Stefano Righetti, CEO Hyphen-Italia
As a Founder of Hyphen, my experience with digital technology began with providing software solutions for the publishing world. We have evolved to become an international leader in assisting top fashion and luxury brands and retailers through their digital journey.
Digital Transformation is an expression that we see everywhere, but what does it really mean? There are many different points of view on this and the situation is constantly evolving; however, as the name suggests, introducing the digital dimension into any organization does not just mean making changes. It is a major shift. It does not simply involve introducing new technology; it calls for a radical rethinking of how we do business and how our organizations function and are shaped. Digital Transformation is no longer an option but a necessity for businesses of any size and level of complexity. It is the only way to remain competitive in a world that switches ever more rapidly between old and new ways of communicating and where omnichannel sales are key.
However, when it comes to taking action, it often becomes evident that there is a lack of clarity about what it entails. It is not simply a matter of adopting new technologies or shifting to the cloud. First and foremost, Digital Transformation is a change in company culture and involves a new understanding of how the organization must work. Digital calls for remodeling processes and information flows and adopting new business models fit to exploit the opportunities ushered in by new technologies, new media, and new communication channels. Digital technologies can help to support and manage processes. They can broaden and orient the network of conversations among the people involved. The tools and services that technologies offer can help to govern the hyperconnectivity that comes with a digital world so that it improves the quality of people’s lives and the company’s business performance.
The only way to absorb such a radical level of change is to adopt a robust approach, a rigorous method, and adequate tools. This requires both long- and short-term strategies made up of intermediate steps so that the organization can become fully digital without stumbling along the way.
For example, by introducing e-commerce or entering the most frequented marketplaces (Amazon, etc.), a business will not automatically achieve higher sales and improved performance. What is required, instead, is a complete rethinking of the processes and business model with which the company does business. This rethinking must start with a thorough analysis of the current reality, followed by a consistent redesign of processes that will impact various aspects of the digital supply chain of a product. Only in this way will a company reap all the benefits of these extraordinary new digital means that would be impossible without the right amount of preparation.
The Essence of Digital Transformation: New Synergies Between the Product Supply Chain and the Digital Supply Chain
Over the last 15 years, our work with top fashion, luxury brands, and retailers has taught us that there can be no real digital transformation unless it starts from the production flow of digital content of products and the brand, also known as the product editorial process. It is this content that provides the fuel that feeds the transformation process, and companies need to create the right structure to produce this content with the right workflows and digital tools.
Unfortunately, more often than not, what happens is that the creation of digital content for a product and a brand is handed over to people working in the Digital Supply Chain, to those involved in designing, producing, and distributing editorial material for communication for omnichannel promotion and sales activities. In reality, it is wrong to think that the Digital Supply Chain people are the only ones in possession of the assets, data, and information connected with products. Indeed, they often have a hard time searching within their own organization to find product content created months earlier, during the first phases of the product life cycle.
This happens because, within the life cycle of a product, various people at different levels contribute to producing assets and information about the product, and this process is often underestimated and overlooked. In every organization, there are content generators and content consumers. A thorough review and redesign of the processes connected with the production and sharing of product content is where an effective transformation process must start.
Digital is radically changing how and where brands reach out to consumers. Interactions between brands and consumers are now happening at a speed and in ways that were previously inconceivable and the number of channels and media where brands need to be present has greatly multiplied. While it is true that this new, multichannel reality is creating new opportunities for building relationships, it is also causing unprecedented organizational complexity that is disrupting traditional business models.
The new paradigms for multichannel communication, promotion, and sales are forcing brands to build a solid Digital Supply Chain. However, the processes for producing and using digital content often lack alignment and synchronization with the operational needs of the people involved in the Product Supply Chain. For example, samples may not be produced in a timely fashion for e-commerce photos. Whenever a company produces content for the editorial process of a product, there must always be timely contact with the product supply chain. The two supply chains, digital and physical, must intertwine like the strands of DNA with the right pace and synchronization.
For this reason, embarking on the path of digitization, as we stated, inevitably involves tackling an organizational redesign, and this endeavor must be supported by a suitable method and adequate tools.
As illustrated in Figure 9.1, in our opinion, there can be no real digital transformation unless the Product Supply Chain is synchronized with the Digital Supply Chain. The Product Supply Chain and the Digital Supply Chain must intertwine and interdepend and this connection must be supported by an adequate organizational design and tools that help us manage the inevitable entropy.
Figure 9.1 Interdependence between the Product Supply Chain and the Digital Supply Chain
Source: Courtesy of Hyphen Library.
