by RISHIKA MURTHY July 14, 2020
We are in the midst of a digital revolution.
According to Gartner research, the pace of technological change will only
continue to accelerate, “forcing organizations to invest in acquiring the
skills necessary for digital transformation.”(1)
The coronavirus pandemic has seemingly served
as a catalyst for digital transformation by forcing many day-to-day business
operations to incorporate remote work accessibility to the
workforce. With the pandemic came a recession; one the World Bank predicts to
be the worst since World War II.
A retrospective
While there is no historical precedent for
today’s exact state of affairs—a global health crisis shutting down the
economy—these periods of recession and cultural change can serve as an
opportunity for companies to adapt to customer needs in real time,
define what the brand stands for, and work on customer
centricity.
How Hewlett-Packard
got its start
Entering the Great Depression of 1934,
Hewlett-Packard (HP), presently a household name, was started by two Stanford
graduates. Based in Palo Alto, California, HP, won their first major contract
with Walt Disney, another California-based company. They produced audio
oscillators for the movie Fantasia. By 1942, the company was still small, but
World War II changed everything.
Bill Hewlett was called back into the Army
during World War II and HP had become well-known enough to start producing
audio oscillators used in proximity fuses and microwave-signal generators used
in radar and counter-radar measures.
Employees wages were reduced to war-time
wages, but HP created incentive plans allowing for profit sharing, which later
became a model for “people centered” practices. It was practices such as these
that allowed HP to keep their strong workforce despite reduced wages.
HP focused on innovation and achievement. They
rewarded employees for new ideas and allowed them to take ownership, which
helped to earn trust and loyalty. Over time, HP’s focus on fostering innovation
contributed to the company’s success and prominence in the technology industry.
During the recession in the 1970s, HP again
reduced wages across the board by 10%. After six months, everyone’s wages were
returned to pre-recession numbers as the company weathered the storm
together.(2)
Lesson learned
Employees can often serve as the eyes and ears
of the company for what the customer needs. By encouraging employee
innovation and collaboration, not only can internal teams, including engineers
and customer service teams, work together to create solutions, but can evolve
a product to better serve the needs of
customers over time.
Customer needs
Netflix is a company that hit its stride
during the 2008 recession. It started as a by-mail DVD rental company in 1997.
By 2007 it began its streaming services and was expected to fail when the
economy crashed one year later.(3)
However, with more people at home due to
unemployment and the low subscription cost of $8/month (at the start), Netflix
thrived and is continuing to do so.
Through strategic partnerships with Roku, Xbox
(Microsoft), LG, and other streaming services, Netflix was able to adapt to the
digital landscape and use streaming technology to provide convenient access to
a wide range of entertainment content. As customer demand grew, Netflix began
to produce original content, while traditional production studios were cutting
budgets. Once again, Netflix disrupted the entertainment industry by focusing
on evolving customer needs and preferences,
using data to continuously improve both content and user
experience.(4)
Strategic
commonalities
What HP and Netflix seem to have in common for
weathering the economic storm is customer centricity. HP was able to meet the
needs of the time and Netflix, coming of age during the rise of more
sophisticated digital technology, was able to use algorithms and user data to
enhance the customer experience.
Although HP may have lacked such digitally
savvy tools, through investing in its workforce, it was able to build a company
around what its brand stands for as a pioneer in the Silicon Valley tech
industry.
According to Gartner research, 2020 was
predicted to be a year of great digital transformation for businesses. New
technology, such as artificial intelligence and advanced
analytics, are set to arrive. It won’t be enough to simply add these tools to
current strategies.
Centering customer’s needs will be a large
part of adapting marketing and technology. And, unless digital business
transformation models focus on customer experience and use empathy to build
these new strategies, the sole use of new technology will not cut the mustard.
Customer centricity
Focusing on what the customer needs means
that, as Gartner notes, “organizations are under pressure to drive digital
business transformation while maintaining a focus on customer experience under
the new and existing business models.”(5)
Chances are, current environments have forced
companies to go fully remote with their employees. Not only has this enforced
an upgrade in digital environments for company communications, but employee
experiences similar to what Hewlett Packard employees might have faced during
World War II.
With this sudden shift in infrastructure,
comes a change in business thinking. “What does it mean to keep the customer
happy despite current limitations? How to deal with problems quickly? How to
understand the context of a customer’s needs?” (5)
This is where continuous collection of customer data becomes critical.
Businesses can analyze customer data and make strategic
decisions, big and small, by looking at what types of products and services
customers purchase at any given point in time, how often, and where.
In a time of crisis and post-crisis
recovery, customer empathy can set businesses apart
from competitors, help build long-lasting customer relationships, and sometimes
even establish/strengthen a brand. Similarly to how HP ran their operation,
employees working at home may also have some insight into customer empathy
during the coronavirus pandemic.
Gartner suggests the following for building
customer empathy:
·
Channel convenience for the customer
·
Timely response to feedback
·
Deep knowledge of the customer’s
problem
·
Proactivity in customer engagement
·
Being helpful and friendly
·
Fairness
·
Honesty
2020 and beyond
In the 2019 Gartner CEO and Senior Business
Executive survey, 82% of CEOs said that they have a management initiative or
transformation program underway to make their companies more digital.(5)
Going forward, businesses need to ensure they
are delivering value to customers and
improving their lives in some way, which can work hand in hand with keeping
employees engaged and aligning with the brand mission.
Technology alone will not help businesses to
withstand and evolve through social, economic, and other disruptions, unless
they pay adequate attention to their customers’ needs and digital journey with
the evolution of their products/services. Looking back through history and how
certain brands evolved by meeting the needs of a changing world, businesses
have an opportunity to use this uncertain time to make a positive impact and
grow.
Sources:
1.
2020 Planning Guide Overview:
Building Skills for Digital Transformation, Gartner 2019
4.
Netflix: American Company, Encyclopedia
Britannica
5.
Digital Business Requires
Organizations to Focus on Customer Centricity, Gartner 2019
Rishika Murthy began her journey
in print and broadcast journalism. She earned her MA from Indiana University
and watched as digital became an unstoppable force. She adapted and evolved
into a content and digital marketing strategist and continues to keep up with
the different ways the field of marketing is growing, evolving, and
revolutionizing. Connect with her on LinkedIn.
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