper etiquette) around social technologies. I’ll buy that segmentation would bring something to crafting a change management and adoption strategy – but would I use personality types or would I use things like rank, role, and behavior?

Convince me if you can!

Finally, let’s talk technology. I’d love to get your thoughts on what types of collaborative technologies make the biggest difference in an organization. And I’d also like your thoughts on whether that’s even the right question. Do you need to think about a collaborative suite? Will one tool likely die on the vine where a constellation of tools might work? I’ve seen both approaches fail – but that’s never conclusive. We live in a “baseball” world where failure is always the most common outcome.

 

Digital Transformation Dialogues – Part 3 – Bringing an Older Workforce up to Speed and Driving Adoption of Digital Tools

[Here’s more from my ongoing dialogue with transformation expert and friend Scott K Wilder. In the last post, we discussed the role of Millennials in balancing an older workforce. But I wanted a little more detail on how to get an older workforce more digitally aware…]

SW: I probably forgot this one because I am an older guy, but I’m also someone who thinks it’s every marketer’s responsibility to learn digital technology. Before I directly answer the question, let me give you an example. My son is really into drones and wants me to take him to some national parks so he can fly his drone. Before I make a road trip with him, however, I want to master drones, so I hired a drone coach. After all, I am the one who is ultimately responsible for my son’s safety. Working at as a Digital Marketer or Digital Employee requires the same commitment. The only difference, however, is that companies need to play a bit of the parental role and provide a clear path for their employees to learn about technology.

This can be done by paying for courses (Marketo, my former employer, pays for its employees to take courses at Lynda.com). It can be done by making ‘learning certain technologies’ as required for the job. Instead of saying you learn it or you lose it (your job), position this change as an opportunity to skill up — and that the company is investing in the future (in its best asset, its employees).

Companies also should provide career guidance — either for older employees to find other opportunities within their company or with a company’s partner. Training, career guidance are not only great retention tools, but also build loyalty after an employee moves on.

Companies also need to gently require that digital technologies be used in their everyday business practices. If the older person wants to remain part of the company, they will have to hop on the digital bus. And like the Magic School Bus (a book my kid loves), it will be a journey into unknown — with lots of opportunity to learn, a bit of uncertainty and a fun adventure. You know what. Even outside the office, they will feel as if they are on the Magic School Bus because by learning technology, older folks can have a more enriched life. My son Facetimes and Skypes with his Grandma twice a week.

Why should companies do this? Why should they make this investment? Several reasons, such as older workers tend to be loyal, older workers already know ‘your business’. Companies should also build incentive systems — gamify their career development — so they will be motivated to take on the exciting challenge of improving their skills.

Final note: Being Digital is more than just using the internet and Facebook. Companies should also figure out what digital technologies will help these older workers do their job better. If they need to be on social media, teach them Hootsuite. If they need to manage email programs, teach them Autopilot or Exact Target. If they need to collaborate better, be their guide while they learn Slack or HipChat.

GA: There’s a couple of points that I want to particularly call-out there. One is that company’s aren’t taking full advantage of the explosion in high-quality educational courseware that’s available these days. Sure, lots of folks will do this on their own, but not everyone is sufficiently motivated. I’ve always said my number one guiding principal – and the reason transformation is so hard – is that EVERYONE IS FUNDAMENTALLY LAZY. Giving people real incentives and formal guidance on courseware so that it’s part of an employee’s basic career development is really easy to do and I think pays tremendous dividends. If your company hasn’t curated public courseware for specific career-tracks and incentivized your employees to take advantage, you should be kicking your HR team’s butt (just my humble opinion).

I’m also a huge fan of the idea (as you know) that people have to DO stuff. And I’m glad you brought up the technologies because that’s the next (and last) area I wanted to explore. A lot of the digital technologies are fundamentally collaborative. But that can make adoption critical to their success. I know you’ve been living this problem – how do you get a team (and keep my older, non-digital workers in mind) to adopt tools like Slack?

SW: Gary, why are you always asking me the hard questions? I think you ‘re correct in focusing on ‘the team’ vs. ‘the company’ and trying to mandate day 1 that a whole company start using something like Slack.

