An article in the Harvard Business Review online entitled “Why Nordstrom’s Digital Strategy Works (and Yours Probably Doesn’t)” addressed core issues around digitization of business processes as the fundamental “digital” strategy. Nordstrom’s strategy works for a number of reasons. Their core philosophy is based on excellent customer service and delighting the customer. This focus on the customer, understanding their preferences and meeting their needs is legendary. Nordstrom further enabled this core strategy with new channels and tools.
“They have not only introduced new channels, but they have integrated them in ways that empower employees and customers. Nordstrom hasn’t used SMACIT [social, mobile, analytics, cloud, and internet of things] to develop a digital business model — they have further digitized their business model, and pursued their purpose, using SMACIT.”
The article goes on to say:
“Nordstrom’s digital capabilities make complete sense for Nordstrom. What makes them important is that they are tightly integrated with all the parts of the business that ultimately serve the customer. This is not a matter of having the best apps, analytics, or social media tools. Instead, it’s a matter of tending to the details of building integrated digital capabilities, one at a time, making the right data accessible, and simplifying processes. Most retailers will struggle to do this because they haven’t architected their product or customer data for easy access by the new digital capabilities. Without those core capabilities, integration with and among new digital capabilities is virtually impossible."
I especially appreciate the statement "Most retailers will struggle to do this because they haven’t architected their product or customer data for easy access by the new digital capabilities. "
One organization we recently worked with is attempting to build omnichannel capabilities with over 300 legacy applications used to run the business. In that kind of fragmented infrastructure data will inevitably be fragmented. Even in the systems that provide limited, siloed, functionality the data standards are inconsistent and data hygiene lacking. Leadership is loathe to rip and replace such a convoluted environment - and rightly so. Doing so would be an enormous gamble on internal and external IT resources as well as the ability to absorb such enterprise wide change (which would impact almost all of its 100,000+ employees).
In our experience, this is not atypical.
Where to start?
The challenge for these organizations is to choose a starting point – as the author suggests in customer and product information – and make the necessary investments to fix upstream data processes and install current leading technology in product and customer information management. This is the necessary foundation upon which incremental improvements can be made by switching out applications.
Starting with the unsexy, messy and costly data hygiene and infrastructure is not where most business leaders want to begin because it is abstract, difficult to measure progress, and the benefits are not immediate. It is much easier to install a shiny new mobile application and hand code the brittle integrations with legacy systems. Though presenting the appearance of progress, such an approach will impede real progress by further fragmenting the information ecosystem.
Don't wait till it is too late
Unfortunately it sometimes takes a catastrophic event (such as rapid loss of market to a new technology as witnessed by music and publishing industries or loss of core operational capabilities due to failure of mission critical systems) to motivate leadership. Sometimes even then it’s too late. Technology and consumer preferences and behaviors are changing at such a rapid rate that agility is the only capability that will keep retailers competitive.
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