The 7 Deadly Signs of Digital Debt

Previously, we spoke about the rising awareness of Digital Debt thanks to recent events. This time, we want to help point out the most common signs of Digital Debt in your own company or operations. 

After all, there’s a good chance the issues that produce such debt have gradually become part of day-to-day business. So much so, in fact, that costs and missed opportunities may simply be hidden in what is taken for granted. 

The symptoms of digital debt are transparent and come in numerous forms. 

What is Digital Debt? 

We covered this last time (and we highly recommend reading through if you want a thorough understanding) but, to summarize: Digital Debt occurs when a company realizes an insufficient amount of digital transformation. It is the loss of market position or the ability to engage with customers in competitive markets – and the growing costs required to make up the difference. 

If you want a historical example, does anyone remember Blockbuster? It’s well known that the company, which relied only on physical outlets to rent physical copies of movies, had the chance to acquire Netflix when the latter was in its infancy. But Blockbuster failed to realize the growing importance of digital channels – and when they did, they failed to keep up with the competition. 

In short, recognizing the signs now and taking action will ensure you don’t end up as the next Blockbuster. 

Let’s consider the following… 

Processes That Have Lost Sight of Business Objectives. 

“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.” 

Oscar Wilde

The Clues:  

As companies grow, they often implement processes that exist simply for the sake of existing. Middlemen, for example, slow operations down but seldom result in increased profits or happier customers. Anyone who’s ever had to go through the various tiers of a help line can attest to that. 

Let’s be honest. Tedious administrative tasks take away energy from the meaningful and relevant parts of the job. There are countless reports estimating the amount of hours (and consequently days) wasted doing manual tasks – a 2017 study by McKinsey found that around 30% of frequent tasks could be automated in the majority of jobs –  and that 30% of said work hours could be automated by 2030. Freeing time previously spend on administrative tasks lets people – and therefore companies – do what they’re meant to do. That is the objective, remember? 

The Solutions: 

Automation, automation, automation! There are many technologies that can automate these repetitive and manual tasks. Technology exists to make our daily lives easier – this is just as true in business as it is in daily live. 

Digitalization – done right – creates shortcuts that don’t compromise on quality. A digital solution should always be easier, quicker and more accurate than the old way of doing something. It takes the tedious and shrinks it into a minor inconvenience at the most. Our work with GATX is a great example here: automating the paperwork process behind wagon repairs sped work up. Documentation was sent, accessed and updated in real time, so teams focused more on repairing and releasing rolling stock over trying to get hold of the documentation for verification. 

Inconsistent and Error-Prone Procedures 

“You can never make the same mistake twice because the second time you make it, it’s not a mistake, it’s a choice.” 

Steven Denn

The Clues:  

While we’re talking about paperwork and middlemen, humans make mistakes. Do a task a thousand times and you’re likely to make a mistake somewhere (especially if you’re in a stressful situation, such as a pandemic!). Data entry is a key culprit here. While it’s essential – around 69% of companies believe their work is being impacted by errors (at least according to Experian). And what company doesn’t need data entry from time to time?  

The Solution: 

Digital transformation stabilizes processes, sets boundaries for your teams, and lets employees focus on a workflow. It could also effectively join production, distribution and sales into a smooth unified process without communication problems. 

Automation can again save you here. Manual data entry can lead to mistakes, especially if the information is moved from system to system by hand. When we integrate such systems, create a singular source of truth or otherwise automate these pipelines, these mistakes are removed in their entirety.  

In the technology word, we’ve already solved problems with reusable code wherever possible. It’s why we use libraries like React Native, or even Design Systems, so that we do every task once, then automate the rest. By pulling from the original, consistency is solved. 

Training is Inefficient & Knowledge is Being Lost 

“For the best return on your money, pour your purse into your head.”  

Benjamin Franklin

The Clues: 

How long does it take to train a new person in your teams? If they have to learn complicated manual procedures. This is particularly true when it comes to complex administrative work. Following countless procedures and rules through various documents can take days, if not weeks or more, to learn. What’s more, if the senior staff leave before new blood can be recruited, this can result in a knowledge drain – which in turn leads to slower operations, mistakes and other costly issues. 

And besides all this, will processes consumed by admin work serve your turnover rates well? (we already went through that one, but it’s worth repeating for emphasis.) 

The Solution: 

There’s reason accountants use calculators and spreadsheets; sure, they can do it themselves, but it’s longer, prone to mistakes and ultimately a waste of time. Technology works best when it takes complex tasks and makes them as simple as possible for users.  

This way, your business is free to focus on giving teams the knowledge and expertise related to their field, rather than complicated processes. You should be hiring people on their knowledge of your respective business domain, not because they’re a master of an outdated paper-based system. 

An Inability to Accurately Measure Business Results 

“If you can’t measure it, you can’t improve it.”

Peter Drucker

The Clues 

In business, success should never be achieved through guesswork. You either did or did not break even. Verifying the effects of every action enables you to put effort into what really works. Counter to this, moving in absolute darkness can only guarantee wrong decisions, plenty of failures and misallocated costs. 

Yet this is the reality that many businesses find themselves in. They might know their overall expenses vs their overall gains, but they don’t know the details. What can be cut? What should be pushed more? What delivers the best ROI? 

The Solution 

You’ll hear countless people say that “data is the new oil” and… they’re not wrong. Hyperbolism aside, aggregating data is just the first step. Analytical tools, such as Power BI, are essential for making smart decisions. There’s a reason it’s called Business Intelligence (or Customer Intelligence, if you want to explore specifics). It’s been on the radar of many a marketing department – a priority for at least 55% according to a 2019 Adobe study – and sales are also getting in on the act. It’s not only B2B markets, either. Thanks to 2020’s pandemic, e-commerce has exploded and companies have access to more information than ever – just not the means to use it. 