They key is to start with one group.  Pick a team that seems receptive to taking on new ways of doing things — especially when it comes to digital technology. And within that group, you should also identify a few key digital change agents, early adopters, who are willing to not only try out the new technology, but also be champions for it.

Create a program for these digital champions. It can be rewards focused, but even better,  show them how sharing their knowledge and experience will help them learn a new technology even better and make them more marketable. Intuit, where I spent almost a full decade, has a philosophy called “Learn Teach Learn.” The only way to really learn something is to teach it to others (Intuit has a great learning culture!).

Of course, there is another option. You could see if any group in the company is currently using Slack and make them that group ‘your change agents. At Marketo, it was actually the company’s commuters — employees who took a small shuttle bus that looked like one of those vans old age homes use to transport its frail residents – who started using Slack. They let their fellow workers know if they wanted the bus to wait for them or if they wanted the van to turn around and pick up someone they forgot. My group of commuters called our Slack group, The Purple Lobster.

The Slack group was called the Purple Lobster because that’s what we called the van. We picked purple because that was Marketo’s company color. And lobster because it wasn’t the fastest moving vehicle on Highway 101.

And like a lobster slithering in the sand (sorry about pushing the poetic envelop here) slowly, but surely ,other commuting groups started to using Slack. Eventually, product teams started using it And finally, the CTO and his team made the call to not fight the crowd and force the company to use another tool, like Chatter. Instead, CIO convinced his fellow executives to adopt Slack across the company. It was a brilliant ‘if you can’t beat them, then join them’ strategy.

If you identify a group using Slack, challenge them to go completely cold Turkey. See if they are willing to only use Slack only (no email) for a week or so. At Atlassian, I had my hand Slacked when I tried to send an email to someone with a simple question. They recommended I use their Slack like product, Hipchat. And now, I only have 20 emails in my inbox. How many of you have only 20 emails in your corporate email inbox?

If you are not so lucky to find early adopters, you need to find a group of people who are most like to use the new technology. If there are some older folks on the team, pair them up with the younger wipper snappers. Or provide some training.

The key in all this is not to focus on technology. Instead, treat the change to Slack or any other digital technology as a change management exercise. Focus on adoption — education, onboarding and engagement. None of this should be done in a vacuum. You need someone to shepherd the process. Someone who can be a guide, a teacher, a problem solver and yes, a true change agent.

Other considerations include rewarding people for their efforts and successes. Gamify the process! In doing so, make sure to acknowledge people’s efforts for trying. Don’t make the same mistake most schools make and only pass people for knowing the answer. As Carol Dweck, well known motivational researcher,  points out, children praised for hard work chose problems that promised increased learning (vs. just getting the right answer). This also applies to adults. Really!

The key here is to alter someone’s mindset. Instead of rewarding (just giving them a bonus) or punishing someone (not promoting them) for adopting a new technology, recognize their effort and hard work. The end result will be they might adopt taking on new challenges and succeeding at them. Even if it means learning and using something like Slack.

Finally good old training is important. It always amazes me how many companies introduce a new technology and offer one time training. Usually during a three hour class. If you are licensing a technology like Slack, see if they can conduct monthly webinars to answer questions (if not, you offer it). Also have videos and Q&As available for your staff.

Personally, I would rather be HipChatted vs. Slacked. But technology sometimes like religion. You have to find out what people are most comfortable with. At Marketo, it was Slack. At Salesforce, it is Chatter. For me, I prefer to be Skyped!. How about you?

Digital Transformation Dialogues – Part 2

(Resuming my dialog with transformation expert – and friend – Scott K Wilder). Scott had touched on the challenge an older workforce presents to digital transformation and the need to embrace Millennial Leaders…)

GA: I see this all the time. In fact, I’d venture to suggest that there might be a pretty strong positive correlation between the average age of your workforce and the perceived need for digital transformation. But this seems really hard to change. Good luck attracting young digital talent to a company that skews older AND is poor at digital. I also see challenges in adaptation. I argued that when you select a digital leader for transformation it’s important – even vital – to get someone who isn’t just experienced in cutting edge digital. They need to have experienced the pain of transformation to be effective in that role. But I see potentially similar problems trying to integrate younger employees into your workforce. I could see where they would just get frustrated. Obviously, though, this has to be done. Thoughts on how to smooth this? And thoughts about making an older workforce more digital in a fairly effective manner?

