The term “digital transformation” gets thrown around ad nauseam these days. Rarely is it defined with much clarity. For me there are two main categories of digital transformation. The first is what I call digital business, which means applying digital technology to create new business models.
For example, Mercedes-Benz has launched new subscription offerings based on a vision of the automotive industry moving from selling cars to selling networked mobility services. Or consider John Deere, which is using advanced data analytics to transition from simply selling farm equipment to operating a digital platform that helps agricultural producers optimize crop yields and farm operations.
The second category is your digital foundation, which I’ll focus on here. It means digitizing your internal business operations to boost productivity and speed, so you can shift dollars and human capital from keeping the lights on to innovation and growth. Rising productivity frees up capital that you can spend to create new digital products and revenue models.
Building a digital foundation
There are three dimensions to a strong digital foundation. Velocity is the speed of operations and how quickly work gets done. Intelligence is the ability of data analytics to predict, not just react. And experience refers to the effectiveness of software experiences delivered by technology platforms.
Over the past couple years, I’ve had the opportunity to meet with some 250 CIOs around the world. More than 90% of them were focused on building their digital foundations to enable future digital business models. So how do you build that foundation?
First, it’s about applying a range of digital technologies, from mobile apps to machine learning and predictive analytics, to leverage automation to speed up every single process–from onboarding new employees to resolving customer issues and closing the books at the end of every quarter.
Second, it’s about leveraging data assets and advanced analytics to make better decisions. And third, it’s about using those same technologies to create great employee experiences that yield higher retention and engagement, and customer experiences that drive brand loyalty.
Domino’s Pizza is a great example of a company that built a new digital foundation to enable better customer experiences. A few years ago, Domino’s said, “We’re not a pizza company. We’re a tech company.” They invented several new ways for their customers to order pizza, ranging from Twitter to their mobile app. You can even text them an emoji of a pizza.
It’s important to note that Domino’s didn’t change their underlying business model. They’re still in the business of delivering pizzas to hungry customers. But creating a new digital foundation for how Domino’s sold pizza had a dramatic impact on their business performance and market valuation. In fact, their stock price has more than tripled in the past five years.
Here at ServiceNow, we have a high interest in our software engineers filing patents. We used to subject engineers to a clunky, tortuous process for patent filing. We put some design thinking towards it, re-imagined the process, and turned it into a digital workflow on the Now Platform. Two quarters later, we measured an 83% increase in the number of patents filed.
Leaning into experience design
That was my “aha” moment. I realized that experience design isn’t just about great-looking screens. The right experience can accelerate adoption, accelerate the behaviors that you’re trying to incent, and accelerate the economic outcomes that you’re trying to achieve.
Over the past year I’ve worked closely with our chief talent officer, Pat Wadors, to reinvent the experiences that we provide to ServiceNow employees. We broke the employee experience down into a series of “moments that matter.” They include everything from recruitment to onboarding, promotions and offboarding, when you leave the company and transition to alumni status. They also include more personal events like getting married or having a child.
All these moments matter a great deal to employees. They all involve some sort of software-based interaction between the employee and the company. If you can use tech to redesign each moment so the employee quickly gets the information or service that she needs, you give them a positive impression of your brand. And by automating routine processes, you free up time that employees can spend on strategic activities that create value for the company.
Pat and I come from very different professional backgrounds: I’m an IT guy, while Pat has spent most of her career in HR. At first, we spoke different languages when it came to the employee experience. I tended to focus on efficiency and productivity, while Pat would talk about building “beautiful experiences” and “counting smiles in the hallway.”
But over time I’ve learned that beautiful experiences and productivity are two sides of the same coin. In order to create great experiences, you need to simplify, automate, and eliminate unnecessary steps. This increases productivity for the employee as well as the department serving the employee.
The productivity payoff
You need budget and buy-in senior leaders from to create those great employee experiences. That’s where value metrics come in. By creating a strong digital foundation for our employees, we’ve boosted our employee satisfaction score for new hire onboarding to 86%. Another 89% of our employees are satisfied with their HR experiences in general.
Finally, we realized $15 million in productivity gains by digitizing key employee experiences in order to streamline workflows across functions like HR, IT, legal and finance. This was strategic for the company, because it freed our employees to focus on initiatives that will allow ServiceNow to scale over time. These results all flowed from the premise that our employees would be more productive if we helped them get mundane tasks done quickly, so they’d have more time to focus on work that really matters.
As business leaders, we’re all looking for the new business model that will transform our industry and attract hordes of new customers. Those breakthroughs are few and far between, but we can all build strong digital foundations that help our companies move fast and smart on our way to the all-digital future.