Let me emphasize that again: Digitization is no longer a choice. The more an organization is capable of operating the digital shift proficiently, the more competitive it will become. The opposite is sadly true and there are already casualties among brands who have not been able to make the shift in time.
One more time: successful digital transformation can only take place when the digital content supply chain is integrated effectively with the product supply chain.
There are at least six main areas, or layers, where this change has to happen (Figure 9.2):
Figure 9.2 The six layers of digital transformation
Source: Courtesy of Hyphen Library.
- Sales
- Communication and Promotion
- Product R&D
- Industrial Processes
- Logistics
- Management of work environment (Comfort, Productivity, Safety, Sustainability)
Our work over the last 15 years has been primarily in the areas of Sales, Communication and Promotion, and product R&D. An integral part of this work is about producing the Digital Product (and brand) Identity that is necessary to represent the product on the web.
Déjà vu from the Publishing Industry
Having worked with traditional publishing, I realized something: a transformation process had already occurred “behind the scenes.” The printing process shifted from physical to digital, but this was not noticed by consumers at large—all they saw was a proliferation of new products available, but for those working in the sector it was nothing short of a revolution. When Apple introduced Desktop publishing in the early 1990s, everything changed.
The Digital Revolution that occurred in the publishing world did not only change the process of printing; digital technology impacted every process involved, from the concept of a magazine, book, flyer, to the production of finished materials. Desktop publishing revolutionized the techniques for the creation, prepress preparation, and printing of published products. Just a few years later, print was no longer the only channel for publishing and soon became secondary compared to digital publishing and the web.
What unites the transformation that took place within traditional publishing and the new digital transformation is content! The editorial process was the “factory” for the printing trade. Omnichannel communication is leading companies to understand that content (editorial material) is increasingly important for them. We began to propose to our brand customers the same change process that we had provided to large publishers: Brands become actual publishers.
Brands and Retailers Are Publishers
Digital technology is removing the distance, physical and otherwise, between communication, promotion, and purchasing. Until not so long ago, our need or desire for a product or service led us to look for them in physical stores so we could get to know them and develop an interest that could then convert into a sale. Today, our desire for products is stimulated through direct or indirect digital forms of communication. We can look, assess, and purchase through the same media without any mediation or interruption in terms of time or logistics. This means there is a strong “emotional” factor in purchasing as there is no longer the same time lapse that allows consumers to plan or change their minds.
The editorial content associated with the brand and its products is what becomes the primary element in communication and promotion. It is what allows communication to take place. Without quality (and self-explanatory) content, the whole process of communication, promotion, and sales comes to a halt.
In every digital project, it is imperative to know what can be the starting point for the creation of editorial content. Also, many projects fail for lack of digital content or because the cost of that content is too high; digital connection with customers requires timeliness and availability of high-quality content. In order to have good digital content, companies must start the process of creating that content right from the start. Indeed, it is becoming increasingly important to have a digital rendering of a product before it goes into production. This is no longer just an R&D concern; Marketing must be able to test the product and so its digital version is now essential.
In essence:
- Products (and services) now need a digital version that represents them on the web (i.e., the touch-points where the product/service is shown, communicated, and sold) and this has to take into account who will be seeing this version, what their needs are, which permissions are required, and which devices are used.
- This is not only relevant for the B2C world. The digital version of a product is the “passport” that is required throughout its lifetime and all through the value chain, from conception through to customer service, as well as for all the various phases of communication, promotion, and sales.
The Digital Identity of Products and Brands
Product Digital Identity (PDI) is a leverage point, a key factor in the journey of a company toward its digital transformation (Figure 9.3). It is its “passport” in the omnichannel universe. PDI encompasses all the content that is used to represent the product in the digital world; this content is determined by what a channel/device is authorized to publish and typically consists of images, video, designs, 3D, tests, characteristics, tags, links, filters, and so on.
Figure 9.3 Product Digital Identity (PDI)
Source: Courtesy of Hyphen Library.
Creating PDI and managing it within a company in the most standardized, “industrial” way possible can be an important catalyst for the digital transformation journey. Ideally, PDI should be coupled with an organizational approach that is “systemic” and consistent with the project-like nature of the work being carried out. Enabling a management system based on this “network of projects” in my opinion (and experience) will certainly boost the process of digitization.
In summary, PDI is key because of the following:
- The PDI is crucial during the distribution of assets to various channels as it provides a means of connecting all the text and interactive content that represent the product on the web. For this purpose, it is not sufficient to have a set of images with metadata; what is needed is a new digital entity that represents the product in its entirety, bringing together in one location the technical characteristics of the product/service, its attributes, history, images and video, and in general, all its multimedia and interactive elements.
- PDI is becoming increasingly part of the business and service that supports the relationship with retail and wholesale.
