The transformation to a CDXE culture
Authors: Thorsten Dirks & Juergen Roesger
Why are we writing about transformation and culture in the context of "Customer and Digital Experience Excellence (CDXE)"?
Because companies need a culture focused on Customer and Digital Experience Excellence (CDXE) to be successful!
Hand to the heart. "Customer orientation, customer focus, customer centricity, the customer at the center" are buzzwords that we find in every company written into colorful flyers on the subject of corporate philosophy, self-image and value system.
But the reality unfortunately looks dramatically different. Companies look inward first and foremost, they are focused on their competencies and their resulting opportunities, they speak proudly about their products, they think about their continuous technical and functional development from a feasibility perspective, but they do not think about the true needs and desires of their customers. This gives other vendors, who see the world from their customers’ eyes and offer excellent CDXE, plenty of room to push into established terrains. This has happened and succeeded often enough in recent decades. The possibilities of digitization and the ever-lower entry barriers of markets are dramatically accelerating this process.
CDXE is therefore not only a strategic mission, but above all a mindset, a mission in terms of content, an understanding of values that, among other things, views the exchange with customers at eye level as a basic prerequisite for success. In short: a culture in which employees live internally what the company promises externally and what the customer should feel directly.
„Culture eats Strategy for Breakfast“ (Peter Drucker)
Hardly any quote is used more frequently in transformation and change projects and it is intended to illustrate the outstanding importance of corporate culture for the success of a company.
But how can this culture be developed and what does the necessary transformation of the company to this exact culture look like? And why do most of these transformation and change projects fail?
Because the importance of corporate culture for the implementation of strategy is overlooked by executives in the vast majority of companies. It is simply ignored. Culture is not directly measurable, does not fit into any of the daily business Excel-sheets and is therefore not "tangible" for most (male) executives. Why is that? In many companies, corporate culture is primarily coupled with a value proposition, engineering power or product excellence and less with attitude, freedom, trust and the courage to try something new.
No matter how sophisticated and convincing strategy development and its final draft may be, implementation will not be successful if executives and employees do not develop, establish and live a common culture in order to make the strategy a culturally tangible experience. Because culture arises exclusively from the convincing actions of executives! Not from their words, but only from their actions. And authenticity is the top priority.
That's why sustainable cultural change and the transformation that goes with it are created top-down and start "right at the top". If the CEO is not a passionate driver and focal point of the ongoing transformation, it will not succeed.
How does a leader live authenticity?
Openness and transparency are absolutely essential hygiene factors. In addition, action-oriented exemplary behavior helps to convince employees of their willingness to change. It is often the small signals that employees and the market pay attention to. A company-wide environmental sustainability offensive is not very believable if the top management team is driving around with CO2 skidders. Walk the talk is the motto that should be exemplified with the utmost discipline. Successfully implementing this is also the legitimation for the request for transformation design, its implementation by the executives and the transformation participation of everybody.
What characterizes a leader who can successfully shape a cultural change?
In a nutshell:
A healthy balance between aggressiveness and integration competence.
Outstanding analytical skills which, in addition to brainpower, also leave room for imagination and freedom of thought
Mental and physical robustness as well as the ability to maintain both
Continuous self-reflection, combined with the ability to reconsider and correct decisions made, and to admit mistakes to oneself and others.
Form complementary teams, NOT too many of the same archetypes or mini-me's
Desire for "future and innovation", looking forward and learning from the past. Even if it is sometimes uncomfortable and upsets the comfort zones of well-established processes.
Leaders who take these leadership principles to heart are top executives, primi inter pares who are respected for their leadership qualities, but who also create the necessary basic trust in the urgency of change and form the relevant people into effective teams.
The right people at the right place working in the same direction
And in this context, that means understanding customers, making them happy with the right products that are also relevant to them, being there for them even when it can be difficult, thus building up an excellent reputation and, overall, significantly increasing the company's results and value.
Analyze and anticipate customers’ expectations
The permanent analysis of consumer behavior is the daily business of in-house marketing and market research departments. For the most part, however, these methods date back to a time when consumer needs were projected by brands. The „must-have" aspiration for consumers was the result of sophisticated brand/product communication choreographies that served the aspirations of their time, social differentiation as well as milieu affiliation needs.
In the age of the mass individualization movement, which has become a matter of course due to the availability of digital media and increasingly more communication and interaction options, the relationship between suppliers and consumers has changed dramatically at the same time. Due to the transparency that now exists regarding the quality, performance, and customer experience of products and services, as well as the ability to make price comparisons in real time, the experience with a product is becoming an increasingly essential factor. This is also true with regard to the brand's spillover effect (Biedenbach & Marell), which is now greater in terms of quality promises than that of classic communication.