SW: Having younger individuals in your company is important for a true digital transformation. But don’t just hire them because they are less expensive than the older workers. Hire them because of how comfortable they are with technology and their desire to learn.

To smooth things out, first I would focus on what Millennials want in their career and / or what do they want to get out of their work. They have a tremendous desire to learn. Yes, it’s not just about achieving for them. Reminder: Creating a learning culture is an important way to transforming a company.

Therefore, during an interview process or an onboarding process, I would ask them:

– where do they see themselves in a year (none of this three year or five years stuff)

– what skills do they think they need to learn or acquire (maybe you, the hiring manager, help guide them towards an answer by sharing what skills are required for this)

– how can you (their manager support them)

Reminder: Find out their goals and aspirations before they start working

A big mistake companies make is that they never even consider asking these questions.

I would also look beyond the hiring manager or group. I would find a younger employee a mentor, who is outside the group they work in and who is not part of their of their everyday team (even if it is a cross-functional team). I would find someone who can be a good sounding board for the individual. In fact, I would have the person interview 2-3 potential guides or mentors. Let them feel like they are part of the process. Reminder: Assign them a mentor and Don’t just assign everything to a Millennial. (OK, that’s two reminders)

Establish toll-gates or check-ins with the younger employee. Part of creating a learning culture is to have an open and continuous feedback loop. Reminder: Check in with your younger employees even if there’s a manager that separates you and them.!

Younger people today are passionate about causes. So figure out if there’s a way to tie your digital transformation to a higher cause (or even calling). If you are T-Mobile, for example, can you use your technology to help people in less developered countries get better access to telecommunications (Maybe be part of Google or Facebooks’s Internet Satellite projects). Reminder: Define and share your cause!

And somewhat related to the ‘cause’ calling, make sure your company has a clear mission. People, in general, respond better when they know where the company’s True North lies — what the company is trying to accomplish. Final Reminder: If you really want to smooth things out and integrate younger employees into your digital transformation, make them a part of the journey from the beginning.

GA: This is great stuff. I’ve always been a little skeptical of generational theories – but there really are some noticeable differences with Millennials. It’s also, I think, a matter of our times. We talk about Millennials, for example, being passionate about causes – and I’ve certainly seen that. In general, though, I think it’s true more generally these days – not necessarily that people are more passionate about their causes  – but that they are more willing to cross work with other things and are less determined to have a work life and a non-work life which never shall meet. When you can get people to bring that extra passion to their work it’s a pretty big win.

But you dodged one aspect of my question (or at least sinned by omission) – what about getting older works more attuned to digital? In some ways, I think that’s a more important and interesting problem…

The Road Goes Ever On

“It’s a dangerous business,” says Bilbo Baggins, “going out your front door. You step onto the road, and if you don’t keep your feet, there’s no knowing where you might be swept off to.” Eighteen years ago I stepped outside my comfortable door and was swept out into a digital world that I – like everyone else – knew very little about. There were dragons in that wilderness, as there always are. Some we slew and some we ran away from. Some are out there still.

But though a road may go on and on, a person sometimes finds another path. In the last few months I’ve felt rather like young Mr. Baggins, visited by dwarfs and a wizard, and confronted with a map of a great unexplored wasteland, a forbiddingly guarded, lonely mountain, and a vast treasure.

It’s not so easy to give up adventuring.

Eighteen years ago when I first started thinking seriously about digital analytics, we were the poor step-child of analytics. Web analytics (as we called it back then) was pathetic. To call it analytics was a misnomer – the right word being some polyglot mash-up of hubris, false-advertising and ignorance. Perhaps “faligris” was the word we needed but didn’t have. We looked with envy at the sophisticated analytics done for mass media, retail, and direct mail.

Seriously.

My how times have changed.

