Marcus Charalambous - The future belongs to digital-first companies
Marcus Charalambous is the president and CEO of Backbone, creators of the digital experience platform Expresia.
In this episode, we talk about the concept of a digital-first company and what makes such companies so well positioned for winning in the digital transformation age, as well as how they can continue to dominate in the future.
We break down the chief reasons why so many digital transformation initiatives fail to succeed and highlight to need to be future ready to allow yourself to be the future disruptor rather than the one getting disrupted.
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“The future of this digital universe that we're creating is long-term digital assets that scale and grow in value. The opposite of that is a digital liability. And what a digital liability is exactly the same as having a big debt, right? Over time, you're paying interest.”
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, content and community manager at Agiledrop.
Tim Butara: Hello, everyone. Thanks for tuning in. Our guest today is Marc Charalambous, president and CEO of Backbone. They're the creators of the digital experience platform Expresia. In today's episode, we'll be breaking down the concept of a digital-first company and exploring why such companies are so well positioned for winning in the digital transformation age, as well as how they can continue to also dominate in the future. And Marc, welcome to the show. It's great having you with us today. Anything you'd like to add before we begin with the actual questions?
Marc Charalambous: Thank you very much for having me. I really appreciate it. I look forward to our conversation today.
Tim Butara: Awesome. I think it's definitely a great one. Digitalization and digital transformation kind of necessitate companies to not just do digital, but also think and operate more digitally holistically. And it's definitely an important topic to discuss on our podcast. So my first question for you today, Marc, is what constitutes or maybe what distinguishes a digital-first company?
Marc Charalambous: Digital-first company is one that prioritizes digital experiences and technology in their core business strategy, right? So they're consistently innovating and improving their digital offerings in order to differentiate themselves from their competition and to make digital a core competency or part of their organization.
These companies focus on creating a unified, user friendly digital experience for all stakeholders, including customers, employees, vendors, suppliers. It's a full 360 conceptual approach to where they need to be and what the world will be over the next five to ten years.
They understand that technology is a key strategic advantage, and they embrace the continuous change that it brings. It's not an avoidance. It's an opportunity to thrive in that environment, and rather than being intimidated by it, they go in head first and really embrace digital as an opportunity or a phase shift.
Digital-first companies aim to be leaders in their field by leveraging technology to achieve their goals and basically improve human interactions with their brand at every touch point of their brand. So it includes everyone from customers to their staff to everybody that touches and interacts with the company on a day to day basis.
Tim Butara: And how does such a company– I mean, what are the specifics of how they make the best use of these new breakthrough technologies and new technological innovations?
Marc Charalambous: I think what's important to note is just that there's a ton of technology out there, and I think it's more of a vision thing about understanding that they need to invest in technology in such a way that change and managing change is at the core of why they're doing it. There's a ton of different tools out there and getting the mix wrong, and I think not managing how you actually go about implementing these strategies and maintaining them over time, can actually backfire.
And so it's a tricky one. And I think this is why it's really daunting to a lot of business leaders to get it right. Because most people running bricks and mortar businesses in an age of this much change are absolutely, in many cases, horrified by what it means in terms of additional stuff they have to understand and get right apart from their actual business model.
So I think it's not an easy one. I think what it comes down to is really understanding that change is at the core. And I mean, if you ask me, in my honest opinion, it's about understanding the notion of abstraction within a business and making sure that no matter what you're doing, you're allowing what you build and the software and the technologies that you build to be multipurpose so that you're actually getting positive returns on what you're building. So in other words, if you're going to go and do a content management solution or something that is a customer experience, it's not just building that one experience.
You need to get multiple sort of benefits out of it, such as laying the foundation for, let's say, a 360 API in what you do, so that the next time you iterate or move forward on advancing, let's say, an initiative, you're actually building on a foundation that will scale rather than becoming something that in two years time you realize, oops, I think we made the wrong call and we got to go to the– I call it going back to the pits. It's like being in a Formula One race. You could be at the front of the pack and you blow a tire and all of a sudden you're back in the pit and it's really going back to the start.
And I think that's existentially important for organizations to get right because that investment of time and energy in human capital, if it doesn't actually reach a return or have a long term benefit, in many ways you're throwing all that time and energy away and it's a deficit that you need to go back and retool.
So these are tough questions to get right. And being digital-first is not necessarily an easy thing to get right, but it is a vision and it is something that needs to be invested in, I think, wholeheartedly at the core. And I think this is going to make those types of businesses really stand out from those that are sort of constantly on the fence about when and how hard to invest in it. It's not just building a website.