For example, this is something we’ve already done for House of Champagne. The company wanted to be able to slice and filter to a deep level. Their operations generate lots of data, but this only becomes useful when its sliced as needed: by product, by location, by sales representative and more.  

Yet all of this requires digital data. Piling documentation isn’t exactly friendly when you need to make sense out of it. Leaders need reliable and actionable insights to be truly foresight and proactive. So, digitalize your data before you start to analyze it – trust us, you’ll be doing everyone a favor! 

Passively Reacting To The Market 

“Do what today others won’t, so tomorrow, you can do what others can’t.” 

Brian Rogers Loop

The Clues: 

We saw this the most in the current pandemic. Companies adapted at different speeds to shifting trends. Some were able to quickly adapt to new situations while others took a “want and see” approach that is the hallmark of Digital Debt.  

Even if you have good insights, staying entirely offline or falling behind with digitalization limits your ability to act with agility. Markets are changing more than ever. If you’re not able to adapt, pivot or move operations as quickly as other companies, it’s a very sure sign that you’re behind the market – and will continue to falter. 

The Solution: 

Digital channels and tools give you a lot of flexibility. It’s no wonder that those businesses which managed to sustain growth during this recent turbulence belonged to the e-commerce sector. These businesses, whether they had physical stores or not, had the foresight to embrace the internet as much as they could. 

We actually spoke at length about the emergence of seniors shoppers within e-commerce due to 2020’s lockdowns and for good reason. It’s a perfect (even if we do say so ourselves) example of a new audience born from shifting market conditions. Naturally, those that have adapted stand to gain. 

Likewise, companies that have been enabling and promoting remote work are doing much better in organizing business without the on-site work.  

While securing yourself with digital solutions doesn’t guarantee that you’ll become the next market leader, it surely opens more paths that you could enter. When it comes to business the old adage is always true: don’t put your eggs all in one basket. A digital channel is another way to support yourself – a lesson many have now learned the hard way.  

Fixing Every Problem with Sales and Promotions 

 “You cannot buy engagement. You have to build engagement.” 

Tara-Nicholle Nelson

The Clues: 

When revenue drops, the sales and marketing departments may immediately find themselves in the center of attention. You may be tempted to pour money into big generic campaigns, sponsoring, industry events and whatnot. This Above The Line (ATL) approach, as its called in marketing, might better be known as spray and pray tactics. It’s born from not knowing enough about the actual customer; information wise, companies are in the dark. 

The Solution:

The same Adobe report from earlier also found that 44% of marketers consider such a quest for this “holistic view of customers across all interactions” as a key challenge. Without this information, they fall back on the above tactics that try to cover inefficiencies with scale (read: expenditure). 

Trying to sell more without having the answer why you’re selling less is counterproductive. Generally speaking, while advertising and sales efforts are necessary, you still need environment which allows them to be effective.  

You could start giving special care to client retention and measuring how satisfied the clients are with the service (e.g. by asking them about experience of the order process). 

Not Investing In Innovation 

“We cannot solve a problem by using the same kind of thinking we used when we created them.”  

Albert Einstein

The Clues: 

Are you operating as normal, with the same level of business, but each year your costs seems to get higher and higher? Does expanding seem to be a constant uphill struggle? 

At the end of the day, Digital Debt lies within processes that eat up money or don’t generate as much revenue as they could. Inefficiencies and unused potential slowly drag your company down just by keeping your business in the same place forever. 

The Solution: 

This one is about the right mindset as much as it is about funding. When the business is struggling to move forward, innovation becomes essential and should be viewed as a worthwhile investment. 

Releasing significant portions of the budget for digital transformation efforts is essential to remain competitive. This money isn’t just about technology – it’s about securing your corner of the market and staying relevant. 

Don’t See These Problems? Think Again 

Sometimes the only way to start seeing the problem is to get an external and objective view… to bring a complete stranger inside your company. It could be a new COO, director, consultant, or even a particularly revolutionary manager. 

Someone who has been with the company a long time, however, may fail to see the signs. Digital Debt can often be like the proverbial frog in hot water. Enough small declines over time can go unnoticed. 

Now is the time to ask important questions. So let’s put these 7 deadly sins into context: 

  1. Are your processes growing larger in scale, but not in-line with business value? 
  1. Are repetitive and manual tasks wasting valuable time and/or leading to mistakes? 
  1. Are you spending more time training people on complex processes rather than vital business knowledge? 
  1. Are you struggling to accurately measure success and outcomes efficiently?  
  1. Are you being reactive, rather than proactive, with market trends? 
  1. Are you over promoting or trying to over-sell just to make revenue? 
  1. Are you not investing or dedicating ongoing resources to innovation or digitalization? 

Identifying A Problem Is Always Step 1… 

Step 2 is always fixing the problem – or at least planning to do so! However, you may find people are reluctant to answer your call for change. When faced with such defensive responses, it’s often best to look outside your company for that revolutionary spark. 

After all, if you had the internal means, it would’ve happened already, right?  

Now is the time to be objective, not pointing fingers. In these cases, external expertise can inject some new energy into your company. Commerce Transformation comes in many forms but it’s goal is always the same: to remove both Digital and Technical Debt, helping companies realize their full potential on tomorrow’s market. 

The best way to start this process is with a good, hard look at how things currently are.  

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