I’m not going to go all Pollyanna on you. There’s still a lot not to like about the way we do digital analytics. But here’s the thing – I’m not sure there’s a field that does it better. Without really realizing it, digital has spawned a discipline of continuous improvement that includes a fairly sophisticated view of dashboarding and reporting, interesting segmentation, a decent set of techniques for specific analysis problems, and – probably most impressive – a real commitment to experimentation. Sure, most companies get a lot of this wrong. My extended discussion of the perils and problems of digital transformation isn’t (really!) just grumpiness. But the companies that do it well are truly outstanding. And even in the flawed general practice there is much to like.

The best of digital analytics these days has nothing to be ashamed of and much to be proud of.

That’s why, on the map of the digital analytics world, there are more gardens than wasteland, more cultivated field than dangerous mountain. Digital Analytics is well past the “trough of despair” in the hype-cycle – delivering tremendous value on a consistent basis. That’s a great place to be, but I’m looking for a little more adventure.

A little backstory may be in order here. Not too long ago, one of my larger clients asked us to take a look at a solution they’d tried to measure their customer’s IN STORE journeys. Their vendor wired up a sample store with a network of cameras to detect and measure in-store customer paths. It looked a lot like digital analytics. Or should I say it looked a lot like web analytics? Because in almost every respect, it reminded me of the measurement capture, reporting and analysis we did back in 1997. The data capture was expensive and broke frequently. The data was captured at the wrong level of granularity and there was no detail feed available. The reporting was right there with Webtrends 1.0. The analysis – literally – became a standing joke with our client.

It was pathetic.

Well, even from this mess, there was interesting information to be salvaged. You COULD do better reporting even on the sadly broken data being collected. But it got me thinking. Because this was a “leader” in the field.

So naturally, I checked out the rest of the field. What I found were the same type of engineering heavy, analysis tone-deaf companies that I remembered back in the old days of the web before people like Omniture and Google figured out how to do this kind of thing right. I found technology solutions desperately looking for actual business problems. I found expensive implementations that still managed to miss the really important data. I found engineers not analysts.

I found opportunity.

Because this data and these systems are very much like digital analytics. The lessons we’ve learned there about collection, KPIs, reporting, segmentation, analysis and testing all feel fresh, important and maybe even revolutionary. And this time, there’s a chance to provide an end-to-end solution that combines technology with the kind of reporting and analytics I’ve always dreamed about. There’s a chance to be the Omniture AND Semphonic of a really cool space.

I just couldn’t resist.

So I’m going to be leaving EY and, for that matter, digital analytics. I’ll miss both keenly. These past years in digital analytics have been the best and most rewarding of my professional life. I’m proud of the work I’ve done. Proud of the work we’ve done together. Proud of the discipline we’ve created. But I want to take that work and build something new from the ground up.

I’m going to build a startup dedicated to bringing the best of digital discipline and measurement to the physical world. Helping stores, malls, stadiums, banks, hospitals and who knows what else understand how to use customer behavior to actually optimize customer experience.

I want to make the best experiences in the real world every bit as seamless, personalized, and optimized as the best experiences in the digital world already are.

It’s a dangerous world out there in physical retail. They’re struggling and they don’t really know how to get better. If there really was a map, I’m pretty sure it would have a big X with “there be dragons” printed right above.

I can’t wait.

Welcome to Digital Mortar!

 

 

Digital Transformation Dialogs

I’m going to wrap up this extended series on digital transformation with a back-and-forth dialog with an old friend of mine. I’ve known Scott K. Wilder since the early days of Web Analytics. He’s been an industry leader helping companies build communities, adapt to an increasingly social world, and drive digital transformation. In some of this current work, Scott has been working with companies to adopt collaborative working suites for their customers, partners and employees – which I think is a huge part of internal digital transformation. So I thought a conversation on the pitfalls and challenges might be interesting and useful.

GA: We all see these hype-cycle trends and right now there’s a lot of interest in digital transformation at the enterprise level. I think that’s driven by the fact that most large enterprises have tried pretty seriously for a while now to get better at digital and are frustrated with the results. Do you agree?

SW: Good question.

When you read white papers about the latest trends in the enterprise space, most of them highlight the importance of each company being digital transformed. This usually means leaving a legacy approach or operation and instead leveraging a new approach or business model that embraces technology.

