With the business landscape and customer expectations changing rapidly, digital transformation has become a critical initiative for many companies and paramount for sustainable competitive advantage. Indeed, nearly 40% of global CEOs have digital transformation at the top of their boardroom agendas, according to a study conducted by BT and the Economist Intelligence Unit.
After taking the first steps in a digital transformation, then what's next? HMG Strategy recently caught up with Shamim Mohammad, Senior Vice President and Chief Information Officer at CarMax for his insights into the critical priorities on which to focus on in the digital organization. Shamim will be speaking at HMG Strategy's upcoming 2018 Chicago CIO Executive Leadership Summit on May 8.
HMG Strategy: Shamim, what are the three critical priorities that executives should focus on in the digital organization?
Shamim Mohammad: The first is maturity. The most effective way to achieve digital maturity is by organizing teams around the customer journey. More than 90% of CarMax customers begin their car buying journey online before they come to a store, so we've restructured our organization to support the new ways that customers are shopping.
To best meet these changing customer expectations, we've developed cross-functional Product teams with experts from different parts of the company like marketing, operations, and IT. We empower these teams to identify solutions autonomously and quickly.
For example, one of our Product teams is testing Home Delivery in Charlotte, NC. The team is able to receive real time feedback from customers so they can quickly iterate, make improvements and avoid spending time and resources on features that aren't resonating. The technology this team is using allows for quick deployments, continuous delivery and rapid prototyping.
By taking these steps, we're becoming more mature.
Why is it so important for teams to focus on outcomes over outputs?
SM: Focusing on outcomes over outputs helps create a sense of urgency to solve customer problems rather than simply meeting a deliverable. An example of an outcome goal could be driving a certain percent increase in website traffic or conversion rates. The best outcome goals are measurable and specific.
At CarMax, the big metrics are pretty simple. We're focused on either buying a car or selling a car-these two actions drive our company's performance. Each of our product teams tie their KPIs to outcome goals, and we review the results very regularly.
How can teams optimize for velocity?
SM: This can be achieved by embracing continuous integration and continuous delivery. DevOps is at the core of these efforts, and at CarMax, we've developed practice centers for continuous improvement and delivery.
We also have a mantra of "fail fast, fail cheap" which permeates a culture of continuous learning and a minimum viable product philosophy.
We structure our teams to test and learn. Every two weeks, we have open houses for the product teams to share progress on their KPI's and key learnings. Anyone in the company from a new analyst to the CEO is able to attend and hear about the product teams' findings. That level of engagement and transparency matters.
If digital 'maturity' is the first priority for digital organizations, what comes next?
SM: Efficiency is another priority. We strive to optimize design and reduce waste.
As technologists, many of us tend to make things very complex. But we have to focus on making things simple. Instead of an elegant design, we're working on simple designs that we share with users for their feedback. Then we can make adjustments, as needed. We're fine-tuning quickly to move the best ideas forward and deliver an improved customer experience. That's how we reduce waste in the system.
For instance, this year we deployed a customer relationship management capability. We started by rolling it out to about 10,000 of our associates, and then went live to the entire company in mid-January. Whenever you launch a major new system, you expect to have some issues. So, we launched a command center to support the rollout. The morning after the launch, I went to the command center with the CEO. The room was very quiet and there were few, if any, issues. By focusing on a great customer experience and eliminating waste, we were able to deliver something of this scale seamlessly to the entire company.
What's the third priority in the digital organization?
SM: Reliability. This is central to creating a strong customer experience. If customers have a bad experience on one of your platforms, then with a click of a button, they can seek out one of your competitors.
While we're a Fortune 200 company (#174 on the Fortune 500 list), we operate like a startup entrepreneurial company. We design for scale and for speed to accommodate for growth and maintain performance, and architect our platforms for scale and performance.
We have our eyes on the future as we continue to enhance our digital transformation and find ways to further help our customers.
To learn more about Shamim Mohammad and other top-tier technology executives who will be speaking at the 2018 Chicago CIO Executive Leadership Summit, click here.