A Blueprint For Pragmatic Digital Transformation: The Home Depot Story
Traditional retailers have been impacted more than most when it comes to digital disruption. Even retailers and brands that have embraced the urgency to transform often struggle to prioritize investments and create the right culture. Fortunately, we can learn from organizations that are embracing a pragmatic approach to transformation. They often start with focused innovation efforts and partnerships that help to launch new digital products and services, such as a new mobile app, and then use those efforts to build momentum for larger omnichannel efforts. One such firm is The Home Depot.
In our most recent report, “How The Home Depot Became A Digital Powerhouse,” we peel back the layers of The Home Depot’s evolution to understand the steps and, importantly, the sequence of the steps it took to create the leading US retail mobile app (see “The Forrester Retail Wave™: US Mobile Apps, Q1 2019”), embrace omnichannel from the top down, and build a vibrant “digital-plus-physical” culture.
The Home Depot’s Digital Makeover Was Years In The Making . . .
The Home Depot’s journey toward digital sophistication began to scale up in 2015, when leadership set the lofty goal to become better at building software. Hopefully, that goal resonates: “Get better at building software” is likely something you’ve already heard. If not, you’re either Google or you deserve a tech-savvy board member/leader (a discussion for another time). Nonetheless, The Home Depot took this goal as a mandate and set out on its journey.
The Home Depot’s transformation has included many moving parts, yet the firm’s success can be viewed as the result of three key actions:
Step 1: The Home Depot laid the groundwork with collaborative tools such as GitHub, Jira, and Slack and flexible back-end technology and tapped partners such as Pivotal Software to set it off in the right direction.
Step 2: Leadership recognized the importance of an omnichannel strategy, which radiated throughout the organization. We found that The Home Depot’s CEO, Craig Menear, has emphasized the importance of omnichannel in every single quarterly investor call since he has been CEO (18 quarters so far).
Step 3: The retailer accelerated its digital development with internal talent. In order to operate in cross-functional teams that continuously iterate based on customer feedback, The Home Depot recognized that it needed to do much of its digital development in-house. It tapped partners to help it shift to operate like a software company and is in the process of adding an additional 1,000 in-house tech professionals. Now, The Home Depot produces 90% of its code in-house.
. . . And Provides Lessons For (Re)Prioritizing Your New Digital Efforts
To completely digitally transform, companies need to transform across all five pillars — strategy, structure, culture, talent, and technology — but it’s nearly impossible to do “Big Bang” transformation across all five pillars at the same time. Getting the sequence in place was key for The Home Depot. Without the proper tech in place, it couldn’t carry out its digital-plus-physical strategy nor recruit top tech talent — not to mention, by attacking two or three components first, the other pillars often fall in place. The Home Depot focused more on its technology, strategy, and in-house talent. In the process, it redefined the organization structure to include cross-functional teams and hired and upskilled employees to breed a culture of continuous digital innovation.
For more in-depth strategy tactics, we have a 24-report digital business playbook that covers each of the five pillars for those beginning, in the midst of, or far along in their digital transformation.
Not every journey will involve the exact same steps or sequence, but the next time you’re asked for an example of a company that has successfully digitally transformed and how it did it, point to The Home Depot.