Transformation is coming to companies in all industries – including traditional ones like transportation. Antti Kleemola, Chief Digital Officer for Finland’s national railway company, explains what it looks like from the inside.
The transportation market is changing rapidly. We could even use the buzzword disruption to describe the change.
Investments are being made in developing door-to-door services built on top of existing transportation infrastructure. Any actor in this setting must understand the customers’ needs first, and then operate in a very lean and efficient way. The key is to learn faster than your competitors.
Finland's railway service operator VR is no longer focusing only on railways and trains. VR has become a transportation service company for both people and goods. It plays an important societal role and ensures an eco-friendly logistics network.
The change has been successful in many ways. 95% of VR’s sales are direct to consumer, and more than 80% already come from digital channels. Between January and September 2019, long-distance passenger numbers grew by 9.3%. Mobile sales are up 44% from the previous year.
Successful transformation takes place in increments
Competitive dynamics demand that everything that can be flexible, must be flexible. And decisions need to be proactive.
Since VR is in a position to invest, now is the time to improve the service that customers are getting. This change must be realised in small steps. There is little or no point in trying to do everything at once, and a complete transformation may take years. In that time, things may have changed again, so you need to drive change in increments as small as possible. This way you’ll keep the agility that is needed to respond to changes in the environment, while being able to grab opportunities that technological development brings.
Of course, you must first understand what the starting point is. Without the basics in place, fancier stuff is just smoke and mirrors. In digital sales, the basics are a system or set of systems that can execute transactions. On this level, the focus must be on meeting the essential requirements for running the business, and fulfilling the legal aspects of bookkeeping and requirements for an audit trail. Many people know it as the “systems of record”.
A well-functioning base allows the creation of components that meet more specific customer needs. A richer experience can then be provided through captured data and clever analytics using systems that can read any and all data sources.
Basically, all customer events must be captured for later use. In some cases, even external data sources can be used to enrich the captured data. This description is naturally a very high-level one. Nevertheless, all architecture and systems-related decisions should reflect it.
An excellent example is VR's decision to build a lot of the analytics capability on top of AWS Cloud Services, which essentially captures all data available from customer interactions. Amazon and other cloud players offer many options within their ecosystems. It is flexible, but currently, organisations are trapped with the cloud service provider they have selected. Although, the world is going towards multi-cloud setups in order to avoid vendor lock-ins and rigid limits.
At this point in time, Amazon offers the best tools for development and integrations, Google leads with data management, and Azure offers the best experience for digital office workers. Being present in all these spaces provides a more comprehensive understanding of where the cloud is heading. A multi-cloud setup also reduces the risk of vendor lock-in and offers freedom to utilise new services wherever they become available, in the most cost-efficient manner.
Solve the problems that unlock value
Organisations have a high risk of seeing systems as solutions. Systems as such have no value. At best, they are enablers that make it possible to solve a primary problem. Without understanding this relationship, systems are created for all the wrong reasons. The approach and decision making must not be based on organisational structures, but on people who benefit from them.
It is essential to organise around customer value, and question the purpose of any tool or process from this perspective.
When it comes to customer value, proving the whole end-to-end value chain is the first order of business. This kind of customer experience can be proved by faking it – i.e. with processes without a connection to a transaction system, handled via manual steps. After the concept has been proven, connecting the front to the transaction systems can be considered. At that point, an architecture approach that structures the work and keeps the system landscape flexible is worth gold. Finding people who can apply it in daily work is even more valuable.
A good example of this approach is VR’s personalised multi-channel customer communication system. Instead of a massive amount of detailed upfront planning of the to-be all-in-one marketing automation system, we wanted to understand the customer use cases. Soon we figured out that we can meet both disturbance messaging and marketing-related communications with the same approach. By building on top of ready-made AWS components, we were able to provide end-to-end communications services for pilot users. The solution is flexible, and we’re able to enrich it with user-friendly marketing tools in the future.
Sometimes you need to break things to change things
Driving change in a complex organisation is not a small task. If established ways of working have not been dismantled properly, the culture and mindset will never change. In order for change to succeed, enough patience and trust must be provided within the organisation. It is not something that happens overnight.
A good example of changing the mindset is the way some organisations utilise existing components and products. They are not fixed on the idea of customising everything, but instead create value through understanding the business drivers and then recommending the best ways forward.
There is so much technology available nowadays. There is no need to re-invent everything AWS Cloud Services provides, but rather to build on top of it. If an organisation is able to adopt this kind of thinking, they are on their way to maximising value creation in the long run.
Driving digital growth is getting more complex. Good results can be achieved through clever growth hacking involving development, design, and marketing technology. But soon we will face a world where this is not enough. We need visionary thinking and agencies that understand the potential that can be unlocked by new ways of working.
This means dealing with sales automation, artificial intelligence, and complementary digital and physical sales channels. For all this to succeed, we need to transform our sales with ingenious strategy and a new kind of approach to culture. This culture must embrace small changes and experiments. There is a big difference if you use 100 or 1000 workdays for something. By limiting the scope, we eliminate the need to down-write big investments. In this setting, people must accept that at least half of the experiments fail, and it is ok as long as you keep learning. Courage to kill failed experiments enables us to run fast with the ones that offer real potential.
Learn how to thrive at the turning point of digital sales by reading The Digital Sales Transformation Handbook. Discover how digital sales transformation is changing companies, and how your business can leverage this change through organisational development, customer experience, ways-of-working and technology. Featuring interviews with industry experts, such as Marta Dalton (eCommerce Director for Unilever and Coca-Cola previously), Risto Siilasmaa (Founder of F-Secure) and Antti Kleemola (CDO of VR, Finnish Railways).