A tale of two transformations: Adobe and Best Buy on digitally reinventing themselves

Adobe kicked off its Adobe Summit customer event in Las Vegas with its CEO explaining how Adobe ate its own dog food to digitally transform and fundamentally reshape what had been a successful business. He was then followed by Best Buy’s CEO, who described how his company had followed the same strategy to revitalize a company that had been on many endangered lists.

Best Buy CEO Hubert Joly (L) and Adobe CEO Shantanu Narayen onstage

LAS VEGAS – Digital transformation isn’t exactly new as a theme these days. Every vendor whose business touches on the enterprise in any meaningful way now rushes to genuflect before one of the great gods of modern IT. The Adobe Summit, which started here Tuesday was no different. What was different, however, is Adobe CEO Shantanu Narayen’s  story of how Adobe digitally transformed itself to reinvent what had been a successful business and position it more advantageously for the future. He was followed by an Adobe customer. Best Buy, whose CEO told a parallel account of how that company digitally transformed itself from the brink of becoming the next Blockbuster to again become relevant in modern retail.

“The central theme of the keynote is business transformation,” Narayen told the keynote audience, a new high this year with over 17,000 conference attendees. “The core of the message is that to win in today’s world, every business has to transform themselves to become maniacally focused on the customer experience. We’ve seen this ourselves through our own transformation.”

Narayen then told the audience that even as a highly innovative seller of boxed software, Adobe realized that it faced being left behind as software developmene evolved, and with it, the routes that software took to get to market.

“We sold software through distribution and resellers, but could only deliver a new version every 12 18 months,” he acknowledged. “We were profitable but couldn’t keep up with the pace of innovation that our engineers wanted to deliver. We didn’t have a direct relationship with the customer. Most importantly, we didn’t attract the next generation of users. So we reimagined our business model, turned a multi-billion creative business on its head, and moved to a subscription based-business model with Adobe Creative Cloud.”

Narayen stressed that that model was about far more than a different way to sell and bill the customer. It fundamentally altered Adobe’s relationship with its customers.

“The subscription model put the customer experience front and centre,” he said. “It embraced the reality of a digital business. In the end, we become a more successful company, Digital transformation starts by reimagining the whole customer journey. We had to scale the process and personalize the journey for tens of millions of customers. It required a completely different rethink of how we operated, and a radically difference cadence of how we ran our business.”

The resulting DDOM [Data-Driven Operating Model] combined the customer model with the data in real time.

“At Adobe, we like to say that retention is the new growth, that creates that frictionless experience,” Narayen said, pointing out that this involved anticipating things that might occur like credit card renewal that could disrupt a subscription. We believe all businesses need to have their version of DDOM at the core of customer experiences. It’s critical because it ensures agility for people on the front lines empowered to make decisions and be more responsive to customers in real time. You might have millions of customers, but the trick is to know each like they were your only customer. That means you know what they have done in the past so you will know what they want in the future.”

Narayen said that the Adobe Experience Platform and real time customer profiles make this a reality, to delivering this personalized experience, across multiple devices.

“Building a great experience sounds like a simple idea, but delivering it is so much harder,” he said. “Legacy environments can’t keep up with customer desires for personalization that put the customer at the centre of the digital strategy. We orchestrate this for them and give the experience they expect. This will separate leaders from laggards. This is customer experience management.

Hubert Joly, the CEO of Adobe customer Best Buy, then followed to tell the customer of how Best Buy had applied the same principles to turn around a far more dire situation than Adobe had been in.

“Best Buy has found a playbook for success by embracing digital transformation,” he said. “Seven years ago, people thought we were going to die. Amazon was going to kill us. ‘Renew Blue’ was our turnaround strategy, and started in November 2012. The first thing we did was we took price off the table. We made sure we matched Amazon’s prices. Then we worked on the customer experience. We made our website easy to use, and we shipped as fast as Amazon, and for free. We invested in our employees, and our turnover went way down, to less than 30 per cent. We wanted to make our stores a coliseum where all the gladiators would come and fight and we collect tickets from them, and we have all these vendors within our stores.

“The second part of the strategy, ‘Building the New Blue,’ was about reinventing the company,” Joly continued. “The goal here was to move from ‘we have stores and we sell widgets, what can we do,’ to enriching lives with help of technology and addressing key human needs.” They established a home advisor service, as well as a seaport service where for a yearly annual fee, they would support everything in a home and would make it work.

“It’s far from setting up a TV and moving on,” he said.

As a result, Best Buy today is more data driven.

“You can talk about transformation, but if you don’t have enablers, it’s just talk,” Joly said. “Digital marketing has been huge for us. 80 per cent of our media spend was traditional. Now 90 per cent has a digital database, together with a single customer idea. That’s a huge foundation. From that we can do targeted marketing. We are very careful not to send too many emails to  people who don’t like emails. Our Blue Shirts are provided with information about the specific customer. If you call tech support, they see everything you have in your home.”

That positions Best Buy well for a future in which traditional stores are severely challenged.

“We don’t see ourselves as a brick and mortar retailer – but as a solver of unique problems,” he concluded. “We think our online experience is now on par with AWS, so that’s a draw, 1-1. We  have our stores, and we have our ability to go to people’s homes. That’s 3-1 for us!”