Michael Porter, the Harvard professor who literally wrote the book on Competitive Strategy, defines three dimensions of competition: Cost Leadership, Differentiation, and Focus. For many years, global enterprises invested heavily in research and development to build a product differentiation competitive advantage, and their go-to-market approaches reflected this feature-based strategy. By focusing on differentiated product value, the objective was to finesse price-based perceived commodity competition, resulting in superior margins.
As many markets have seen significant consolidation, a strategy of dominant superior product advantage has diminished in its effectiveness, as most competitors have created similar products – all of which meet customers’ essential requirements. How, then, do executive leaders create sustained competitive advantage without being forced into to a cost leadership strategy? These seismic shifts in the completive landscape require a 21st century response. At a recent transformative CEO summit discussion, executive leaders of Xerox, Steelcase, and The Associated Press all described their focus on digital customer engagement, as a pillar of their long-term growth strategy.
The panel was unusual in the sense that while each of the three participating companies have been in existence for more than 100 years, this generation of executives are now acutely attuned to this rapidly shifting experience-based buyer decision-making preference. This is true both with respect to initial purchases and also to long-term loyalty, rather than either feature- or price-based preferences.
The panel was moderated by Dr. Gavin Finn the leading innovator in B2B digital customer engagement and CEO of Kaon Interactive. Finn highlighted that the core lesson of this customer engagement revolution is that is has precipitated and accelerated a true digital transformation, meaning that the entire process has changed because of the capabilities of digital platforms, as opposed to simply digitizing individual analog processes.
Sara Armbruster, CEO of Steelcase, emphasized that Steelcase is taking a digital-first mindset in everything they do. “Providing the customer with a set of simple to use, yet powerful digital solutions is critical to keeping a level of engagement with them throughout the entire cycle of decision-making and implementation,” Armbruster said. “Business decision-makers are now behaving like consumers,” she added, “and the bar has been raised with respect to their all-around experience despite the fact that the B2B process and products are much more complex.” This consumer-driven B2B behavior is a major trend across industries, as enterprises have shifted their buying processes to mostly digital channels.
In 1846, when The Associated Press was formed, news and information was disseminated by people on horses. Today, people still crave the latest news, but the way they consume that information is primarily in a wide variety of digital channels as the digital publishing cycle has become decentralized. Michael Fabiano, Head of the Americas business at AP, said: “The Associated Press has a similar business model to a software company, as our licenses grant our customers access to API’s and Software As A Service, in addition to the content and features packaged within these products.” He continued that it is not enough to create and rapidly distribute the content, which has always been thought of as their core intellectual property but increasing the flexibility of integration options. We are vying for consumer attention and focus, so the way that consumers experience the content is a competitive differentiator.
This idea of digital transformation is omnipresent in the minds of strategic leaders such as Steven Bandrowczak, President and COO of Xerox, who emphasized the rapid pace of change that is being driven by customer digital buying behavior. “Today is the slowest pace of change that we will experience in our lives,” he asserted. “At Xerox, we have rapidly innovated in the way that we use digital technologies, such as Augmented Reality and Virtual Reality, to amplify the customer experience and accelerate time to decision or problem solution. Anticipating the evolution of these kinds of technologies has become critical to our competitive leadership.”
Of course, this kind of transformation to customer engagement as a competitive strategy, while facilitated by digital platforms, also requires a mindset and process revolution throughout the enterprise. Sara Armbruster emphasized that the restrictions of the COVID-19 pandemic had the effect of quickly mobilizing the attitudes and innovative spirit of Steelcase employees to deliver engaging and effective digital customer experiences. The results have demonstrated that, while face-to-face interaction will always be a part of their go-to-market approach, Steelcase now has highly effective digital customer engagement venues for many more prospects and customers, which has improved the overall effectiveness of Steelcase and their dealer partners. The crucible that was the pandemic led to digital innovations for Xerox, according to Steven Bandrowczak, which have helped to overcome resistance to rapid digital transformation, both because there was no realistic alternative, and also (perhaps more importantly) because customers have reported that these innovations have improved their way of working. Michael Fabiano uses an emotional intelligence approach to helping people adjust to the new reality of the digital-first world, working with the employee base to demonstrate that new digital skills to create and deliver these experiences are not only valuable, but essential, and are beneficial to the individuals in their careers as well.
While the Wall Street Journal reported a decline in customer experience in some segments over the past year, this means that companies who invest in a digital customer engagement strategy will achieve a disproportionate competitive benefit as B2B buyers exhibit a high degree of preference for a better overall engagement experience when making buying choices.
Dr. Finn summarized the session by remarking: “What we have learned here today is that global leaders will build their competitive leadership strategy around the ‘digital transformation’ of the entire customer experience in the 21st Century. Our mindset, our processes, and our digital technologies must all align around the customer and how their experience in working with us elevates them substantially beyond the levels of success they could reach without us.”
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June 16, 2022 at 03:29AM
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CEOs Make Digital Customer Engagement Their Competitive Strategy For The 21st Century - Forbes
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