Ignorance towards Digital Transformation can seriously harm your business!

Developing digital consciousness in enterprises: two case studies

Many organizations still fail to see that the digital change has brought about a fundamental alteration in consumer behavior over the past years. In this article I explain why you should be aware of the the digital shift, because ignorance can seriously endanger businesses.

Businesses need a complete transformation if they want to survive the next few years. Digital consciousness is a crucial prerequisite for this transformation. Unfortunately, only a small minority of organizations have even begun to develop digital consciousness. Many still fail to see or acknowledge that the digital change of the past years has resulted in a fundamental shift in consumer behavior.

What evolved is a kind of electrified collective consciousness: people use the opportunity to form networks and reflect things almost synchronously, in a positive way. New insights on one side of the network automatically become knowledge components on the other side. The individual members of these networks need to work less to acquire more knowledge. Users can grasp complex problems quickly and with minimal effort. Everyone can make informed decisions without extensive prior research.

Specific products and brands become insignificant

In the “pre-social-web” past, companies would send out messages as one-way communications. All the consumer could do was decide whether or not the message mattered to him. Today, businesses find themselves facing a very tight network of consumer references, and more often than not they do not know how to address and deal with it. Great advertising isn’t what makes people buy products anymore. People buy products because the collective has provided positive feedback – feedback that is given extremely quickly and not necessarily based on prior knowledge or experience of the product. Specific products and brands do not matter anymore. What matters are relevance and content in the world of the consumer.

These emerging virtual consumer collectives have sprouted complex networks with a momentum and dynamics beyond the control of individuals or organizations. The phenomenon scientists call emergence – the forming of a whole that is more than the sum of its parts – renders obsolete the traditional way of addressing consumers through advertising. Companies need to understand this, or they will not be able to adapt their brands and products fast and efficiently to changing requirements. However, a repositioning of brand and products isn’t nearly enough. The breathtaking speed in which users exchange information calls for a transformation of internal company operating processes. To truly adapt to the changed marketplace, companies need to establish close interactions between consumer marketing and planning processes. They need to combine human talent, processes, and technologies into powerful, adaptive, digitally conscious processes. If they fail to evolve they are doomed.

The case studies

Case study #1:

Organization: A multi-national chemical company with a portfolio of established products and a strong brand. Product sales and customer retention focused on competitive prices while high quality and reliable deliveries were also decisive competitive factors.

Problem: Price dumping by competitors cost the company its leading market position.

Solution approach: The company needs to reestablish its brand and product strengths by communicating the different usage scenarios and benefits of the product to the consumers. This is best done through the new communication channels offered by social networks. The approach requires a high degree of planning skills and closely connected processes and systems.

Case study #2:

Organization: Global player in the food industry, very solid and conservative. Market leader in its segment.

Problem: The client wanted to ensure sustained growth without risks. The traditional approaches were already being taken.

Solution: A combination of traditional channels and new sales platforms. A smart combination of the company’s own websites and social networks is used to widely distribute relevant content regarding food products and usage scenarios, e.g. recipes. This content strategy in combination with modern search and sales methods (mainly via Google and Amazon) opens a new and important sales channel.

Big data alone is not enough

Established S&OP processes (sales and operation planning processes) need to be expanded to include awareness components for the various areas of social networks. This means that planners will have to consider not only conventional planning data, but also consistently exploit new signal sources such as:

  • Company website logfiles and analytic information
  • Data gathered from corporate, brand, and product blogs as well as curated content sources
  • Signals and links from Twitter, Facebook, Youtube, and other major social networks
  • Likes, links, tweets, retweets, followers on and from all social media sites

In addition to the obvious technical issues of data mining, is necessary to settle questions regarding data granularity, quality, and relevance. “Big data”, the term that has become so common in recent years, is far from succinct in this context, as poor analyses are not improved by an even larger quantity of unqualified data. As existing planning systems usually do not allow for any kind of useful analysis enhancement, organizations need to establish new approaches. Business intelligence is one viable approach, but only if it is integrated in the business context.

Most significant, however, is that all those involved in these processes become aware of the changes that are taking place and the consequences brought about by these changes. The digital consciousness must take hold deep within the organization. There are two aspects of digital consciousness. One is the collective consciousness described above. The other consists in the perception and conversion of processes that are taking place inside the company. All staff must be educated about the new procedures, means, conventions, and changes. What does the brand stand for? Or the product? Which consumer do we want to address, how do we want to address them, and on which market?

Knowledge of the new reality requires that sales developments, which usually take the form of planning dynamics, be considered differently. Organizations should establish control mechanisms that can represent new developments as they emerge. These mechanisms need to recognize consumer needs and demands at a very early stage and understand criticism in order to nip those much-dreaded shitstorms in the bud to keep planning dynamics in check.

There are no standard solutions

Conventional planning practice offers a number of good initial approaches to dealing with digital change, but no broad basic solution. The latest research shows that social media are able not only to trigger positive buying decisions, but also strengthen the brand in the long term. This will not happen magically, though, but requires organizations to establish functioning links between conventional internal processes on one side and the network of market and social media connections on the other. Standard solutions are of no use here, as every company needs to develop its own digital consciousness – a complex process focused on the consumers’ collective.

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