In a recent article about a major retailer’s struggles to balance Amazon-grade competitive pressure to digitally transform against the livelihoods of its in-store customer associates, CNBC.com quotes Wharton School professor Santiago Gallino as saying that retailers must “reinvent themselves and rethink the role of employees [or risk becoming extinct].”
The only problem is, what if the employees aren’t on board?
There are several industries where the march of technology clearly threatens to displace the shoulders on which those industries were built. Robots in manufacturing. Chatbots in customer service. Driverless trains, trams, and one day cabs [sic] in mass transit. ATMs in banking.
Contactless payments: Not all upside
Now, between online and in-store purchases, the livelihoods of millions of commission-driven sales associates may be under threat from contactless payments; an increasing preference of shoppers especially since the COVID-19 pandemic struck.
According to the same article:
Contactless payments have gone mainstream, according to data from Mastercard. It found 41% of in-person transactions globally in the third quarter of 2020 were contactless, up from 37% in the second quarter, and 30% a year prior.
Of course, with no legacy base of sales associates to concern itself with, “contactless” and “Amazon” are nearly synonymous with one another. From Amazon Go to Whole Foods, it wasn’t until relatively recently that Amazon opened or acquired physical stores, once again setting the example for the singular, highly personalized, and contactless experiences that many customers now expect across their preferred retailers’ multiple engagement channels (web, mobile, in-store, call center, etc.)
Few if any customers, and now even fewer sales associates, have a true appreciation for the sort of API-led architecture it takes to engage customers with a frictionless, personalized, omnichannel experience; the myriad silos of data — 39 systems on average for most organizations — whose boundaries must be dissolved into a mashup that holistically informs the customer experience no matter where or when that experience happens. Never mind how each purchase is tied to the organization’s financial systems to identically support contactless and contact-driven transactions in real-time.
Towing to Gallino’s refrain about extinction, traditional retailers like the iconic retailer featured in the CNBC article are in a race to level the playing field against Amazon’s innovations like its Just Walk Out technology, digitally transforming themselves and introducing their own contactless experiences like one called Scan and Pay.
The composable enterprise: Agile recalibration to the unexpected
But hundreds of the retailer’s employees, many of whom saw how contactless innovations were threatening their way of life, were not having it and, through their union, essentially gifted an unlevel playing field to Amazon; an Amazon whose own employees recently rejected unionization. Whereas sales associate commissions are not a direct cost of goods sold for Amazon, some traditional retailers are legally bound to outmoded provisos found in Draconian collective bargaining agreements and the crippling bite they take out of profitability.
To the strategic thinker, the arbitration case brought by the sales associates seems short-sighted. At scale, it is Amazon’s financial efficiency that helped to drive many well-known retailers into bankruptcy. Perhaps in hindsight, the former employees of those companies would have undoubtedly preferred a different outcome. On the other hand, in a world where many people are living paycheck-to-paycheck, imagine having your take-home pay reduced by 25 or 30 percent despite your great performance and years of dedicated experience.
It’s an intractable situation but one that speaks directly to the highly nuanced challenges of digital transformation and the imperative for all organizations to prioritize their journeys to become composable enterprises. The big idea behind achieving a composable state — one where business capabilities are packaged into digital components that can be quickly refactored into business outcomes — is about having the agility to respond to rapidly changing business and market conditions such as an unfavorable outcome to employee arbitration.
While it’s not recommended, it’s technically possible to achieve a potentially transformative outcome such as a contactless payment system without taking what Gartner calls the packaged business capability or PBC approach to composite outcomes (usually, either composite automations or composite insights). Any organization can tactically go for the shortcut by hardwiring some unpackaged capabilities together using custom code. But then again, an unexpected arbitration ruling is exactly the sort of shifting business condition to which such custom code is particularly ill-suited.
Imagine having to suddenly fix your brand new innovative and widely marketed contactless payment scheme that previously had nothing to do with employee-related systems (ID management, compensation, etc.); an entire workflow that must be refactored to involve new data, new capabilities and all sorts of conditional branching. For example, according to the CNBC article, the retailer’s Scan & Pay system has now been offline for over six months and when it finally returns nationwide, it will not be available in the specific stores connected with the arbitration case.
As my father used to impress upon me in my adolescence; “David, there’s never time to do it right. But somehow, there’s always time to do it over.”
With an eye towards responding to such shifting market and business conditions on a timely basis, enterprises that do it right — ones that take the composable approach to digital transformation — will have a significantly easier time recalibrating existing business processes than will organizations that continue to custom code. For example, the aforementioned ID management and compensation systems will have already been transformed into reusable PBCs that are more easily snapped than laboriously glued into mission-critical workflows that are constantly in flux.
Even then, it’s unclear whether such agility is enough to overcome the inefficiencies of an unlevel playing field. But it would be an even greater mistake to go down without mounting the best fight possible.
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