4 Ways to Digitally Transform Traditional Indian Businesses

What do a large automobile manufacturer, a cement manufacturer and a real-estate company have in common? They’re all traditional businesses in India that are making digital transformation their largest investment focus.

These trades have historically kept their focus on sustainable sources of revenue and profitability. When it comes to digital transformation, however, many are unsure of the best way forward. Digital transformation for traditional businesses such as these is a major exercise in change management.

Here are four actions that digital leaders from these trades should keep in mind when transforming their business in 2019 and beyond.

1. Winning the internal battle

Traditional businesses are inherently distribution driven. The better the distribution network and the happier the distributors, the more successful the business will be.

Digital is disrupting this core aspect of traditional businesses and enabling brands to go directly to customers. Hence, one of the first struggles of digital transformation is aligning stakeholders to find the sweet spot between the Direct to Consumer (D2C) distribution and traditional distribution channels. It’s not easy! The traditional distribution channel has worked for businesses for years, so how do you get around this to allow for D2C business?

There is no easy answer here. Businesses need to acknowledge that there are bound to be internal channel conflicts and devise a work-around. Digital opens up new avenues like direct revenue stream, Online to Offline (O2O) assistance and enhanced customer support – all viable options to help distributors sell better and faster.

Digital also doesn’t have to mean a complete disruption of the traditional distribution model. For example, insurance companies traversing this journey looked for a different customer segment that was natively digital and didn’t like interacting with agents. This was net new revenue.

Similarly, another model that a lot of retailers adopted was the online-to-offline model. A lot of discovery continues to happen online and fulfillment continues to happen in offline stores. Spend some time thinking about the areas in your business that can be improved by digital and align the right stakeholders.

The other aspect of this is whether you can design a crediting system to make collaboration between traditional and digital distribution channels easier. For example, with every movement of an existing customer to a digital channel (assisted by the traditional channel), can the cost savings be added back as revenue to the traditional channel due to movement to a lower cost channel? This type of program design needs strategising to ensure that you are planning for the long-term success of the business.

2. Building a culture for digital natives

Once traditional businesses have decided to undertake digital transformation, how do they build a culture that makes it easy to attract the right talent? Traditional companies rarely find in-house talent that can lead this business change and typically rely on hiring senior leaders who have experience with digital native businesses.

Talent that is used to running with teams in digital marketing and product or data science can find it difficult adapting to the structured, approvals-based work culture of traditional organisations. Despite having low work experience, these digital native workers are used to making big decisions and handling large digital marketing budgets.

Traditional businesses perfect their launches and go through several approval cycles to finally launch what they think customers may like. Digital doesn’t work like this. There is no reason why you should be spending months getting alignment from every stakeholder in the organisation. Instead, use digital as a channel to gain consensus on what will work.

So, is your business culture equipped to provide digital native employees with the right autonomy and flat organisational structure that they’re used to?

3. Getting used to the idea of failure

One fundamental change needed in the way traditional organisations work is in their mindset of success. Digital teams need to pivot to a model where it is okay to not know or to fail and go through several iterations before arriving at something that will engage customer segments. Acting on a digital strategy will also entail launching a prototype or minimum viable product (MVP) , which may have a lot of broken pieces, in order to gauge the customer’s reaction. This fundamentally leads to the mindset for quicker product releases.

Traditional businesses need to get out of the ‘always right’ mindset and take more risks on ideas. It’s okay if a few things don’t work out the way you anticipated – you learnt something new and hopefully won’t repeat the same mistakes again! This fundamental culture shift can be managed through hiring external parties. However, it’s important to keep this in mind for organisations that re-purpose internal teams or still exert control over external hires.

4. Identifying the right areas for digital intervention

Many traditional companies tend to associate digital transformation with digital marketing. While ramping up digital marketing efforts may benefit in expanding audience reach, this may not be the problem that needs to be tackled on the first day. For example, a traditional manufacturing company may benefit significantly by focusing on automating the B2B procurement process through a marketplace or even digitising a lot of paper-based processes. These use cases may need to be addressed first before ramping up activities to increase reach.

Undoubtedly, large traditional businesses are often already multi-channel and have extensive experience in incubating newer channels on an on-going basis. However, incubating the digital channel requires support on very different dimensions. For example, defining the balance between digital and traditional distribution, identifying the right problems to solve using digital channels, and building a culture that attracts the right talent to harness the true power of these digital capabilities. A successful incubation will require the executive team to recognise, internalise and demonstrate commitment and patience to seeing this transformation through.

MG Motors, HDFC Bank, and Asian Paints are some of the Indian brands that shared their digital transformation journeys at Adobe Symposium in 2019.