- Brands must be able to deliver their products in a digital version to those who communicate it to the market, possibly before they are delivered physically to shop shelves. Customers will want to see a new iPhone before it becomes available in the Apple Stores.
- Brands must consider the process of generating the digital version of a product in the same way that they think of the physical production process and do so in a highly standardized, “industrial” way.
- The digital version of a product is essential for selling products through Retailers and Wholesalers. The information that is supplied to the consumer and that sales staff use to explain the product to customers comes from the same systems that manage the PDI.
The Digital Editorial Process of a Product
Brands are drowning in the vast and varied content that comes with each product. Brands struggle to locate product content or even know who is the right person that has such information. Furthermore, they often discover that other people and departments have also been producing and using the same assets and this means unnecessary duplication of work. The existence of silos only exacerbates these time-consuming redundancies, and the more products there are, the greater the confusion that is created.
We realized that what was required was a systemic solution to help organizations along the path of digital transformation. We identified three pillars to make the solution work:
Pillar 1: Product Digital Identity (PDI)
This is where we create a mapping between a product and its digital identity. Every product or project will build up a digital “passport.” Various elements from different roles and sources will contribute material to this digital passport, such as sketches, texts, tags, video, 3D, images, copy, and translations.
Pillar 2: Product Editorial Process
Every department or role in a company is a content producer and designs, creates, and adapts a single product identity, often at the same time. Without an underlying infrastructure to support workflows, content can get lost, inconsistencies can be created, and local archiving can prevent access. For this reason, we developed a Product Editorial Process to automate, optimize, and support each company’s distinct internal workflows (Figure 9.4).
Pillar 3: Digital Library
How do we store and access all of the content? We came to the conclusion that what is required is a Digital Library. This is a technological tool to catalogue, tag, and adapt content for different purposes. It provides a structure to hold this all together. Instead of chaos, digital assets can be managed through a Digital Library to save time, increase productivity, and support creativity. Indeed, no front-end/front-store service or application can be successful if the company does not have quality digital content that can be accessed in a timely way (Figure 9.5).
Figure 9.4 Digital content as raw material
Source: Courtesy of Hyphen Library.
Figure 9.5 Digital Library
Source: Courtesy of Hyphen Library.
Online Business Versus Offline Business
Many people believe that the very existence of the Retail/Wholesale world is threatened by online business. In reality, the problem is that current commercial and distribution models are not always compatible with what is now happening in the market because of digital. Today, there are ways of engaging customers, communicating and promoting products through digital media and devices; these new ways are aligned with new pathways in the “Customer Journey” and can disrupt current commercial and distribution models.
A functional hierarchy and the budget-inspired, local optimum-driven decision making it brings with it can seriously hinder the creation of digital ways of establishing relationships and selling.
Any nonsystemic behaviors create internal conflicts that will, directly or indirectly, generate suboptimal communication with the customer to the benefit of the competition. Unfortunately, only a few organizations are able to compete with “digital native” retail giants who are inherently able to satisfy (and introduce) the new customer journey and purchasing models in a truly omnichannel way. There are brands, for instance, for whom it is irrelevant if a consumer goes to a physical store and then buys online or vice versa. There must of course be consistency between the selection of goods seen online and what is displayed in the stores as well as the way in which products are displayed and represented online and offline.
A fundamental element of the “Customer Journey” is the User Experience of the consumer during their journey, and an essential part of this experience is created by the editorial content for the product and brand. The quality, depth, and availability of this content will increasingly influence the choices of the consumer and the relationship with them and, consequently, determine the business performance of a company.
Producing Content
There is often mention of the idea of a Content Factory as a way of producing and managing digital content and materials. I believe that a Content Factory must belong to the brand with the goal of creating and managing the digital editorial process end to end. It must be supported by new tools and services that can enhance performance and automation and should be as independent as possible from the destination/channel where the content will be used. More in general, my idea of a Content Factory is an operational model supported by adequate tools/services that can direct the network of conversations of all those involved in producing, managing, and distributing product, editorial, and brand content while keeping control and ownership of the brand assets.
In order to create a valuable Content Factory, companies can adopt workflow models that have been used for some time in the publishing world by updating them with a new approach and methods and adequate e-business services. What is needed is a network for common use of content that can be internal or external. It requires new competencies to oversee this process and a different mindset.
One of the (many) dilemmas that every brand faces in trying to gain control of the end-to-end digital editorial process is the one connected with the creation of digital assets in the form of photographic images. Understanding the fundamental assumptions upon which this conflict rests allows for the development of a tailor-made transformation plan that can be designed and controlled all through its execution. The conflict cloud we have included here is an example developed with a world famous luxury fashion brand we have worked with for many years. Yet again, the solution, although heavily supported by technology, has been the result of a shift in understanding of the role that a systemic organization should play in embracing digitization and the strategic, organizational, and operational changes that this understanding implies (Figures 9.6 and 9.7).
