ANALYSIS: Getting Digital Transformation Right (What Nobody Tells You)

I gave my POV on digital transformation and how organisations are adapting to it. This article was originally written by Advertising + Marketing (A+M) and can be found here

Image credit: 123RF.com

Like it or not, the COVID-19 pandemic has spurred many companies to start their digital transformation journey. While it might be on the agenda of most companies nowadays, success does not come easy. A research by McKinsey Digital titled "How to restart your stalled digital transformation" found resourcing issues (20%) to be the most commonly cited factor in stalled digital transformations. More than half of respondents (53%) said their resourcing problems result from the ways funds are earmarked or allocated among initiatives. According to McKinsey, this reveals that "the trouble is not simply a matter of allocating sufficient funding or talent" when it comes to digital transformation.

To jump-start stalled digital transformations, McKinsey found that undertaking a rigorous change-management programme (28%), improving the economic model for the transformation's timing and impact (21%), as well as developing a robust internal communications plan (21%) were most associated with success.

How do marketers define digital transformation?

One thing marketers can agree on is that digital transformation is an internal change involving business processes, culture and customer experiences to meet changing market requirements. StarHub's chief digital officer, Adam Stewart, told Marketing that digital transformation is not just about creating a new mobile app or embracing automation software. "I strongly believe that the key to a successful, scalable and sustainable digital transformation is making deep and holistic changes across all experiences, products, services, processes and data with customers’ needs and expectations at the centre of it all," he said.

According to him, the changes StarHub makes must improve customers' daily experience with the brand - from simplifying product catalogues to speeding up product enhancements, shortening response times and minimising errors. He added that success stories come from companies that are flexible and respond quickly to changing customer priorities and market movements, realising greater customer satisfaction, revenue upside and business cost reductions.

Likewise, Daniel Lee, senior director - digital acceleration, foundational markets at McDonald's, defined digital transformation as business transformation executed through digital technology. He explained that it is about combining customer-centric thinking with actionable data and digital channels, that ultimately deliver improved business outcomes. "It ranges from simple actions such as making existing processes more efficient, to creating brand new ways to reach and engage with customers," he added.

Besides improving business processes and making them more efficient, digital transformation also enables organisations to be more nimble and agile as well as being cost efficient in their day to day operations, Abbott Malaysia's head of digital marketing and CRM, Nicholas Goh, said. He added that this would then give the organisation a competitive edge over their competitors.

Also weighing in on the topic was Acquia's senior field marketing manager Rachel Lam, who shared about the aspects of digital transformation that nobody tells you, "Where there are so many ways to interact with your prospects and customers, the information gathered from these interactions, there is always an issue of making sense and use of all the data," she added. To be successful in digital transformation, companies need to do the groundwork and ensure it is sustainable after the transformation. Otherwise, there will be challenges in the long run, she added.

Some ways Acquia has implemented digital transformation for its clients include understanding the buying process of the customer through the interactions with its content and salespeople via online and offline channels. According to her, this helps the SaaS company better target similar prospects or audience through relevant channel and content. "Through the interactions with the customers, we are then able to provide consultative insights to them and provide them personalised solutions that would fit their needs and solve their pain points," she added.

Aspects of digital transformation that nobody tells you

Digital transformation might have become a buzzword in recent years, but there is no guidance on where and when to start. Goh said this includes areas such as when is the right time for an organisation to embark on a digital transformation journey and whether they are even ready to do so.

"In most cases, I would say when an organisation has a mandate to embark this journey versus people readiness as well as system readiness are often times mis-aligned. Alignment within the whole organisation and buy in from stakeholders are key before embarking on this transformation journey," he added.

Goh also said he wished he had gone on a digital transformation course before starting on the journey. He explained that most of the time, he learnt how to implement and amend things on the fly as he went along. While such a practice is not ideal, Goh said that having past experiences and knowledge in some areas do help him make decisions a lot quickly and easily. This is especially so when it involves technical knowledge as well managing stakeholders expectations.

Agreeing with him is StarHub's Stewart, who said that the execution of digital transformation strategies will become smoother when stakeholders see clear business objectives and outcomes.

