Risk aversion, weak customer focus, and siloed mind-sets have long bedeviled organizations. In a digital world, solving these cultural problems is no longer optional.
Shortcomings in organizational culture are one of the main barriers to company success in the digital age. That is a central finding from McKinsey’s recent survey of global executives (Exhibit 1), which highlighted three digital-culture deficiencies: functional and departmental silos, a fear of taking risks, and difficulty forming and acting on a single view of the customer.
Each obstacle is a long-standing difficulty that has become more costly in the digital age. When risk aversion holds sway, underinvestment in strategic opportunities and sluggish responses to quick-changing customer needs and market dynamics can be the result. When a unified understanding of customers is lacking, companies struggle to mobilize employees around integrated touchpoints, journeys, and consistent experiences, while often failing to discern where to best place their bets as digital broadens customer choice and the actions companies can take in response. And when silos characterize the organization, responses to rapidly evolving customer needs are often too narrow, with key signals missed or acted upon too slowly, simply because they were seen by the wrong part of the company.
Can fixes to culture be made directly? Or does cultural change emerge as a matter of course as executives work to update strategy or improve processes?1In our experience, executives who wait for organizational cultures to change organically will move too slowly as digital penetration grows, blurs the boundaries between sectors, and boosts competitive intensity. Our research, which shows that cultural obstacles correlate clearly with negative economic performance (Exhibit 2), supports this view. So do the experiences of leading players such as BBVA, GE, and Nordstrom, which have shown what it looks like when companies support their digital strategies and investments with deliberate efforts to make their cultures more responsive to customers, more willing to take risks, and better connected across functions.
Executives must be proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations. This includes changing structural and tactical elements in an organization that run counter to the culture change they are trying to achieve. The critical cultural intervention points identified by respondents to our 2016 digital survey—risk aversion, customer focus, and silos—are a valuable road map for leaders seeking to persevere in reshaping their organization’s culture. The remainder of this article discusses each of these challenges in turn, spelling out a focused set of reinforcing practices to jump-start change.
Too often, management writers talk about risk in broad-brush terms, suggesting that if executives simply encourage experimentation and don’t punish failure, everything will take care of itself. But risk and failure profoundly challenge us as human beings. As Ed Catmull of Pixar said in a 2016 McKinsey Quarterly interview, “One of the things about failure is that it’s asymmetrical with respect to time. When you look back and see failure, you say, ‘It made me what I am!’ But looking forward, you think, ‘I don’t know what is going to happen and I don’t want to fail.’ The difficulty is that when you’re running an experiment, it’s forward looking. We have to try extra hard to make it safe to fail.”
The balancing act Catmull described applies to companies, perhaps even more than to individuals. Capital markets have typically been averse to investments that are hard to understand, that underperform, or that take a long time to reach fruition. And the digital era has complicated matters: On the one hand, willingness to experiment, adapt, and to invest in new, potentially risky areas has become critically important. On the other, taking risks has become more frightening because transparency is greater, competitive advantage is less durable, and the cost of failure is high, given the prevalence of winner-take-all dynamics.
Leaders hoping to strike the right balance have two critical priorities that are mutually reinforcing at a time when fast-follower strategies have become less safe. One is to embed a mind-set of risk taking and innovation through all ranks of the enterprise. The second is for executives themselves to act boldly once they have decided on a specific digital play—which may well require changing mind-sets about risk, and inspiring key executives and boards to think more like venture capitalists.
Sales Isn’t What It Used To Be
Depending on what decade you were born in, the term “sales” can evoke different images. Some may flash immediately to the grey-suited salesman, briefcase in hand, knocking on doors trying to stir up leads. Others may think of a content marketing funnel in which prospective leads are slowly lured into a business deal by offering them something of value — a blog post or helpful article, for instance. Whatever you envision, the fact is that both sales models require plenty of human interaction and typically months before leads turn into customers.