Tim Butara: What about when we also take into consideration the business goals? How should these, if a company has a business plan, has a vision, has their mission, they have their goals pretty clearly set. But how should these be balanced with, I don't know, breakthrough technologies that they can't really expect, new innovations that they maybe realize that it's high time that they tap into them and embrace them? What are some best practices and some key thoughts here?
Marc Charalambous: Well, I think business and technology goals are closely connected and they should be considered together in order to achieve the best results. Obviously, technology can be used to optimize resources and increase efficiency within your organization. And as such, it should be viewed as a valuable asset to the business. But obviously, when you're making these decisions, it's important to consider the return on investment, the risk, the potential for scalability as the business grows, et cetera. There's a multitude of factors, right?
For example, with Expresia, if you go with a pay for what you need or pay for what you use model, it will help ensure that the technology doesn’t become, let's say, a financial burden on the company. There are a lot of factors in that capacity where there are hurdles and areas to be cautious.
It's also important for a business to invest in long-term solutions that give them a competitive edge. And getting this right is difficult. And this is really, I think, of the crux of a lot of what makes this decision difficult. But also if you get it right, I think it's got a lot of potential to create that edge between you and your competition, especially as the digital landscape shifts and evolves, right? There's a lot of moving parts. So this is a very multivariable equation and there's a lot of technology and a lot of nuance and a lot of variation to this technology to consider. And most companies aren't technology companies.
So this is, I think, one of the biggest challenges that lay in weight. So by considering these factors, businesses can choose technology that allows them to pivot and adapt as the needs, competition and understanding of the competitive space change. So there's a lot to this and I think it's pretty daunting for companies to get it right. So this is sort of where us as a company, we're trying to sort of abstract or get a lot of the stuff or build it into what our offering includes.
Because I think a lot of what I've just talked about there needs to be baked into the technology that you choose, as opposed to it being something that– companies shouldn't be pivoting to become technology companies in that they become what they're not. If you're a company that's a bricks and mortar business that's trying to evolve into this new space, you're not just going to easily pivot into being a tech company. I think that's pretty unrealistic.
But I think some of the technology choices you make and the relationships that you forge, I think bring that value proposition to the table. And I think it's important that businesses know how to evaluate the technologies they choose based on those benefits, and it not just being a technology conversation, it being about sustainability and a complex ecosystem. And if the technology you're choosing, I don't think it doesn't give you that as a very clear benefit, then I would be careful.
It's also important for businesses to have a clear understanding of their technology needs and how they align with the overall goals and objectives of the company. So these are sort of a bit of the meat and potatoes of it. This may include conducting, obviously, market research and staying up to date on industry trends. This is sort of a no brainer, but again, there's a ton when I say industry doing research and trends, just look at what's happened in the last three months with ChatGPT and what's happening with AI.
It's literally overwhelming, even for people like myself or you guys that are in the industry, to understand where this is going and where to place your bets and where and how to incorporate this stuff in. So while I can provide some generic advice about it, I mean, things are moving at a pace that really humanity hasn't fully, I don't think it's ever had to sort of cope with this much change, really, ever. Right? So there's not a lot of precedent for how to do it and how to do it right.
Tim Butara: I think this super fast pace of change and super fast pace of innovation, kind of combined with all of the other uncertainties and all the other factors that kind of play into it, are also huge reasons for why so many digital transformation initiatives don't actually succeed, right.
I don't know which publication, but one of the big digital-first companies, like I don't know if it was McKinsey or some firm like that, published a report about how many digital transformation initiatives fail, and it's actually quite a large number. I'd like to talk about this a little bit. So why does this happen in addition to what we already talked about? And what does this failure in digital transformation mean for these businesses?
Marc Charalambous: Again, I think just to sort of start off the answer to that, I think there's an incredible amount of complexity in terms of what the equation is. It's a multivariable equation, and it's very hard to get it right, especially when there's disparate groups of people trying to analyze the problem in different companies with different team sizes, strengths, expertise, et cetera.
But generally, there are several factors that can contribute to failure of a digital transformation, or rather, failure of digital transformation initiatives, which are processes of organizational change that aim to make digital a core competency or a long term asset for the business. Some of the technical reasons for this failure or the failure of these initiatives include a lack of clear goals or strategy.
