Digital transformation of an interior design business

A 30MM € North-European privately held interior design business serving a highly profitable niche market segment in the home-deco space had experienced stellar growth and profitability over the past decades. However, despite strong brand value in the core target audiences the C-suite, led by a newly pointed CEO, had started to see “clouds” around the business because of slowly deteriorating operative results.

To turn the direction of the company, the leadership team had done extensive work to evaluate causes for the deteriorating business. One of the major conclusions by the C-suite was that the business had fallen behind its competition on the adaptation of “digital curve”, hence impacting the ability to capture value at the same levels as prior because of evolving consumer preferences and expectations towards the use of digital interfaces. The leadership team had also concluded that the impact of digitalization did not impact just the consumer-facing interfaces but all the internal processes across functions as well.

HKH Management Consulting (HKH) together with Global Consultancy Partners (GCP) was tasked by the client to advise on digitalization of the business model. The HKH/GCP team of four partners approached the case using a nine-stage model that consisted of an analysis of both internal and external environments to set a baseline for the strategy-making process. The external analysis included an in-depth market and competitor analyses using various highly effective tools to highlight, on one hand, the competitive forces that come to play, and on the other hand, relative positioning of industry players within the vertical. In addition, a multi-layered analysis of both the direct and indirect competitors was conducted including an analysis of their respective market shares and forecasted growth rates respectively. The client’s past performance was analyzed in full detail based on all available data combined at evaluating both opportunities and threats facing the business as well as internal weaknesses and strengths. Part of the internal analysis was conducting a Digital Maturity Assessment.

In the assessment the company’s digital maturity is analyzed using a 10-dimension framework, where the dimensions analyzed include: 1) Customer Experience, 2) Data & Insights, 3) Strategy & Leadership, 4) Technology, 5) Operations, 6) Culture & People, 7) Organization, 8) Marketing, 9) Cyber Security, and 10) Brand Management. These dimensions were then ranked on a 4-level scale, ranging from basic to world-class. This analysis tool allowed the team to highlight in detail the current state of the client across dimensions and the target state, hence forming the baseline for concrete strategic objectives. It was highlighted that across many of the dimensions the client ranked either basic or medium. The strategic objectives were derived from the company’s mission and vision combined with concrete KPI’s and qualitative and quantitative targets for each strategic objective.

HKH/GCP team recommended to establish a digital transformation team with clear mandates, reporting structures, and budgets to act on. Combined with the company analysis, the team provided an in-depth technology review to highlight how various emerging technologies, such as artificial intelligence, big data, augmented reality, and IoT will impact the client’s business and most importantly consumer behavior. After this the team identified five key problems, linked to strategic objectives, that digitalization could solve for the client. Based on the desired target state and out of key problems, strategic objectives & potential new technologies emerged 10 initiatives that the client should tackle. These initiatives were then compared two-dimensionally; 1) what is the impact, and 2) the effort required to execute. The team recommended to prioritize the initiatives with high impact and low effort. Out of the recommendations, the team drew an overarching and a detailed transformation plan with required activities. In the final stage, detailed dashboards were developed to measure success against the strategic objectives.

Case outcomes

After the 12-week assignment the recommended strategic approach was approved by the client’s board and the systematic deployment could start. As the client lacked many critical digital transformation skills amongst its employees, the first step was to recruit the most pivotal and needed competencies for the transformation team working directly under the CEO. HKH/GCP team agreed with the client on a systematic and regular implementation advisory, so that HKH/GCP could assist the client’s digital transformation team on a regular basis to stay on course during the transformation journey.

One year after starting the journey, the client has been able to successfully staff the transformation team, drive through number of key initiatives across the organization, and made clear and concise training and reskilling plans for number of employees to be aligned with the new strategic direction. The company has started to see improved KPI’s across number of metrics.

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