Unfortunately, most companies fail when they undertake this endeavor. Sometimes they fail because just pay lip service to this initiative, never do anything beyond placing the goal of ‘going digital’ on a powerpoint slide they give a company All-Hands (I have witnessed this first hand). And sometimes, they just test out bunch of different programs without thinking through desired outcomes. (They throw a lot of virtual stuff against the internet wall hoping that something sticks).

Undergoing a Digital Transformation means many things to many people. It can imply focusing more on the customer. Or it can mean enabling employees collaborate better together. At the end of the day, however, a company needs to first focus on one simple end state. One change in behavior! Rather than trying to boil the whole ocean at once and try to do implement massive digital transformation across an organization, it’s better to start with a  simple project, try to leverage technology to accomplish a desired outcome, learn from the experience and then share the success with other parts of the organization

Start first with a relatively simple goal. And if you really want to change an organization, see if you can get employees volunteer to be your soldiers in arms and then closely work with them to define what digital success looks like. It could be as something getting employees to digitalize their interaction with each other more  or leveraging technology to improve a VOC process. Whatever it is. Start with one project.

Here’s one approach. Once the goal is to define, then ask for volunteers to work on figuring out how to achieve the desired outcome. No digital program or initiative is going to be successful without employee buy – in and involvement, so it behooves CEOs to find a bunch of enthusiastic volunteers to figure out the ‘how’ (If you remember you calculus Y = (x)x Senior managers can decide on the Y, and then let their team figure out the X or inputs.

Digital Transformations often fail because:

  • Executives often decide their company goals and then impose their approach on the employees. Digital Transformation initiatives also fail because CEOs want to change whole culture overnight. Unfortunately, however, they often forget Rome was not built in day. Even though a true Digital Transformation is often a journey, it is also important to start simple. Very simple!
  • There’s no buy in at the mid-level ranks in the company
  • There’s no True North or desired goal
  • There’s too much attention on the technology and not the cultural impact.

I have read articles that tell you true cultural change can only happen if you eliminate political infighting, distribute your decision making, etc. While all of that is important, it will require gutting your organization, laying off a lot of people and hand-picking new hires if you want to change things quickly.

To truly change a culture, however start simple. Pick a goal. Ask for employees to volunteer to work on it (take other work off their plate so they don’t have to work after house). Ask them to to involve leveraging digital technologies. Give the team room to succeed or fail.  Most importantly, be their guide along the way.

Once this small team completes their project, celebrate their success in front of others in the company. Have them highlight how they leveraged technology.

Once this group is successful, anoint each team member to be a digital transformation ambassador and have them then move into other groups of the organization and share their learnings, experiences, etc.

GA: I’m a big believer in the idea that to change culture you have to change behavior – that means doing things not talking about them. I like the idea of a targeted approach – huge organizational changes are obviously incredibly risky. That being said, I feel like most of what you’ve talked about could be applied to any kind of transformation project – digital or otherwise. I’m not disagreeing with that, but I’m curious if you agree that digital presents some unique challenges to the large enterprise. And if you do agree, what are those challenges and do they change/drive any aspects of a transformation strategy?

SW: There are definitely challenges in driving any type of transformative change in an enterprise environment. Here’s a list of challenges preventing a smooth adoption of digital technologies or hindering the ability to digitally transform an organization

As they say. It’s hard to teach an old dog new tricks. Companies get stuck in their old ways of doing things. For example, even though companies are testing the waters with Slack and Hipchat, two great collaborative platforms, few have made any progress in being weaned (a bit) off of email. For example, we all complain about email but refuse to reduce how often we use it). Part of the problem is the result is that those individuals, who are tasked with driving change in the organization actually tend to be the biggest resisters to change. The IT department, who I will pick on here, usually are decision makers and keepers of the digital platform budgets do not want to try something new. (Marketing is slowly getting more say here, but most marketing leads don’t understand new technologies). So IT and even Marketing wait as long as possible to make a decision about adopting newer collaborative technologies, such as Slack or Hipchat. And while they are doing an elaborate evaluation process, today’s tech savvy staff often just jumps in and starts using the latest and greatest technologies. They don’t ask for permission first. This was the case at Marketo with Slack. First, a small group of employees starting using it and soon others jumped in. There was resistance at the highest parts of the company. Eventually, IT, however had no choice and how to follow the wisdom of the crowd. Survey Monkey also started out this way. There are other challenges as well. Solution: Companies need do a better job at knowing understanding what tools their teams want to use and why they want to use them. If the troops are using Google Docs, for example, management needs to embrace this and not try and force their way (in this case, the Microsoft Office 365 way) down the throats of their employees. If there are security concerns, figure out a solution.