"What I would want is an innate ability to recognise the nuances of customers’ ever-evolving needs and expectations. Customers’ expectations are a constantly rising tide in our fast-changing digital world, and we want to stay ahead and accurately predict what our customers want," he said. Stewart explained that this is why the telco's digital transformation journey relies heavily on data insights. To further boost this capability, StarHub is also in the process of breaking down data silos and harmonising its data assets for the company to have a unified view of its customers.

Mindset shift is key

At the heart of getting buy-in from the management is a mindset shift. According to Digi Telecommunications' chief digital officer Praveen Rajan, the key to digital transformation is actually people transformation and mindset shift. Most automation and digitalisation are operational processes, which still require people to craft the solutions.

He added that transitioning employees to new way of doing things requires acceptance, readiness and effort invested in training, for instance. "In other words, while having the latest digital technology is necessary, what is equally important is having company-wide support with the right people and the right mindset in place to see through an effective digital transformation," he said.

There is also a common notion in the industry that digitalisation is the answer to all business problems. While it can be the foundation and catalyst to many solutions and operational improvements, Rajan said the fact is that there will be complex business challenges that require more than just digitalisation to close the gap. Fundamentally, a good start is often to identify parts of the business that will benefit most from digitalisation, and then scale from there, he added.

According to him, one thing he wished he had known before embarking on digital transformation was the fact that it is a never-ending journey and that it will continue to evolve. "The digital landscape is an ever-changing one, and when you think you have transformed, either your customers have changing needs or the market changes before you know it," he said.

Citing MyDigi app as an example, Rajan said email addresses were used to log in to the app when it first rolled out. However, the team quickly learnt that the growing younger generation has moved away from using emails as a communications tool. As a result, it changed the login method to mobile numbers.

Also stressing the importance of mindset is McDonald's Lee, who said the culture around thinking is the most underlooked aspects of digital transformation and any business transformation for that matter. Transformation means doing things differently, which starts with being willing to think differently in several areas: making decisions quicker, taking calculated risks and having permission to fail, Lee explained.

"Organisations and careers in most organisations are built around slow consensus driven decisions and ensuring that failure is discouraged if you want to stay employed. If an organisation is truly seeking transformation, you must take risks which is naturally bundled with failure," he added. According to him, the trick is to manage risks and failure so that the impact is not as catastrophic when something goes wrong, which most likely will.

How You Should Use QR Codes Again

Using of QR codes in Malaysia during lockdown

If you currently live in Malaysia, when was the last time you used or scanned a QR code? Chances are that you’ve scanned one as recent as yesterday or in the last week. But if I were to ask you the same question 6 months ago, you’d probably say not in the last month or not in a while. QR codes or Quick Response codes have been around since the 1990s, yet the culture of scanning QR codes never quite took off in Malaysia, until lately.

Various use of QR codes found outside retail outlets

Malaysians never had the need to scan QR codes as it requires an additional step of downloading QR code scanners into their devices as most phones don’t come pre-installed with one. Unlike countries like China, where QR codes are used for almost everything, QR codes in Malaysia are mainly used for e-wallet transactions in the past 2 years, and even that, most Malaysians prefer using cash at point-of-sale especially people of the older demographic.

However, I foresee that trend changing in the next 6 months to 1 year. This is because, post lockdown in Malaysia, most businesses require you to scan one before you can enter their premise as it’s a mandatory requirement by the Malaysian government in order to do contact tracing of everyone who has visited a certain premise. Sure, there are still those who choose to use a traditional pen and paper to record their whereabouts, but over time, I would think those who do will eventually switch to scanning a QR code to leave their contact details as it is not only time saving, but it’s also more hygienic (you don’t know who has touched that pen previously). To sort of validate this theory, I try to look at how many people left their contact details on the book provided at the supermarket entrance where I make my weekly grocery runs. I noticed that the list gets shorter each week I go. I don’t think this is caused by lower traffic volume to the supermarket, because I go to the same supermarket each week at approximately the same time, and the queue is roughly the same each week I go there. ­­This could mean that lesser people are leaving their contact details on the book and more of them are scanning the QR code at the entrance.

Another data point is when I did a Google Trend search on QR code scanners, and no surprises that you see a huge uptick of searches during and post lockdown periods.

Google Trends showing searches for qr code scanners

So, how and what can use QR codes for? While there are a ton of usage for QR codes, here are some I find relevant to Malaysia.

