Current books reviewed: “Disruption and Transformation Management. Digital Leadership – Digital Mindset – Digital Strategy”
Digitization is resulting in transformation processes in companies that bring with them their own unique challenges. How can companies shape these changes – or even disruptions – and turn them to their advantage? In “Disruption and Transformation Management,” renowned authors, among them both academics and practitioners, deal with precisely this question.
The editors Frank Keuper, Marc Schomann, Linda Isabell Sikora and Rimon Wassef have divided the book into four parts. The first, Digital Leadership, looks at the requirements and challenges for managers that result from digitization. The second part, Digital Mindset, deals with changes in day-to-day work. In the third part of the book, Digital Strategy, the authors discuss how digitization is impacting corporate strategies and business models. The fourth and final part, Digital Ecosystem, is all about the changes in existing markets and the emergence of new markets, such as the sharing economy.
Customer experience management as a management approach
In their article, “Customer Experience Management,” Heinrich Holland, Professor of Business Studies at Mainz University of Applied Sciences, and Nandhini Ramanathan, Operations Manager at the Zurich Versicherung insurance company, consider Customer Experience as a management approach. After all, every product, every service and also every interaction with a company is associated with an experience for the customer. This experience is becoming increasingly important in business practice for two reasons: firstly, because products and services are becoming interchangeable, and secondly, due to the increasing focus on experience in society, which is reflected in customer behavior. Customer Experience Management (CEM) offers an approach for optimizing customer loyalty since that loyalty is increasing in significance, particularly against the backdrop of decreasing loyalty rates and increasing willingness to change provider. “The goal of CEM is to systematically analyze customer experiences and to shape these, so that customer expectations are exceeded, resulting in long-term loyalty to the company.”
A key element of CEM is bridging the gap between customer expectations and the actual experience as they perceive it at the various points of contact. The goal: unique, positive customer experiences across all three phases of the customer life cycle (acquisition, loyalty, retention). In practice, this overriding objective involves further concrete goals. The authors set out what these goals are in an empirical survey of decision-makers. Forty-five percent of respondents said that they want to surprise and delight customers. Twenty-four percent want to achieve an emotional customer relationship and stronger loyalty, while 14 percent want to set themselves apart from the competition and a further 14 percent said they want to increase revenue through recommendations.
The authors identify three developments that play a role in connection with CEM:
The need to bring together the online and offline worlds. As a result of digitization, future CEM measures must focus on a consistent omnichannel approach. The traditional business model must be linked with digital media. Furthermore, an omnichannel approach offers various possibilities for increasing efficiency.
The need to set oneself apart from the competition. Digitization has increased market transparency and made it very difficult for providers to set their products and services apart from the competition. Besides the legal possibilities for retaining customers, such as contract periods, emotional loyalty is also necessary. Only in this way can customer loyalty be established that offers added value for both customers and companies. The authors believe that providing unique customer experiences presents a significant opportunity here.
The link between functional product features and emotional elements. Customers demand individualized offers and flexibility from companies. Furthermore, an increasing focus on experience among consumers means that an emotional, experience-oriented approach is required. Successful companies therefore link the functional properties of a product with emotional events. “An emotional connection between the customer and the company and its products and services ultimately offers a competitive advantage that is hard to imitate.”
Successful CEM, with its approach of systematically designing touchpoints, is essential for optimizing customer loyalty. “In this way, a long-term customer relationship can be established.”
Optimizing costs with digital solutions
In their article on “Digital Costing,” Ralf Haack, Head of the Steinbeis Digital Finance & Performance Management Consulting Center, and Jassir Qushta, research associate at Steinbeis University Berlin, consider strategic cost optimizations in the context of digital disruption.
To optimize costs, the authors recommend using big data analytics, among other things. That is because one of the biggest challenges for companies is managing large volumes of data with different structures. Analytics solutions could offer companies significant added value here, by making more effective and efficient analyses and better forecasts possible. On this basis, better strategic decisions, more effective operational management and greater customer understanding could be achieved. Furthermore, these initiatives would result in cost savings in many cases.
The authors issue a further recommendation for Robotic Process Automation (RPA). The application scenarios for intelligent automation are vast and range from self-service terminals to industrial robots and virtual customer advisors to drones that are being tested for automatic grocery delivery in pilot projects. Industrial robots already showed the potential of automating standard tasks in manufacturing and production decades ago. But in IT, sales and customer service too, robots will play a role in the future. Haack and Qushta assume that there will be increased collaboration between humans and machines in the future.
They advise that as part of their digitization strategy, companies should consider the aspect of optimizing costs through digital solutions. They claim, however, that the key success factor for this digitization is employees: “It is crucial that by means of talent management and innovative working practices […] this manpower and these experts be recruited, given further training and used in a targeted manner, so that digital progress can be utilized as an opportunity for the company.”
“Disruption and Transformation Management. Digital Leadership – Digital Mindset – Digital Strategy,” published by Gabler Verlag, 2018, € 64.99.
Frank Keuper is Director of the Steinbeis Center of Strategic Management (SCSM), Hamburg. Marc Schomann is CEO of Resulting Plus GmbH and Professor at Steinbeis University Berlin. Linda Isabell Sikora is Director of the Investments & Wealth Management Steinbeis Transfer Institute at Steinbeis University Berlin. Rimon Wassef is CEO of WBS Business IT Solutions GmbH.