I think it's really, with all this change, unless you've got very clear outcomes that you're looking for, I think it's very easy to go astray. And so I think that that's an important thing to sort of keep very clear, understanding the cost, overestimating the benefits or underestimating the effort required, failing to understand or actively manage the change process itself.
I mean, there's more to just doing this than and getting it right. You've got to build so much buy in from the team, communication, making this change in process actually something that the team is a) aware of and bought into. And then also there's a ton of energy that goes into that. And if you don't get the actual change itself right, then you've burned a lot of cycles and a lot of energy and I think lost a lot of faith along the way for some of those that maybe we're trying to get on board.
It can create a lot of, I don't know, maybe the word dissonance is too strong, but just lack of maybe– just after failing a couple of times, you start to really lose the belief or the team and all those that are required to support these changes over the long term phase. So there's a lot of executional risk as well as social, internal human interaction type of risk that's also required in terms of getting and building momentum to sort of get something across the line and actually make it stick.
In addition to that between a very small organization and a large organization, you've also got a ton of variation or variable there between the depth of the team and other things that are happening in the business that may not allow the resources involved in making this change actually happen have the time and the energy and the capacity to actually get it over the line.
Another thing that I think is important is – this is not our first rodeo. We're talking about digital transformation now, but I always joke that we've been digitally transforming since the Internet. This isn't new. Digital transformation is not a new concept. We're just new, we're just talking about it and it's a new– I don't want to use the word buzz word or phrase, but really it's not new. It's been happening for the last 25 years.
So what's changed? And I think that there's been so many failed attempts – and failed maybe is too strong a word, but we've gone through this so many times. We've shed our skin so many times as organizations and trying to try to pivot and bring in new systems and this, that, and the next thing, that there is a bit of fatigue, I think.
And also everyone's been through how many web rebuilds or that sort of thing where none of them have been a panacea. And I think that there's a little bit of fatigue there and I think that that contributes to people within organizations maybe being a little temperate about how committed they are maybe in their mind share or driving a really hard, clear vision on something like this that it takes to get something over the line. Because maybe a lot of the belief that this is really going to change things isn't really there. So I think that's an important one as well.
Tim Butara: There were some really great points here, and I'm wondering if you maybe have any tips for business leaders who experience such failures but kind of feel like they shouldn't give up yet, or just generally some best practices and tips for businesses that want to kind of position themselves as digital leaders.
Marc Charalambous: I think it comes down to– there's a lot, a couple of tips. I think it's important to be looking at digital transformation at a layer that maybe is a little bit more technical than most people want to get into. And that's really thinking about an organization as an agnostic – in other words, your organization has to end up being, in my belief, 365 API driven, period.
Your organization needs to act like an organism– not an organism, but a node on the network that is agnostic and can talk to anybody. It can talk to payment processors, it can answer questions. It is basically an API, and your business and your domain space needs to be 100% API driven without exception.
Now the question is, okay, great, how do you get there? Okay, well, maybe you start down that path, but if you don't have that vision to get there, I think you're not going to make the right decisions on the road to get there. And something that I talk to my team about a lot is, the destination is super important and you can have the best team and the best vehicle to get there, but if you're driving down the wrong road, at some point you're going to have to turn around and get back on the right road.
And so I think understanding that is almost more important than the work that needs to be done. Because there's a lot of talented people, there's a lot of great members of many, many teams and many great companies that have got really dedicated, excellent, smart, well educated, well intentioned people that just need to harness their energy in the right place to go to the right destination.
And I think that vision is the most important. I think that the future of businesses are going to be that if your business can't function as an open API to accommodate the change, which is inevitable, I think fundamentally, you're going to end up having to go back to the drawing board at one point.
So whatever technology you're using, whether it's an ecommerce platform or content management or in our case, Expresia, which the whole purpose of Expresia over the last 10 or 15 years of us using it, is to deliver that as an end state, right, and actually bring all of these core sort of foundational pieces – content management, ecommerce, the ability to build applications, to manage your code, your IDE, how are you dealing with data, how are you dealing with personalization, how are you doing with all this stuff? You can cobble a bunch of stuff together and you can make something work.
But if you're not actually achieving an end state, which is a fully encompassing 365 API, which is your organization, which ensures that the work that you're doing today in a year's time can be leveraged to immediately deliver results on the back of the work that you've done today, you're doing the wrong thing, in my opinion. You're going to end up having to retool.