The impact CDXE has on the four dimensions of brand equity (Source: Biedenbach & Marell)
The customer journey has become much more complex. Whereas in the past it was a matter of very simple triggers such as the resolution of a camera or screen or the processor speed of a notebook or smartphone, consumers are today increasingly looking more frequently and more intensively for in-depth information on products, services, functionalities, price offers, and comparative products. To this end, consumers draw on significantly more sources of information for their purchasing decisions than they did a few years ago. Social media channels, forums and blogs, influencer communication, and new media genres with a very strong use-case orientation (e.g., curved.de, turnon.de) have positioned themselves between the function of classic branding and the purchasing process and are influencing which product is purchased more than ever in this so-called mid-funnel (Think with Google). Google Research, for example, was able to recognize up to 300 interactions in the mid-funnel for obtaining information, the best offers as well as options only for booking a flight to San Francisco.
Mid-Funnel-Attribution-Model (Source: Think with Google)
In the future, however, it will be even more important to understand as early as possible how products and services can serve relevant use cases for customers. To do this, it is first necessary to analyze and understand the relevance from the consumer's point of view. Appropriate AI/NLP-based analysis tools are available for this purpose and, with their results, form the starting point for use-case-based communication and content strategies. Relevance meets context in the sense of a suitable product or service. This approach completely changes the approach of marketing, communication, sales and service functions, because in the future they will be integral and no longer sequentially linear as isolated individual functions.
Continuous adaptation and integration should not be understood as a linear process, but rather as an infinitum and thus as a fixed component of the corporate culture, as USAA, for example, has established (CDXE-Initiative, img & University of Mannheim).
In addition, consumers today see themselves as part of product and service development. The experience of products and services does not begin with the purchase, but already with the idea. The customer journey is also an infinitum and must be under constant observation. The feedback loop between consumers and companies is crucial in order to ensure customer-centric innovation.
How can companies shape this loop to establish efficient and effective communication with customers, and what is the cultural basis for this? And what is the way to get there?
You know the answer!
But how does a successful transformation happen?
Companies need to switch from sequential planning/thinking to exponential planning/thinking.
Next level of attitude
In the vast majority of companies, a sequential planning and thinking process is pursued. This translates into: "What can we do better tomorrow/next month/next quarter than we are doing today?“. To achieve this, the status quo is analyzed using various qualitative and quantitative approaches and small improvements to products and/or processes are implemented based on the results. However, this lacks the "disruption approach".
What is needed in a time of permanent change, which has been the only constant for some time now, is an exponential approach to the planning and thinking process. The disruption approach!
"Where your talents and the world's needs cross, there lies your vocation.” Aristoteles
The first step is to imagine which customer needs - in the sense of customer and digital experience excellence - (need base) will have to be satisfied in five years' time and what role the company will play in this, what parts of the value chain will be responsible for meeting these customer needs, and what resources (talent and resource base) will be required for this. The question of "why" must be answered rigorously (purpose base).
"The best way to predict the future is to create it." Willy Brand
This picture of the "world in five years" must be described as precisely as possible, but in the knowledge that it is based on assumptions that will change on the way to this future. Only through this clear understanding of a picture of the future it is possible to also shape it and new business models/ecosystems as well as new products will emerge. These in turn will disrupt existing models/products. To face this challenge, the company must think and plan exponentially.
The future draft (North Star) is followed by an analysis of the status quo. The transformation plan is developed from this positioning, which reflects the clear orientation of the company in the present, as well as from the future blueprint. Both the future vision and the transformation plan must be communicated transparently to all stakeholders (employees, customers, investors, partners), as must all changes along the way.
What do I need to do today to arrive at our future draft in 5 years?
In order not to lose sight of the future vision on the way forward, a passionate and courageous implementation (relentless execution, simple plan and relentless execution) is needed on the one hand, on the other hand the orientation of the company has to be determined constantly - almost in real time - and the implementation as well as the management approach has to be adapted (sensor base); for this a data driven approach (data empathy base) is needed.
The balance between aggressiveness and integration competence
In a volatile and uncertain world: Expect the Unexpected
The result is a flexible response company (agile organization in agile working environments) that always enables its stakeholders to determine their exact orientation and also makes the degree of target achievement transparent via an OKR logic (motivation base).
And it is precisely such a flexible response-oriented company that is needed to find answers to customers' needs in the sense of the CDXE, which are constantly changing.