2020: The Year of Digital Acceleration

Some may call 2020 the year of living dangerously but “the year of digital acceleration” is a better fit when it comes to customer engagement. It’s not just the rising remote work/play Wall Street stocks; a very deep and rapid transformation is underway. See this recent survey report from McKinsey:

… results confirm the rapid shift toward interacting with customers through digital channels. They also show that rates of adoption are years ahead of where they were when previous surveys were conducted… Respondents are three times likelier now than before the crisis to say that at least 80 percent of their customer interactions are digital in nature.

The shift to remote work has accelerated the shift to the digital life. And it has only just begun. Tens of millions of households are now planning to leave the cities where they live for new locations, even while keeping their employers and jobs. That’s right: more online meetings, more online buying, more online playing. This acceleration is very likely to continue.

Anywhere from 14 to 23 million Americans are planning to move as a result of remote work. Combined with those who are moving regardless of remote work, near-term migration rates may be three to four times what they normally are. - Upwork, October 2020 Survey

Then there is the problem for many most organizations: digital transformation can be costly, complex and confusing. It can drag teams into retrofitting legacy systems instead of deploying new customer-centric digital platforms.

Contrast this profound consumer preference shift to another recent McKinsey report on stalled digital transformation projects:

At organizations pursuing digital transformations, more than seven in ten survey respondents say the progress of these efforts has slowed or stalled at some point.

McKinsey lists numerous reasons for digital project difficulties including:

1) Lack of alignment and clear understanding among leaders about how to execute against a digital transformation strategy;
2) Lack of CEO engagement and sponsorship;
3) Concern from leaders that their digital transformation project is a waste of time;
4) A focus on backend benefits, with Product Development, Marketing and Sales seeing the least benefit from the initiative;
5) A fear of the overall complexity of the initiative and uncertainty of its success;
6) Understanding of how employees and customers are evolving, especially in a time of COVID-19;

A Strategic Decision: IT versus Customer-First

These issues were cited this spring, during the digital ignition. The findings point clearly at the limitations and costs of updating legacy IT - trying to retrofit costly new capabilities into existing systems deployed and managed by IT.

But customer needs are driving digital acceleration. Shouldn’t, therefore, sales and marketing leadership be driving the transformation? Legacy retrofits are an option but new digital platforms should be considered as a viable option despite accumulated technical debt.

The best way to accelerate is to focus on customer needs and expectations first without wasting time and money on costly legacy retrofits. Compare what you can buy versus build. Determine what gets you in the game as consumer habits shift, so you can monetize while your competitors cobble tech-heavy legacy platforms.

Technical debt is likely part of the problem, as survey respondents suggested IT ownership or leadership as responsible for some stalls, not to mention concerns over cost and waste and who benefits. Cultural debt? Sometimes transformation cannot happen within large, complex organizations. There are too many interests, internal and external, in perpetuating out of date, lucrative practices that undermine long term growth (see The Innovator’s Dilemma and the Diffusion of Innovations Theory, for example).

Decide: Retrofit versus Purpose-Built

Retrofit and dependency on IT may be part of the problem when it comes to digital acceleration. Too many outdated pre-digital systems and too much reliance upon specialized IT skills.

Given the urgency and the opportunity for digital leadership, you can expect to see more organizations embracing purpose-built off the shelf digital platforms. These platforms could be much easier to integrate and manage and support greater levels of personalization at scale. No technology skills should be required for organizations to gain a competitive digital advantage as digital life accelerates.