GA: I’ll just note that in many ways this reflects my discussion of a Reverse Hierarchy of Understanding in organizations

…What else?

SW:   Data and Privacy Issues: Companies, rightly so, are always concerned about data leakage, data security and privacy issues. Enterprises, especially the public ones and the ones in important transaction industries like Finance or Health Care, have to be sensitive to how data is shared within an organization. Solution: If an organization wants to adopt a newer technology, management needs to do more research in how other companies adopt newer technology while protecting their company secrets. Few companies develop breakthrough technologies and systems that they are the first to try something new. Probably someone has already created a similar service or implemented a similar technology. They have probably already dealt with similar issues. I am not saying just copy what they did but rather learn from their mistakes. Or what they did well.

An older workforce: A third challenge is that many enterprises attract an older workforce and/or are not sure how to integrate millennials into their organization. As I pointed out in my book, Millennial Leaders, it’s important to embrace a younger workforce and place these individuals on teams where they can help advise key decision makers. Younger employees are more likely to adopt new approaches, new technologies and new ways of doing things. Solution: Bring millennials into digital related conversations sooner than later. While decision making can still be top down, it’s important to give these younger folks a voice.

GA: Okay – I know you have more thoughts on this but I’m going to stop right there because I know you’re an expert on this Millennial stuff and I want to delve into it a bit. But that’s probably a discussion for Post #2…

How to Drive Digital Transformation when You’re Not a Digital Expert : Addressing the Reverse Hierarchy of Understanding

In my last post I described some of the biggest challenges to a traditional enterprise trying to drive digital transformation. This isn’t just the usual “this stuff is hard” blather – there are real hurdles for the traditional large enterprise trying to do digital well. The pace of change and frictionless competition drive organizations used to winning through “weight of metal” not agility, crazy. The need for customer-centricity penalizes organizations setup in careful siloes. And these very real hurdles are exacerbated by the way digital often creates poor decision-making in otherwise skilled organizations because of what I termed the reverse hierarchy of understanding.

The reverse hierarchy of understanding is a pretty simple concept. Organizations work best when the most senior folks know the most about the business. When, in other words, knowledge and seniority track. For the most part (and despite a penchant for folks lower down in the organization to always think otherwise), I think they do track rather well in most companies. That, at least, has been my fairly consistent experience.

There are, of course, many pockets of specialized knowledge in a large company where knowledge and seniority don’t track. The CFO may not be able to drive TM1. The CTO probably doesn’t know Swift. That’s not a problem. However, when something is both strategic and core to the business, it’s critical that knowledge and seniority track appropriately. If they don’t, then it’s hard for the enterprise to make good decisions. The people who are usually empowered to make decisions aren’t as qualified as they typically are, and the folks who have the specific knowledge probably don’t have either the strategic skills or business understanding to fill-in. And, of course, they probably don’t have the power either.

Digital can create exactly this inversion in the appropriate hierarchy of decision-making in the traditional enterprise, and it does so at many levels in the organization. Digital has become strategic and core far more rapidly than most large organizations can adapt, creating reverse hierarchies of understanding that can cripple efforts to do digital better.

So if you want to transform a traditional business and you know your organization has a reverse hierarchy of understanding (or maybe just a complete lack of understanding at every level), what do you do?

There’s not one answer of course. No magic key to unlocking the secret to digital transformation. And I’ve written plenty of stuff previously on ways to do digital better – all of which still applies. But here are some strategies that I think might help – strategies geared toward tackling the specific problem created by reverse hierarchies of understanding.