And you may have equivalent teams like, say, your competitor and yourself, but whoever does the right thing with that team is going to end up in a situation where that scalability and that what I call a digital asset, not a digital liability. And that's really a big talking point for me as well. Like this notion of a digital asset, people think it's a PDF or something like that. It's a much bigger concept than just a file. A digital asset is like real estate.
When you buy a building or you buy a piece of land, I would say 99% of the time, over time, it appreciates in value, which turns it from an expense into something you're investing in, right? Technology, if you're not getting that out of your technology spend, I personally believe you're doing the wrong thing.
The future of this digital universe that we're creating is long-term digital assets that scale and grow in value. The opposite of that is a digital liability. And what a digital liability is exactly the same as having a big debt, right? Over time, you're paying interest – 8% a year, 10% a year, and it just gets bigger and bigger and bigger.
And one thing is for sure. If you're just piling more money into it, in the end of the day, it won't go away until it's gone. You have to get rid of it, right? So at some point, these digital liabilities become, I think, real deadweight for organizations. And the worst thing about them is they're things that need to be thrown away. There are problems now that the group or a company feels that they have to overcome in order to be competitive. Knowing this means everyone knows it's coming down the line. We're going to have to throw away the website or get rid of the CRM or do this or do that.
Because even though five years ago we put all our time and energy into it, and it was championed as being the thing that was going to be the panacea and really change the organization. And this is what I was talking about before. How many times have we all gone through that? 2, 3, 4, 5 times. If you've been in the game as long as me, 20 years, and that's where Expresia was born. Is that I never want to throw anything away. That's the goal. Now, do we succeed all the time? Not always, but that's the goal. Right?
And if you're building digital assets that– we have customers that we started working on in 2009, 2010, they're still on the same genesis platform that they were on before, but the platform’s evolved and taken their business with it. They didn't need to be a tech company because they're not a tech company. They're a mine, they're a mining company, they're a minerals company. They're in financial services. They're in all these different places. They're not tech companies. They use technology. But there are other businesses first. Right. And that needs to also be something that is taken into account.
So again, just to sort of bring this back to sort of meat, potatoes, the money that you're investing and/or spending, what are you doing? Is it a spend or is it an investment? Does it gain in value over time? I mean, it's a pretty easy question to ask. It's maybe not that easy to answer, but I think that's telling in and of itself. I think it's important to answer that question, to measure your decisions by that measurement, if you will.
And eventually, if you kind of marry a couple of those concepts as well as this globe, this 360 API endpoint, if you're not getting there, I don't believe you're getting to where you need to be in order to be completely abstracted in a fully compute universe. And if you think about where AI is going and where and how AI is going to interact with the world, having that kind of interoperability with the world and stuff like that, and other applications and other services out there, I think is crucially important to a) be nimble and to actually bring value that you didn't have before into the marketplace.
Tim Butara: I think a key part of being digital first is thus also being future proof or future ready, right? I think that this is what this API driven approach– because if you structure it in such a way, if you use this approach, then it makes all future technologies that you would like to use, that you would like to leverage less disruptive and less of a burden. If you want to adopt them and start making use of them and start getting a positive ROI out of them.
Marc Charalambous: Well, I think also, too, and again, this is where if you're not in the tech business, maybe you don't see the world this way, but not only does it not make them into being disruptive, it makes them into absolutely free disruptors of your competition. If you can take advantage of these things through just how you're set up, and the fact that you've got that architecture and you can move very quickly and you've got that foundation behind you, catching up and retooling for the competition is actually very difficult.
So I think it's one of those things that if you get right, it builds positive momentum. It's got positive network effects within the organization because you start to realize, oh, hey, hang on a second. What we're doing does have immediate real term measurable benefits. And by the way, everything we're putting into this is giving us a return. Now you're starting to get your team going from the, oh, wow, we don't really think this is so great, to feeling like, wow, we're actually really quite special.
And now your team is sort of starting to fire on all cylinders from a positivity standpoint and realizing how empowered they are to come up with new ideas and to, and it's also getting to the point where you can say yes to everything; that's a positive outlook into what's happening. And we're in a world right now where anything's possible and it's going to happen. It's just that simple. We're in incredible time right now where the rate of change I mean, this conversation can go anywhere just based on that comment. I mean, really, where does this end?
And I'm really holding myself back from talking about the implications of the flip side of this whole thing is we're not going to have to do anything in ten years because AI is going to provide an interface into computing that no human can ever match. So what does that really mean? I don't know. But assuming that we'll manage it in a responsible manner, I think AI can also be something that businesses can take advantage of in a very compelling way.
