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Digital transformation in business is reminiscent of a well used analogy in the world of physics, likening the academic discipline to peeling an onion to get to the core.
Joerg Esser, former physicist now head of longtail at Thomas Cook and managing director of bed bank Hotels4u, told last week’s Travel Distribution Summit in London too many firms just scratch the surface.
“Digital transformation is around finding the core and shaping everything the company is doing around that core. Many companies, particularly incumbents just scratch the surface.”
Esser said new entrant technology companies are very visible in the way they approach digital, often inhabiting offices that most legacy firms could “only dream of”.
But he said agreeing a new modern workspace designed to optimise digital transformation was the easy thing to get agreed at board level.
“Not so with digital change,” said Esser, “when you really go down to the fundamentals, when you really have to ask yourself what is core and what is not.”
Esser’s employer, Thomas Cook, has gone through just such a process, with former boss Harriett Green identifying and selling off ‘non-core’ business like Gold Medal and specialist tour operations.
It has also talked about breaking down old silos within the businesses that have built up over the years and appear to form the fundamental structure of the business.
But Esser argued this was the wrong approach.
“Businesses today, particularly incumbents, and Thomas Cook is a showcase for this, used to run in parallel streams. Yes, if everything goes well there is some sort of strategy.”
Esser offered some key action points to drive digital transformation, starting with having a clear strategy, citing US lowcost pioneer South West Airlines as a prime example in travel.
“There is something about a simple strategy – we recognise it when it works but the difficulty is coming up with it.
“First and foremost simplicity is about finding a solution for something. Simple solutions are in hindsight intuitive, they are not complicated.
“It does not work if you have to explain too many exceptions.”
Esser, who previously worked for Thomas Cook in the Netherlands, said it focused on online conversion taking the proportion from just 10% to 80% 18 months ago.
“Before for Thomas Cook conversion was something some nerd worried about in an e-commerce department, but we said this was what it was all about,” said Esser.
He added that the challenge was not to add to the customers’ options but to strip some away, provide a friction free world, like Disney is doing with its MagicBands.
Firms should approach the problem scientifically, but should not get carried away with data, said Esser.
“Look at the facts. This tackles egos. Boardrooms are full of egos.”
Finally he said firms should copy Apple and run their organisations like a network of individuals and “declutter”.
“Digital transformation, we are sure, will further shape our world and business and this will happen within the next few years and it’s happening right now.
“Those [firms] who know, thoroughly and vigorously, how to peel the onion will come out on top.”