Figure 9.6 Product photography conflict
Source: Courtesy of Hyphen Library.
Figure 9.7 Product photography conflict continued
Source: Courtesy of Hyphen Library.
The Role of the Digital Supply Chain in Business Performance
In a world where the relationship of the customer with a product and brand essentially begins and is managed through digital channels and media, the Digital Supply Chain plays a primary business role. It is not an exaggeration to say that the editorial process of a product (and/or Brand) is becoming equivalent to the product supply chain. Indeed, in some cases, the digital version of the product is more important than the physical production.
The quality and completeness of content have become major means of conversion in retail and it is a revolution that is affecting all sectors. Digital content enriches the product and when the shop window is digital, photography plays a crucial role. As we like to say in Hyphen, “no photo, no business.” For this reason, we were able to develop our HSL (Hyphen Still Life) technology that renders the photographic process highly standardized and “industrial.” In this way, photography does not become a “bottleneck” in the digitization process.
When Gutenberg invented the printing press, he essentially created a container of content and now that container has become digital. Today, digital is no longer an option—to paraphrase Descartes, “I am digital therefore I am.” However, we have to pay attention to the quality of the digital production line and there has to be synchronization between the digital and physical supply chains. This involves a network of conversations among the various roles involved. We need a “digital quality system” and we can look to the work of W. Edwards Deming for inspiration. By adopting the kind of systemic organization design that Deming introduced, along with accurate process mapping/design and control charts, the industrial and digital processes can work in parallel.
Here are some major considerations regarding improving business performance through Digital Transformation:
- The editorial process of a product is taking on the same level of importance as the physical production of the product itself. Without digital content (Digital Identity of a Product) the product cannot be presented in a complete and winning way along the digital highways, it will provide the user with little or incorrect information, sales will diminish, and inventory will increase. In other words, the economic/financial performance of a business will depend increasingly on the availability, quality, and alignment of the digital content of products and brands, regardless of the business model or type of market.
- Product content, specifically photos, have evolved from being a support element for communication and promotion to become business processes.
- Digital transformation is no longer an option for businesses. The level of digitization of company processes will be a determining element for the survival and prosperity of the organization.
- Synchronization can be achieved through a method and actions that enable understanding and awareness of the organization as a whole system made up of the processes and micro processes that constitute and feed the product supply chain. This requires a logistics that integrates digital with the product supply chain.
- A true digital transformation can only take place when the Digital Supply Chain is integrated and is in harmony with the Product Supply Chain.
- Involving suppliers is fundamental for transforming them into “Digital Partners.”
Indeed, a critical element is also the integration of the Digital Supply Chain with the entire ecosystem (value chain) that supports any business. This is not a linear chain, but rather a system of interacting nodes, each one of which contributes their own version of digital content. These nodes need to be synchronized and possibly supported by a platform that allows them to operate in synergy to avoid redundancies. This is something that businesses have been trying to achieve for some time and there are various obstacles, including technological ones. However, I have come to believe that they all boil down to the way organizations are designed and managed.
Digital Transformation Requires a Systemic Approach
One of the greatest challenges of digital transformation is the overwhelming complexity involved. How is it possible to deal with the multiplicity of organizational roles and processes that must be included in the transformation? Where do you start?
Successful digital transformation must start from a unifying vision, something that lends structure and sense to a seemingly endless task. However, the way to create unity is not simply to attempt to tie the various “fragments” of an organization together. The recipe cannot be “divide and conquer.” It has to be much more fundamental and radical to be adequate for our age of complexity. This is something that W. Edwards Deming taught us long ago. Undoubtedly, there are costs involved in the transformation process and many companies measure these costs only in terms of marketing.
What is missing is an understanding of the costs incurred by the entropy that arises from not synchronizing the physical and digital product supply chains and the difficulties involved in building this parallel relationship.
In summary, Digital Transformation means
- Supporting and managing processes using Digital Technologies
- Broadening, directing, and managing the network of conversations among people involved in the various roles and the tools/services based on digital technologies
- Governing the hyper-connectivity offered by the digital world, using it to serve people and improve their quality of life, and to improve the business performance of the organization
- Integrating, harmonizing, and synchronizing the Digital Supply Chain with the Product Supply Chain
- Designing and managing a company as a whole system to facilitate and accelerate flow and to direct the network of conversations in the direction of achieving the goal of the organization