I’ve been at this CX thing since early 2014. Having almost seven years of experience in the space with roles including tech, services, and sales, I have developed a perspective on its challenges that only come from seeing the full picture and having a background in corporate turnarounds and enterprise transformation.
If you’ve been reading my articles on enterprise transformation, you already know that many transformation projects fail because people don’t have a clear understanding of what problem they are solving – The “Problem” Problem, and therefore they spin their wheels and many times attempt to solve problems in “emergency or fire drill” mode, thereby quickly addressing the pain at hand rather than taking the time to understand and solve the actual problem so that it does not reoccur.
How Do We Think About Change
Many organizations leave change to chance. They overlook all the parameters of a good change initiative and they don’t organize themselves in a way that ensures success. I mentioned in my past articles the patterns that I’ve recognized as the key culprits for transformation failure, this article will outline and discuss those in the context of CX or Customer Experience transformations. CX projects typically should be thought of as transformational projects. That is if they are Customer Experience – therefore the outside-in perspective of the customer – they must be considered transformational because they require the whole enterprise’s involvement to succeed. There are few exceptions to this.
Transformation Red Flags
Consider a CX transformation in which a company engages in collecting and understanding the customer’s point-of-view to enhance their omnichannel experience. Here is a brief list of the most important red flags to plan for in this or any type of transformation initiative:
- The Problem: From the start, do you have a clear goal for the transformation? What are the metrics you wish to achieve? What problem are you trying to solve? Whom is your company trying to become?
- Who Owns The Problem: Who is or are the champions for the stated problem you are addressing? Is it a top 10 initiative of the company? Are the champions at such a level that they span lines of business therefore ensuring common goals and objectives can be set for all parties? Is the C-Suite involved?
- Business Operating Model Change: Transformations always will result in some type of business operating model change. Is the resulting change expected and planned for? Are the companies’ goals and objectives aligned with the new operating model or the old model? Are corporate compensation programs adjusted to encourage alignment with the new model?
- New Model Design: Have you thoughtfully designed the resulting “new business model”? Do you know what organizational and departmental changes, new or changed capabilities, etc. will be required to accomplish the new model? Have you left the old model in place assuming things will just work out?
- Risk Model: Has the transformational initiative had any type of risk management completed? Is your organization able to absorb and manage the risk of the business operating model change? What do you have to lose or gain if things don’t or do go as planned? Do your investors understand what this change will mean, both in the short or long term?
- The Definition of Transformation: Does the owner of the initiative understand that the definition of transformation – CX, Digital, or otherwise – is “the thorough or dramatic change in form or appearance and the metamorphosis during the life cycle of an entity”. Does the organization undertaking the transformation grasp the gravity and requirement of what they’re signing up for and what they are undertaking?
- Afraid of change: Is your organization ready for change or are they afraid of change? Has there been a thorough assessment of all and what needs to change to break the status quo and move to the new model?
- Transformational Leader or Owner: Does your organization’s leadership have the experience, ownership, and skills to effect the change? Running the engine is a much different skill from designing or changing the engine. Transformational projects need strong, engaged leadership with the skills to grasp the entirety of the enterprise and the effect of the transformation on that enterprise. Process or micro-process views are not enough to be a skilled transformational leader.
These eight points are key organizational and formative flags that need to be addressed in any transformational project. How do your experiences stack up?
A Use Case
To further highlight the nuances of these important points, we will explore a use case that helps identify the meaning of these points. In this example, a customer-facing financial services company decides to invest in a CX transformation project. Here is a very high-level outline of the use case with details from the eight points above:
- The Problem: The FS company wants to differentiate its place in the market by allowing the customer’s experience to drive their service. Metrics include 100% digital-first capabilities delivery and service resolution, in-channel containment at 95%, bank anywhere/anytime capabilities, and a customer NPS score of 90% or higher.