Now, the other side of that is, I think what the most important part about that is, ultimately things always come down to a human connecting with a digital interface. And another core belief and a very strong driver in Expresia is that you should not ever need to work in different approaches to achieving that end. Whether it be mobile, whether it be on a web browser, whether it be on a tablet, whether it be anywhere, there should be a unified approach to how any human interacts through a digital channel with your organization. Right. And that should be something that's done through a unified framework.
So that's another thing that if you're not getting that out of your framework, you are building sort of a siloed combobulation of different things that now have layers of complexity between them in order to connect and do all these things. And ultimately, I think that's a digital liability.
Now, that's not always the case, and I want to be nuanced about what I'm saying. We're not saying that something like Expresia is going to solve all the problems, but I think it can be at the edge of all the interaction. So even if you have big enterprise systems that are vital to your business, but– they do really great things, but they're not great at people interfaces.
So why are you living with applications that are exceptional at what they do? I e. running 50,000 SKUs and figuring out logistically how all these pieces come together to make, let's say, a phone. But at the end of the day, half of your workforce hates interacting with that stuff because you're literally giving out manuals that say, don't touch 99% of this and only touch these three buttons.
Well, that's a digital interface problem, right? And something like Expresia or a DXP, if architected right, should be able to say, okay, well, how about you just bring me those three buttons in an abstracted way into my own custom workflow? And now you're building software, which is actually about how to perfectly run your business– perfectly is a strong word. How to try to get to perfection in running a business.
And that's an opportunity for massive disruption just in how you deal with your people and efficiency and building software, that's not just about, oh, I've got a content management system and ecommerce thing and there's my website. It all needs to be a 360, unified. If you're a human being and you touch company X, it should be through a unified experience. It's no different than what we do in bricks and mortar, like when you go to an Apple Store. Yeah, you don't go to one Apple Store here and another Apple Store there, and there are different approaches to how they do the store. It's a unified experience. I think Apple has done the best job of this. Obviously, it's Apple. They can do it, right?
Now, what does the future look like? Is it just software companies that are excelling, or does the rest of the world also get to play in that space and actually give them a run for their money? Because the market is maturing with products like in the DXP space that are allowing companies that aren't software companies to deliver that kind of a full 365 experience.
So are you building a website and a web store or is that what you're building? Is that where you're going to be in five or ten years, or even in two or three if you've got the clarity and vision to do it? But the point is that's what Expresia is all about is solving those problems at scale, but giving our customers a way to get into it at a very low entry cost. Because it's like electricity. You don't need more electricity than you need, but later on, as your business scales, you're going to need more electricity. You don't have to buy a ton of electricity. You don't need to buy futures, you just use electricity.
We tried to make our model the same way. So you get this ton of capacity. You can see what's out there in terms of the power of the platform, but you can start really scratching the surface with building a website and knowing that it will scale from startup to enterprise or from the beginning of your vision to something that can fully integrate with all of your people and all of the touch points across everything that's happening in technology over time. And that's a big commitment and a big promise, but that's really what it's about for us, because everything else doesn't seem really worth doing.
Tim Butara: Well, I think we really brought our discussion home now, Marc, and I was going to ask you if you could tell us a little bit more about Expresia, but you already took the cue without me doing anything at all. So before we wrap it up, I just want to ask, if our listeners want to reach out to you or maybe learn even more about Expresia, where would you point them to?
Marc Charalambous: Well, Expresia, you can find out more about Expressia at expresia.com. Also backbone.digital is our international agency business based in Vancouver, in Bogota in South America and in Athens in Europe. Backbone is really the agency that spawned Expresia as a product. Expresia is now completely a standalone product on its own. Obviously, as an agency, we support anywhere from small to large builds on the platform. But yeah, if anyone wants to get a hold of us and talk to myself or anyone on my team about what we do or how we do it, we'd be very happy to hear from you guys.
Tim Butara: Awesome. We'll make sure to link everything in the show notes. And Marc, thanks again so much for joining us today, for speaking with me today. It was an excellent discussion. You did mention earlier that you don't want to get into all the implications for AI and what things will look like in five years, but maybe we can meet again in a year's time and discuss some things and how things have changed.
Marc Charalambous: I'd love to. Thank you so much. I hope I didn't meander too much. There's a ton to cover, so I'd love to do this again. Thank you very much for having me.
Tim Butara: Looking forward to it, Marc. And to our listeners. That's all for this episode. Have a great day, everyone, and stay safe.
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