What does it take to advance digital initiatives with your organization? If you’re asking yourself this question now, you may have a bit of ground to make up. The days of dipping your toe into the digital ocean – pet projects with year-end leftover discretionary capital – are over.
Take, for example, the ultra-competitive higher education market and the profound change underway for those universities late to catching the digital wave. Colleges and universities that once vied locally or even nationally for students now face global competition as well as the exploding Massive Open Online Course (MOOC) market. Couple the MOOC market’s relatively low-cost options with tuition increases that are continuing to outpace growth in family income, and it’s no wonder that today’s universities need to make digital central to their strategic plans. A savvy leader in higher education was looking for ways to harness digital technologies – to improve student achievement, reduce costs, and deliver a more customized learning experience – 5 years ago. Further, they have an established strategic pillar set aside for digital engagement with a focus on adding value to both organization and customer coupled with a clear plan for internal organizational adoption that embraces measurable aspects of accountability and team performance.
But fear not: regardless of your industry of practice all is not lost, for digital strategy can still be a strong part of your portfolio. Here are four strategies to consider as you get moving on digital.
1. Get clear on the core purpose of your organization
Let’s say you are the newly appointed Director of Digital, and the boss has given you the mandate to “Go digital!” Where do you start? There are so many opportunities to take advantage of digital solutions: big data, analytics, mobile, social media, to name a few. Randomly selecting a technology platform ahead of a defined strategic understanding of your identify can be a risky endeavor. Instead, before you pursue a new, and potentially innovative project, ground yourself and anchor your initiative to your organization’s core purpose and greater strategic intent.
Look at industry leading toy manufacturer Lego. As an organization, their purpose is clear, succinct, and puts the customer at the center of their brand: Inspire and develop the builders of tomorrow. Like moons in orbit, everything that Lego does revolves around that mission statement. Every person they hire, every partner they work with, and every digital project they implement. Their mission is brought to life in their brick-and-mortar stores, where kids of all ages are encouraged to enjoy a hands-on experience with Legos. Lego’s digital initiatives remain similarly aligned to their purpose statement; each Lego store is equipped with a Digital Box kiosk that allows shoppers to create interactive experiences with an unopened Lego box by simply holding them up to a series of sensors and a flat screen monitor. Some Lego boxes even include the opportunity to download a free interactive story app that allows the “builder” to put characters behind their toys and play with them in a fully virtual world. Even 2014’s The Lego Movie linked to their purpose statement, promoting the importance of a “builder’s” imagination, and encouraging their customers, or builders, to be comfortable with not simply following the instruction set. From the customer standpoint, Lego’s digital projects are part of the larger story the company is telling; they remain true to the overall mission, which helps result in a seamless product experience.
2. Define the value of digital
All too often, digital is perceived as being about chasing trends – gadgets and gizmos, the latest news from the quarterly Cupertino Apple show – instead of as a necessary linchpin of your business goals. This is mainly because of misalignment among internal stakeholders as to the value of digital investments. Rather, digital is about more than new revenue streams or cost cutting actions; it’s about creating measurable value for your organization and your customers.
To combat uncertainty, start with value definition. Begin by benchmarking your current organizational performance against a competitive landscape of like-minded organizations with digital already in play. Measure your organization against the competition on a series of common attributes, and see where the outliers emerge. Then, apply a classic strategic lens to best define the clear trade-offs behind not pursuing the project. Challenge the status quo, and see if business as usual is truly where you want to be in 1 year, 3 years, 5 years and beyond. Lastly, get time with the executives to lay out the case for change. Provide them with a series of sound strategic trade-offs supported by the necessary analytical rigor, and diagram a visual roadmap that considers the possible short-range and long-range strategic scenarios.
One of the best ways to get out-of-the-gate value definition is to create a pilot program with a select test group. This will allow for you to realize measurable results, with minimal organizational casualties. Beyond the outcomes, the pilot should be executed by an integrated project team invested in achieving the stated pilot objective. A modern example of a great pilot program includes the now implemented Disney MagicBand; linked directly to Disney’s new guest planning management system, MyMagic+ allows guests to book reservations and track their Disney vacation activity through an app. But, before Disney spent millions of dollars to roll out the project to every Walt Disney World resort guest, the project was piloted with randomly selected guests. In 2012, family visitors were randomly selected to participate in this pilot program. During this period, revenue in Disney’s “parks and resorts” segment increased 6%, according to Skift.com, and the segment’s operating income increased 16%, to $671 million. These types of measurable results make for a compelling reason across the organization to roll the solution out on an enterprise level.