- Who Owns The Problem: The project is a C-Suite owned initiative. It is led by the CEO and all C-level executives have a stake and interest in its success. This stake is secured through bonus metrics tied to yearly goals and objectives. The CEO speaks about and communicates this transformation both down and up from her position.
- Business Operating Model Change: This organization is moving from an inside-out to an outside-in operating model. This new model requires the company to reorganize. Traditionally, we would have called this company product-centric. It is organized around the products it sells from mortgages to savings accounts, not around the customer. The new model is customer-centric, it now is organized around the customer. One change in corporate behavior is that the company no longer sets its goals and objectives around products. For example, metrics are no longer set around how many units are sold and the revenue obtained in each unit category, but now goals and objectives are set around the number of customers it gains, keeps, and NPS score of the customers. It compensates its employees on these new metrics, not the old ones, incenting employees to participate in this new operating model.
- New Model Design: This new design requires the company to collect new data on customer sentiment, their behaviors and be able to have leading indicators when experiences are not achieving the desired outcomes set in the problem statement. Additionally, the company must reorganize to create the services it needs to achieve these new goals and objectives while ensuring that the new capabilities and model that has been created are organized to define, deliver and maintain these new capabilities.
- Risk Model: This initiative has had a typical risk model completed as well as a current state, future state, and the roadmap to transform. In this roadmap, the risk was as important to understand as the change itself. With an eye toward understanding what the changes would look like, from employee to customer to revenue impacts, one can understand the risk to an organization’s current key metrics that key stakeholders, like investors or Wall Street, look to understand the health of your organization. It also highlights who needs to be educated into the transformation so that they can and will be supportive of what they will see in those key metrics as the transformation unfolds.
- Definition of Transformation: This transformation has C-Suite ownership. The executives are not passive bystanders, but active participants as this change will and has affected their roles and personal goals and objectives as well. The magnitude of this example necessitates the inclusion of the board of directors, Wall Street, and other entities that have a vested and active interest in the health of the entity and review that health actively through its key metrics. This organization has a clear understanding of what they are undertaking.
- Afraid of Change: This transformation requires everyone’s involvement. From recruiting, to HR to operations to finance. This initiative has key owners from each organization and those owners’ compensation is tied to this initiative, therefore not maintaining the status quo. Part of the overall transformational initiative has key metrics in place which are reviewed and understood by the executive owners and leadership to ensure success.
- Transformation Leader or Owner: This organization hired an advisory consulting firm that specializes in enterprise transformations. The transformation leader is an experienced operational executive that understands the company’s current operations across the board. Although she is not a daily operational personality, she understands how the current state of the company is wired and what needs to change to achieve the new model. She, in fact, is the adult in the room. The conductor of this effort. Owning and leading the organization to its new state.
This high-level summary highlights the differences in the old vs the new organization and the types of investment needed to succeed at CX or any transformation project. Although this project highlights a specific set of goals and objectives that you may consider too broad for your own transformation, it’s important to note that what is listed here, although perhaps not appropriate scope for your project, is required for you to succeed. Determining the scope of your transformation initiative, whom it affects, and who needs to be involved, is part of that problem definition phase.
Don’t leave change to chance. Transformational initiatives are enterprise initiatives and require a significant amount of bandwidth to be successful.
More understanding of transformation and how to set up for success are crucial to its success. In the next article, we will continue to write, in more detail, about real-world business problems, how they were handled, the consequences of doing it wrong, and the rewards of doing it right. We will continue to explore why organizations are designed NOT to change or transform. And how, on the one hand, companies can be driving transformation but on the other, incenting people to stay the same. More clarity coming, stay tuned!
If you are interested in learning how to successfully spot patterns that drive failure, follow my series and reach out with questions and feedback. As this series continues to unfold, it is sure to evolve. If there are specific topics or directions you’d like me to explore, I’d love to hear from you.
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Tim Myers is Vice President of Strategic Alliances & Partnerships at Pointillist.