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July 20, 2017

Why true transformation starts (or could end) with operations

It is critical for businesses to root innovation in solid operations and ensure the customer is looked after in the long-term, beyond the thrill of the initial sale.

By James Nunns

Innovation and disruption have always been important, but never have the terms been so over-used and often misunderstood.

In the context of on-demand everything and huge technological progress in areas like AI and IoT, leaders are feeling the pressure to jump on the reinvention bandwagon. But when it comes to true transformation, innovation starts, and could end, with the operations supporting it. If not, the terms ‘disruption’ and ‘innovation’ will continue to sound great and not mean much to businesses or their customers in the long-term.

Tom Winstanley, Head of Consulting, NTT Data Digital

Leaders are looking for ways to stay responsive, keep up with customer expectation and be the first to spot the next big thing. However, the creation of ‘ideas labs’ or ‘digital garages’ aren’t necessarily the answer and aren’t always conducive to all-encompassing, end-to-end, sustainable change.

Although most organisations appreciate the potential of new technologies and transformations that enable stronger customer connections, we find that many organisations are struggling to unlock sufficient value from their innovation initiatives. This can be for many reasons, including true leadership vision and commitment to innovation and attracting and retaining the right talent to develop and drive the adoption of innovations.

Businesses are clearly struggling to convert ideas into action. Attention must be shared between the front-end window-dressing and the operational foundations holding it up.

In our view, true disruptors typically start with operational transformation, they embrace an agile methodology and look to digitise and streamline processes from the grass roots up. Ultimately, a business can’t just talk about customer centricity, they must re-model their business from the ground-up to support it. Considering the challenges in reinventing an existing business, it’s no surprise that many of the best examples of technology driven customer centric operations come from businesses purpose-built for disruption.

Take Uber or Amazon,  99 per cent of their businesses hinge on operations. It is all well and good having a well-designed, user-friendly app but without back-end support your taxi or retail purchases  will never become a reality.  However, technology enabled, client centric operations are not for start-ups alone.  US based banking and insurance giant, USAA is consistently top ranked for customer service and innovation.

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The organisation is nearly 100 years old and has rolled out a number of industry firsts, including pioneering use of mobility, analytics and its digital virtual assistant. With USAA, digital innovation stems from core customer principles rather than digital ‘shop front’ initiatives. Organising operations and IT systems around the customer is the core recipe to their success continually rolling out customer centric innovations.

The adage, ‘never judge a book by its cover’, is also applicable to businesses. Companies often have a really engaging app or user interface but as soon as you embark on your customer journey, the appealing façade falls away and leaves you disappointed.

Read more: Beyond the buzzwords – the three factors stopping ‘digital transformation’ becoming a reality

This is particularly true of telco providers, who have been known for occasionally not living up to expectations. According to research by the Institute of Customer Service, the UK’s telecoms industry is the lowest ranked sector for customer satisfaction and continues to generate the highest number of complaints.

Their appealing offers and persuasive sales techniques entice customers into contracts and then disappointing service leaves them disillusioned. By focusing on the front-end, businesses are misleading customers, building expectations and running a higher risk of failure. Essentially, as a customer, if it looks as sleek as Apple, we expect it to run as efficiently and all too often, this isn’t the case.

It is critical for businesses to root innovation in solid operations and ensure the customer is looked after in the long-term, beyond the thrill of the initial sale. Loyalty is driven by how you support a customer, the experience you provide and ability to follow through on your promises.

This is where ‘digital service’ comes into play. Digitised operations help ensure innovation translates from thought to action. For example, a claim with your insurer could be processed in two minutes rather than two months, or an app on your phone can diagnose problems and offer solutions rather than directing you to a call centre. It is ideas in action. It is ensuring that the gloss of a zero-touch claim offering works in reality.

It is clear that the difference between a great idea and true disruption lies in the operational execution; how it is implemented in practice. As soon as businesses realise that the back-office is as fundamental, if not more, than the front-end, their ideas will start to reinvent business models, improve customer interactions and help keep them one step ahead of the competition.

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