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Leave legacy behind with alternatives, not replacements.

Most established companies struggle with how to transition into a digital-first future. Migrating customers away from legacy services is hard, and risky… so don’t try. Give them something new instead.

Mark Wilson

Managing Partner & CEO

One of the key questions we get asked when working with established companies who need to become digital-first businesses is “how do we migrate from our legacy world to a new one without breaking the business?”. That’s almost always born of anxiety about customers’ reliance on legacy services, or the business’s reliance on customer income from them.

There’s a super-simple way to think about how to make this transition that leads to many of the right behaviours and decisions: don’t try to migrate anyone away from anything. Instead, focus on creating services that customers will adopt instead.

It’s all about the ‘to’, not the ‘from’.

Let’s use a widely recognisable example: banks.

Think about the transition to online banking and the migration of customers (and cost) away from branches — ignoring the broader merits or otherwise of this process for now.

Branches are costly, staff in those branches are costly. Many supporting processes attached to in-branch banking are slow, costly and not customer-oriented. Systems and tech are old, dusty and expensive to operate. It’s a pain for many customers to use branches yet many people ‘rely’ on them.

There’s clearly a more efficient way to manage most banking tasks via online banking — so banks have long been keen to close branches and migrate customers to digital banking solutions.

This is a direct parallel with the challenge that many established companies face — how to enact a transition away from expensive/crumbling legacy services to something new and efficient without losing their customers; most businesses can’t be quite so cavalier with their customers as the banks were.

The reason it’s been such a challenge for the banks is that they’re taking away something familiar and (generally) reliable (as far as customers are concerned) and trying to offset the loss with something viewed as a less functional replacement. Branch banking catered for all sorts of small edge cases and quirks. By presenting online banking as a replacement, people immediately saw all of the things they couldn’t do.

Banks did things the wrong way around. They sat on their hands for years when they should have been investing much more aggressively in online banking and the ecosystem needed to make it work, from cash-killing free contactless payments to cheque-replacing simple money transfer.

(Frankly, it’s puzzling that some of these things remain as primitive as they are.)

Put simply, banks tried, and continue to try, to migrate people to online banking, which was/is seen by branch users as a less functional replacement.

Ignore your legacy.

There are very few examples of enforced migrations going well. Programmes migrating from a legacy technology platform are especially fraught with risk, often spiralling wildly out of control and ending up as costly failures. I’ve seen dozens go horribly wrong simply because they were driven with a replacement mindset, born of the fear of losing customers by offering them less than they have today.

A replacement mindset straps a heap of legacy on your back and ensures it’s taken with you, instead of being left behind. The intention to de-risk by migrating customers to an equivalent does the exact opposite.

Reframe the challenge as an opportunity for innovation.

Imagine if the banks had introduced a compelling new type of banking — as Monzo et al eventually did — before they closed their first branch. New ways to pay, manage money, transfer money between people and companies… along with plenty of incentives to use it.

Ironically, HSBC did this (in a non-digital form) when they launched First Direct back in 1989. First Direct went on to win numerous customer satisfaction awards year after year. It was a telephone bank for years, using HSBC branches as a backup for when some physical processes were still required. It’s the closest thing to a digital-first approach that we’ve seen in the transformation of traditional banks, and it wasn’t even digital.

The key to pulling off a legacy transition successfully is to provide something new — an alternative — that sheds all notion of legacy behaviour and enables entirely new ones, alongside the legacy service.

At no point try to pretend that it’s anything like a replacement for the legacy version. Focus it on current and future market opportunities and ignore the legacy needs of customers completely.

Yes, you read that right — ignore legacy needs. Legacy services are riddled with debt, from process to technology, all built on legacy behaviours. Those behaviours will likely not exist when people get a more compelling holistic alternative. Remember how fast typing was on a BlackBerry? It was the killer feature of the BlackBerry until the compelling new benefits of the iPhone experience made its importance fade way. What was considered ‘can’t live without it’ functionality was founded entirely on legacy behaviour. When a compelling alternative came along that behaviour became largely irrelevant, and so soon after did BlackBerry.

It’s a telling lesson. You can’t make a material leap forward with your feet tied to the past. Create an alternative to today.

Commit to making the alternative brilliant. Commit to making it a true stand-alone alternative. Commit to positioning and selling it as a new service to new customers before you even think about presenting it to existing customers (who will probably find it anyway).

Oh, and allow it to compete freely with the current service. The minute you try to protect the old by limiting the new, you’re thinking backwards again.

Remember the iPod? Everyone had one. It made Apple a tech force again. Did you know that they still sell it? ( In this case, make the iPhone so good that the iPod becomes at best a peripheral choice for some people. They didn’t just create a compelling alternative to BlackBerry (and the rest), they created a compelling alternative to their own hugely successful product.

I think we’d all agree that the strategy worked, and it worked because they never tried to migrate anyone to anything. They simply focused on making a brilliant new product that would naturally overtake an old one, maintaining versions of the old one while there is still money to be earned from it. It might seem brave to risk a multi-billion dollar iPod business, but imagine the world — and Apple’s fortunes — now if they hadn’t.

Focus on the future state.

Companies transitioning/transforming into digital-first businesses must behave this way: forget about trying to migrate or replace and instead put everything into innovation. Create a new service that’s a great solution for future needs. It’s cheaper, faster and far less risky than an old-school migration strategy and comes with the added benefit of connecting to emerging markets and customer groups. It’s better to be slightly ahead of your old customers for a while than to have nowhere for them to go in the future, and the scenario of future customers accessing a service defined in the past is unthinkable.

Of course, there are times when you have no choice but to migrate in some form — the looming end of support for a technology platform for example — but the same principles should be applied. Replace at your peril.

In every case I can think of from our work, once customers are given a compelling new alternative their addiction to the old way progressively disappears — especially when the new alternative comes from a company they already trust.

We counsel the companies we work with to focus their energies on achieving an ideal future state, not on simply making their current state new again. It’s a simple principle but it releases them from many of the negative constraints inherent in legacy operations and services and enables a much more rapid transition to true digital business behaviour.

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