The three stages of digital evolution

This summer I’ve spent quite a bit of my time talking to people across a diverse set of UK organisations about how digital and social channels are changing the nature of how they interact with customers. It’s been fascinating to get a snapshot of quite how diverse this digital thing is in 2014 – some trailblazers, some laggards, and an awful lot of businesses somewhere in between.

One of the things that has been most striking is where organisations currently see the ownership of these new channels for communicating with customers; there seem to be three distinct phases of digital evolution in evidence.

The first phase is chaotic. A digitally chaotic company has external-facing initiatives happening in many parts of its organisation, opportunistic efforts that aren’t driven by a coherent strategy. There are some common themes: marketing will being doing things on Twitter and Facebook; HR will be doing things on LinkedIn; IT may have initiatives to try and stitch things together, or may have their own agenda. To the outside, the organisation becomes transparent, but not in a good way; the hand-offs between divisions become painfully obvious to the customer.

The second phase is centralised. A digitally-centralised company pulls digital initiatives into a single part of the organisation, often Marketing (that was the case for 40% of the companies I spoke to this summer). The centralisation might see the formation of a Digital group (which has been common in media companies over the past couple of decades) or under the auspices of a Chief Digital Officer (CDO). The challenge for a centralised organisation at first is how to bring legitimacy of central strategy to a chaotic set of activities, and board-level sponsorship and agreement is crucial here. The challenge for a CDO is uniting activity, not becoming just another voice at the table.

But a centralised approach runs risk of ignoring the multi-disciplinary and cross-divisional nature of how digital is changing how we as consumers and customers interact (and want to interact) with suppliers. Marketing’s remit traditionally has been up to the point of purchase – but a customer/supplier relationship is made or broken often by the service delivered after the sale has been made. Only 6% of the companies that I spoke to had placed ownership of digital channels in the hands of their Customer Experience teams.

This points to the next level of evolution – where digital is decentralised back into an organisation so that focus is put on to the customer, not on the latest shiny new technology. This was the stage at which only a minority (about an eighth) of the people I spoke to found themselves.

The more that I’ve thought about it, the more that these stages seem to be parallel to how the management of information technology has evolved over the decades. The first business computing applications were siloed into finance or payroll or research departments, systems acting in isolation to address the needs of a particular business unit. The expansion of the PC and client/server technologies in the 1980s and beyond saw the rise of the centralised IT department. Now we are increasingly seeing “technology” ownership being pushed back into the four corners of business as Software as a Service reduces the requirements for big, technical central departments to manage the boxes.

It can sometimes feel like the digital “revolution” has happened all of a sudden, but we are a couple of decades in now at least; the web has been with us for two decades, and the big social networks are now celebrating their 10th birthdays. Helping to facilitate this evolution in ownership, while retaining governance over strategy, seems to me to be where the value for organisations will lie in the next few years.

The report will be launched on September 23, and you can find out more about it here.