 

Incubation

I’m sensitive to the many draw-backs to incubating digital inside a larger organization. If incubation succeeds, then it creates long-term integration challenges. It potentially retards the growth of digital expertise in the main business and it may even cannibalize what digital knowledge there is in the organization. These are all real negatives. Despite that, I’ve seen incubation work fairly effectively as a strategy. Incubation creates a protected pocket in the organization that can be staffed and setup in a way that creates the desired knowledge hierarchy through most levels.  Would I always recommend incubation? Absolutely not. In many organizations, years of at least partial learning and transfusions of outside talent have created enough digital savvy so that incubation is unnecessary and probably undesirable. If digital knowledge in your organization is still nascent and particularly if you have layers of management still skeptical or negative to digital, then incubation is a strategy to consider.

 

Transfusion

And speaking of talent transfusions, the role of appropriate hiring in effectively transforming the organization can hardly be overstated. The best, simplest and most impactful way to address the reverse hierarchy of understanding is to…fix the problem. And the easiest way to fix the problem is by hiring folks with deep digital understanding at multiple levels of the organization. In some cases, of course, this means hiring someone to run digital. If you’re a traditional enterprise looking to hire a chief digital officer, the natural place to look is to organization’s that are great in digital – especially the companies that dominate the Web and that we all, rightly, admire. I tell my clients that’s a mistake. It’s not that those folks aren’t really good at digital; they are. What they aren’t good at is digital transformation. If you’ve grown up managing digital platforms and marketing for a digital pure-play, chances are you’re going to be massively frustrated trying to change a traditional enterprise. To drive transformation, you have to be a great coach. That isn’t at all the same as being a great player. In fact, not only isn’t it the same, it’s negatively correlated. The best coaches are almost NEVER the best players.

Getting the right person to lead digital isn’t the place where most organizations go wrong though. If you’re committed to digital transformation, you need to look for digital savvy in every hiring decision that is at all related to your digital enterprise. You need digital savvy in HR, in accounting, analytics, in customer, in supply chain, in branding and corporate communication. Etc. Etc. This is the long game, but it’s ultimately the most important game you’ll play in digital transformation – especially when you’re trying to drive transformation outside of massive disruption. In my last post, I mentioned FDR’s many efforts to prepare the U.S. for WWII before there was any political consensus for war. Every leader is constrained by the realities on the ground. Great leaders find ways to at least lay the essential groundwork for transformation BEFORE – not after – disaster strikes. You need to make sure that digital savvy becomes a basic qualifier for a wide range of positions in your organization.

 

Analytics

Dare I say that analytics has the potential to play a decisive role in solving the reverse hierarchy of understanding? Well, at the very least, it can be a powerful tool. In a normal hierarchy of understanding, seniority comes pre-loaded with better intuitions. Intuitions born of both experience and selection. And those intuitions, naturally, drive to better decisions. It’s darn hard to replace those intuitions, but analytics is a great leveler. A good analyst may not be quite the decision-maker that an experienced expert is – but at the very least a good analyst equipped with relevant data will come much closer to that level of competent decisioning than would otherwise be possible.

Thankfully, this works both ways. Where senior decision-makers can’t rely on their experience and knowledge, they, too, benefit from analytics to close the gap. An executive willing to look at analytics and learn may not be quite in the league of an experienced digital expert, but they can come surprisingly close.

This works all up and down the organization.

So how do you get your team using analytics? I addressed this in depth in a series of posts on building analytic culture. Read this and this. It’s good stuff. But here’s a simple management technique that can help drive your whole team to start using analytics. Every time there’s an argument over something, instead of voicing an opinion, ask for the numbers. If your team is debating whether to deliver Feature X or Feature Y in digital, ask questions like “What do our customers say is more important?” or “Which do high-value customers say they’ll use more?”

Ask questions about what gets used more. About whether people like an experience. About whether people who do something are actually more likely to convert. If you keep asking questions, eventually people are going to start getting used to thinking this way and will start asking (and answering) the questions themselves.