Digital Payments

Payment options available via QR codes

E-wallets are set to accelerate in the coming years in Malaysia. In its effort to make Malaysia a cashless nation, the government has launched e-Tunai Rakyat (People’s e-Money) initiative back in January 2020, which saw a disbursement of RM450mil to qualified citizens to boost e-wallet usage. This saw the government pre-loading a small sum of digital cash into an e-wallet of choice to citizens for free. Think of it as a free e-wallet starter kit. With the increased number of new users on e-wallets, the usage of QR codes are also set to increase.

Tracking of Product Information

Ever picked up a packaged product and noticed a QR code on the packaging? I bet not many would know that there are QR codes on consumer products as well. It has always been there, but not many of Malaysians know of its existence to begin with. Again, this goes back to the lack of a scanning culture here in Malaysia. Some of these codes will lead you to pages to know more about a certain product, some just directs you to the brand’s website.

Product information after scanning of QR code

At Abbott for example, we use QR codes on our packaging for 2 reasons; the first allows consumers to check and track the authenticity of our products, from batch number, manufacturing date, date of arrival in Malaysia, source of milk and expiry date. The second usage would be to reward our consumers with loyalty points through Abbott’s loyalty program. We’ve been having these QR codes since late last year and now we see scan rates being up due to the QR code scanning trend being on the rise as well.

e-Brochures / e-Catalogues

e-catalogues in the form of PDFs can now be obtain by simply scanning a QR code

Again, with more and more people opting for lesser face-to-face interactions, it would be hard for brands to or businesses to promote their products in stores. Brochures and catalogues are mainly used as a sales tool by promoters to aid selling. As many businesses are cutting back on cost as well as staff in light of Covid-19, paying for promoters to be in the store as well as paying for printed brochures and catalogues are becoming somewhat a luxury. However, brochures and catalogues can still play a part in stores, just that it has become digital. I recently went to a pharmacy that used to hand out single page promotional catalogues of their on-sale items. Instead, they now recommend you to scan a QR code to get the promotion catalogue of the month. I see this becoming more apparent in coming months as brands and businesses cut back on printing cost. It could be that the next time you visit places like Ikea or a car showroom, you can no longer get a printed catalogue.

Tracking Media Effectiveness and Traffic

It has always been a pain to justify the effectiveness when it comes to out-of-home and point-of-sale media. But if you have unique QR codes that are tagged to locations and medium, you can measure scan rates or number of scans to see how effective your advertising is in those locations. Of course, for your ads to be effective in this, there needs to be a call-to-action on your ad itself to get viewers to scan. You can then analyze which ads and locations are more effective in driving actions for your brand, which then enables you to make decisions to optimize on which location you would put your next advertising dollar on.

App to Web Authentication

Mobile apps are now using QR codes for 2 step authentications

If your brand has a mobile app, and also has a website that requires a login, one of the ways to skip the login process (without you needing to remember and re-keying in the username and password) is to have QR code authentications. Online banking providers such as Citi now encourages you to download their app to use it as an authentication to login to their website. This somewhat offers the customer the convenience of not forgetting their username and password. Apps like Whatsapp also require you to also scan a QR code as a form of authentication in order to use the web version.

Virtual Retail

Virtual store in the subway in South Korea. Scan a QR code to purchase items while waiting for your ride home

This was a smart store in a South Korean subway station that featured a large digital screen of products by Tesco. Using an app, people would scan what they would like to purchase and add to their shopping cart on their app. Just like how you would if you go to an actual supermarket. Once they have completed selecting the products, they can then checkout those items and get them delivered to their homes. It’s a time saver especially for people on the go who do not have time to purchase essential items or groceries. Imagine the same execution being applied to fashion and the F&B industries. Believe it or not, this was done in 2011. But in a time where social distancing is highly encouraged, and face-to-face contact is to be limited, having such an execution isn’t too farfetched. 

In summary, if you’re a brand or business, start to consider integrating QR codes as part of your products and services. If you’re still skeptical on whether or not enough people will scan QR codes, the above examples clearly shows that there is an increase in trend and application in Malaysia. And with more people aware of how to scan QR codes and how they work, you will definitely see a scanning culture becoming a norm in the coming future.