3. Align internal resources through a Digital Center of Excellence (DCOE)
Moving past successful leadership authorization issues, the organization needs to execute on the digital strategy. Today’s leading companies organize their teams by installing a Digital Center of Excellence (DCOE). A DCOE includes the necessary governance procedures, business processes and subject-matter-expert talent to design, develop, and deploy digital projects in a team-based, highly collaborative work environment. Most recently, JPMorgan Chase stood-up a DCOE-like team to act as a “quasi-digital agency,” and the Johnson & Johnson Consumer Products Company chartered a DCOE that is “dedicated to developing best practices and increasing the level of digital competency among our marketers.” Successful DCOEs share a set of common attributes and clearly define their own DCOE vision and goals that include immediate short-term objectives to rapidly demonstrate value to the greater organization. Further, they are resourced by an integrated team with membership or visibility by numerous organizational departments that include executive authorization to be opportunistic, innovative, and as forward-thinking as possible.
Specific talent capabilities found within a DCOE includes platform-agnostic application developers for both front-end and back-end development, business analysts with deep procedural understanding of the business, and disciplined project managers trained to manage a portfolio of projects from high-level risk analysis down to individual task execution. Rapidly and successfully acquiring that talent occurs through external talent acquisition, building teams from within, or some kind of hybrid version of the two. Hiring from outside sources has its trade-offs: premium talent costs, risk of cultural disruption, and in some cases, mercenary-like employees looking for the next digital project to add to their portfolio. Building from within is not without its pitfalls either. Some organizations will try to amass internal talent by harvesting them from across the organization, thus cannibalizing their own internal infrastructure. This can be effective if the right skills are available, but can also be disastrous if cultures are not aligned.
Regardless of the path chosen for initiating and staffing a DCOE, take heed: DCOEs are not the end-game solution. For although a DCOE should be treated as a permanent operating team within an organization, they should also be agile enough to adapt quickly to the market disruptions that inevitably emerge.
4. Establish definitive decision rights among Marketing and IT leaders
In 1977, Alfred Chandler of Harvard Business School staked claim to the thesis that structure follows strategy. This simple but profound statement on strategy building and execution plays out on a daily basis among today’s organizations trying to best design their organizations around digital strategic intent. Best-practice organizational structure traditionally rests on a balanced three-legged stool of employee compensation, performance evaluation, and most importantly, decision rights. It’s that third-leg, decision rights, that gets heavily tested when you start to ask the question “Who owns digital?“
According to a recent Gartner report, by 2016 the CMO is predicted to be spending more money on technology than the CIO. If this holds true, tensions will inevitably rise between the CMO and CIO for control of digital. Traditionally, the core missions of IT and Marketing have served vastly different masters, with IT being the enterprise solution provider and Marketing leading and managing brand channels. But with digital projects fitting somewhere in a blurred middle, it’s no wonder that cultures clash. Couple this with the fact that these initiatives provide immediate and rich customer visibility while at the same time have significant impact on the company’s top-line, and the tension ratchets up and needs to be addressed. To tackle this organizational issue, today’s leading firms are creating new positions with clearly defined digital ownership.
McDonald’s, for example, has created a Chief Digital Officer role to own all digital projects, including budget oversight and management. Other companies like Kimberly-Clark have created a position called the “Global Head of Marketing and Technology” that is fully authorized to own and implement the organization’s marketing technology strategy and roadmap. Title names vary across industries and organizations, but what is clear is this: digitally successful organizations have found a way to create a high-performing organization by navigating their leaders through the ever-blending waters of marketing and IT. Herein lies the CEO’s task: empower executive leadership teams to fully own their projects and align digital strategic priorities and investments with other organizational initiatives to create the greatest value.
There are numerous methods and approaches for standing up digital, but the aforementioned strategies are best practice, blocking and tackling basics, that have been proven to set up an organization for future success in digital adoption. Once momentum is building and your projects are underway, implementation and execution will inevitably get more challenging, daunting and ultimately scary as you navigate uncharted waters. Inevitably, this progress will cause significant change management issues within your organization. But, if the word change hurts too much, substitute irrelevance and you may win some hearts and minds.
By David Whitehouse, Director of Business Consulting