Way back in the early days of Semphonic, I often had junior programmers ask me how to do some coding task. At the time, I was still a pretty solid programmer with years of experience writing commercial software in C++. But since I wasn’t actively programming and my memory tends to be a bit short-term, I almost never just knew the answer. Instead, I’d ask Google. Almost always, I could find some code that solved the problem with only a few minutes’ search. Usually, we’d do this together staring at my screen. Eventually, they got the message and bypassed me by looking for code directly on Google.

That’s a win.

Nowadays, programmers do this automatically. But back in the aughts, I had to teach programmers that the easiest way to solve most coding problems is to find examples on Google. In ten years, looking at digital analytics and voice of customer will be second-nature throughout your organization.  But for right now, if you can make your team do the analytics work to answer the types of questions I’ve outlined above, you’ll have dramatically raised the level of digital sophistication in your organization. This isn’t as foreign to most good enterprise leaders as I used to think. Sure, folks at the top of most companies are used to offering their opinions. But they’re also pretty experienced at having to make decisions in areas where they aren’t that expert and they know that asking questions is a powerful tool for pushing people to demonstrate (or arrive at) understanding. The key is knowing the right questions to ask. In digital, that usually means asking customer-focused questions like the one’s I enumerated above.

 

Consulting

I’m probably too deeply involved in the sausage-making to give good advice on how organizations should use consulting to drive transformation. But here’s a few pointers that I think are worth bearing in mind. Consulting is a tempting way to solve a reverse hierarchy of understanding. You can bring in hired guns to build a digital strategy or drive specific digital initiatives. And if you’re lucky or choose wisely, there’s no reason why consultants can’t provide real benefits – helping speed up digital initiatives and supplement your organizational expertise. I genuinely believe we do this on a pretty consistent basis. Nevertheless, consultants don’t fix the problems created by a reverse hierarchy of understanding; they are, at best, a band aid. Not only is it too expensive to pay consultants to make your decisions on a continuing basis, it just doesn’t work very well. There are so many reasons why it doesn’t work well that I can attempt only a very partial enumeration: outside of a specific project, your consultant’s KPIs are almost never well aligned with your KPIs (we’re measured by how much stuff we sell), it’s difficult to integrate consultants into a chain of command and often damaging if you try too hard to do so, consultants can become a crutch for weaker managers, and consultants rarely understand your business well enough to make detailed tactical decisions.

Don’t get me wrong. Building talent internally takes time and there aren’t many traditional enterprises where I wouldn’t honestly recommend the thoughtful use of consulting services to help drive digital transformation. Just don’t lose sight of the fact that most of the work is always going to be yours.

 

That last sentence probably rings true across every kind of problem! And while digital transformation is legitimately hard and some of the challenges digital presents ARE different, it’s good to keep in mind that in many respects it is just another problem.

I’ve never believed in one “right” organization, and when it comes to digital transformation there are strong arguments both for and against incubation. I think a decision around incubation ultimately comes down to whether digital needs protection or just expertise. If the former, incubation is probably necessary. If the latter, it may not be. Similarly, we’re all used to the idea that if we need new expertise in an organization we probably have to hire it. But digital introduces two twists. First, the best candidate to lead a digital transformation isn’t necessarily the best digital candidate. Second, real digital transformation doesn’t just come from having a leader or a digital organization. You should bake digital qualifications into hiring at almost every level of your organization. It’s the long game, but it will make a huge difference. And when it comes to leveling the playing field when faced with a reverse hierarchy of knowledge, remember that analytics is your friend. Teaching the organization to use analytics doesn’t require you to be an analytics wizard. It mostly demands that you ask the right questions. Over and over. Finally, and this really is no different in digital transformation than anywhere else, consulting is kind of like a cold medicine – it fixes symptoms but it doesn’t cure the disease. That doesn’t mean I don’t want my bottle of Nyquil handy when I have a cold! It just means I know I won’t wake up all better. The mere fact of a reverse hierarchy of understanding can make over-reliance on consulting a temptation. When you’re used to knowing better than everyone, it’s kind of scary when you don’t. Make sure your digital strategy includes thought about the way to use and not abuse your consulting partners (and no, don’t expect that to come from even the best consultants).

Keep these four lessons in mind, and you’re at least half-way to a real strategy for transformation.