Today, consumers have limitless options when it comes to where and how they spend their money, so successful sales tactics will depend on one thing — how convincingly robots can talk to people.
That’s Right; I Said Robots
The phone call isn’t the primary mode of communication anymore, especially not amongst millennials. In fact, in 2014, texting beat phone calls as the preferred method of communication by millennials. Because these younger generations expect immediate responses in their communications — whether texting or messaging — with friends and family, they also expect it from the places they places with which they do business.
Depending on the industry, a business may be reluctant to change their sales strategy since it takes a large workforce, and therefore money, to have an immediate response time every time a consumer wants to talk. Fortunately, that’s where the robots come in.
These robots, specifically chatbots, have been around for decades but lacked the functionality that would eventually make them decent verbal sparring partners with humans. However, as technology evolved, so did chatbots — gaining intelligence that would eventually convince humans that they were actually talking to other humans.
Since messaging has taken such a deep hold on the way consumers prefer to communicate, it’s essential that businesses use chatbots and messaging technology to meet their potential customers where they’re at.
How Chatbots Benefit Business
Text updates have been standard for a while now, whether it’s being notified of a package delivery or getting coupons from a curbside DVD kiosk, but other than the option of a simple “yes” or “no” response, consumers can’t say much back. This lack of response can be frustrating because what consumers really want is to communicate in the same way they do with friends and family — they want to have a conversation.
Messaging platforms let companies talk to consumers on the platform they feel most comfortable — through SMS or messaging apps. These platforms can be built in-house by developers or companies can purchase third-party chatbot apps. Many CRM tools are even starting to integrate chatbots into their products for the benefit of customer service as well as sales and marketing.
Maybe you’ve seen a message window pop up in the bottom of a website’s pricing page, offering to help. That’s a chatbot. Many chatbot apps collect the information that would be considered tedious or repetitive to salespeople; they can also answer simple questions and learn as you set up more rules.
In contrast to the phone, messaging conversations don’t have to be written down in notes later, but are collected in chat logs. These chat logs can save time by getting the salesperson, or anyone in customer service, up to speed on the conversation. If a salesperson is out for the day, another seller only needs to look at the log to catch up.
Even better — multiple messages and conversations can happen simultaneously, unlike phone calls which require full attention. Phone calls could come later when leads were much more qualified; if the prospect already had their information taken and questions answered by the chatbot and they are still coming back for more information — there’s a much better chance of closing a deal.
Now Hiring: Chatbots
The primary benefit of chatbots is obvious — they save time and saving time saves money. But oddly enough, the chatbots can benefit customers on a human level. If they feel heard and like they made a connection, they want to continue doing business with you. Ideally, salespeople and customer service reps would also be happier since they spend less of their time on repetitive tasks.
As technology marches relentlessly forward, it will continue to deconstruct our known systems and refashion them in revolutionary and innovative ways — especially the way we communicate. Businesses must grasp onto this concept quickly and provide innovative ways for sales teams to reach leads and nurture them into customers.
The inaugural edition of DMG Consulting’s Intelligent Virtual Agent Product and Market Report covers all aspects of this emerging IT sector. These “smart” applications represent the future of self-service. For the first time in over two decades, enterprises have innovative and effective options for building and enhancing self-service environments.
In the Vanguard with Coverage of Emerging Markets
The market is ready for IVAs. These solutions, also known as “bots,” “chatbots,” “virtual assistants,” “virtual agents,” and a wide variety of other synonyms, use artificial intelligence (AI), machine learning and other technologies to build advanced speech and digital-enabled self-service solutions that are cost effective and appealing to customers, who actually prefer to help themselves in this channel, as long as it works. Designed to emulate human conversations and interactions, IVAs can provide assistance for many activities that previously required the attention of live agents, including customer service, help desk, product information, marketing, sales, placing orders and reservations, and more.
The new AI-based solutions address a wide variety of enterprise and contact center needs. And what we are seeing today is just the beginning, as companies are investing billions of dollars in these solutions. Next-gen IVAs with more self-learning capabilities are on the horizon. In the future, IVAs will use an increasing amount of self-learning technology that allows them to get “smarter” over time and adapt to customers’ individual preferences as they “learn” from past interactions to improve their understanding of what customers want and need.
2017 Intelligent Virtual Agent Product and Market Report Examines this Emerging IT Sector
The 2017 Intelligent Virtual Agent Product and Market Report is the only in-depth analysis of these emerging solutions. It provides a timely and thorough analysis of the overall market and 7 innovative vendors who offer a broad range of solutions that address customer service, contact centers and other enterprise uses. The 6 vendors covered in detail in this Report are: 7, Astute Solutions, Creative Virtual, Interactions, Next IT and SmartAction. Artificial Solutions is covered at a higher level.
Key Elements of this Report
- Definition of IVAs: what they are, how they work, and an examination of the functional components that comprise these solutions
- Service deployment options for IVA solutions
- Evolution of self-service, from interactive voice response (IVR) to IVA and beyond
- The state of AI: what’s real and what to expect in the future
- Review of the market trends and challenges that are driving investments
- Discussion of IVA market innovation, including what is planned to be delivered in the next 12 – 18 months
- Insights into the current uses, benefits and verticalized applications of IVAs for contact centers and enterprises
- Examination of the role of IVAs in delivering a personalized and effortless self-service experience to enhance the customer journey
- A look at how IVAs are improving the agent experience with real-time guidance, next-best-action recommendations and self-service functions to help agents manage their work/life balance
- Review and assessment of the IVA competitive landscape
- IVA 5-year market growth projections
- Overview of the 7 leading and contending IVA vendors, including company snapshots, go-to-market strategies and product offerings
- High-level technical analysis, including accuracy/tuning and integration features
- High-level functional summary, including administration, security and compliance, and reporting, dashboards and analytics
- Best practices for transitioning to an IVA solution
- Implementation analysis, including vendor methodology, best practices, training and professional services, and maintenance and support
- Return on investment (ROI) analysis
- Vendor pricing models for on-premise, cloud-based and managed service IVA solutions
- Detailed company reports for the 7 IVA vendors, analyzing their products, functionality and future product development plans
- IVA Glossary of Terms
- Comprehensive IVA Vendor Directory
Although some CEOs might recognize that companies like Uber or Airbnb are disrupting the business world, many still maintain a wait-and-see attitude. Traditionally, this means responding once the true threat to their own business has been identified. However, in the case of digital disruption, waiting until the threat is clear is too late. There will not be sufficient time to respond in a way that minimizes the impacts to your business.
“Digital disruptions typically exist outside of the enterprise’s normal range of vision,” said Janelle Hill, vice president and distinguished analyst. “Although CIOs and their business executives acknowledge the potential for a digital disruption, they lack tools, techniques and criteria for identifying and assessing potential disruptions.”
Digital disruptions are more difficult to adapt to than earlier technology-triggered shifts due to their virtual nature. Past disruptions were generally triggered by physical technologies such as PCs or ATMs. Digital disruptions mostly exist in the virtual world, which makes them difficult to recognize until after the impact is felt. Additionally, virtual technologies are easily changed and easily scaled.
CIOs can lead the organization to overcome the challenges of digital disruption and equip peers to recognize and deal with digital disruption.
Recognize digital disruption
First, learn to separate actual digital disruptions from fads. A fad, such as Pokemon Go or Google Glass, will incite lots of excitement but have limited impact. A disruption will completely redefine the market’s needs and potentially cause a significant change in the industry. For example, the iPad caused changes in application development, impacted revenue of desktop and notebook computer manufacturers, and even changed how humans interact with technology, with FaceTime as the first mobile conferencing application. The technology also created an aftermarket accessory industry. At some point digital disruptors will completely change markets, while a fad will not. Consider how digital TV completely revamped the entertainment industry and became so pervasive it replaced analog TV.