B2B Digital Target: 50 Percent.

50 Percent.

That's what an increasing number of B2B CEOs are putting forth as their goal for a percent of total company revenue that is transacted digitally. 

In some cases, it's a BHAG (Big Hairy Audacious Goal) meant to set the bar high for employees.  Other leaders are already fully committed. Grainger's CEO has already stated this goal publicly and invested in a complete digital transformation, including new offices for Grainger's digital team in downtown Chicago. 

Whatever the maturity level and commitment, it's clear that 50 Percent is where the bar is being set for the future of B2B digital Business. 

THREE REASONS WHY:

• Boards of Directors - They are increasingly asking CEOs "what are we doing about digital?" and expecting strategic business answers and plans.
• Customers - The consumerization of B2B is here.  B2B customers expect the same ease of finding and buying products/services on the job as they do at home. And, this is an increasingly important factor in customers' decision about with whom they do business.
• Financial - Self-service and self-sale offer significant cost efficiencies in both delivery and growth opportunities. Even 2-3% or a few dollars of savings quickly become quite significant as digital continues to expand in high-volume areas of interactions.

WHAT WILL IT TAKE?

This is the core question CEOs are asking digital leaders.  And many are struggling to find the answer.  It's not like B2B companies have just been sitting on their hands...Forrester projects B2B online revenue to reach $560B by the end of 2013.  But these companies also realize that the efforts and approaches most B2B companies have employed to date will not get them to the 50 Percent target.

Three of the biggest areas of change all center around current focus areas that must evolve:

• Marketing -- Digital is often seen as primarily a marketing, communications or sales support tool.  This one-way mentality misses the opportunities to create new engagement and value for customers.
• Transactional -- The majority of digital investments today are in initiatives that are directly related to a purchase.  This makes sense because these investments are easier to justify and deliver returns more quickly.  But customers spend only 5% of their time making a purchase, so clearly companies need to think more broadly about customer interactions.
• Technology -- Companies have a history of buying a new technology to solve a business problem.  Today, an increasing number of leaders (especially IT leadership) are recognizing that technology enables digital business capabilities, and should not be the starting point or primary focus. 

Of course, all of the above remain critical for success...but companies are realizing that these are parts of a greater whole...an ecosystem if you will...that is needed to fundamentally perform at an entirely new level.

LEAPING TO 50 PERCENT

Many companies start planning for 50 Percent by trying to figure out out how to scale their existing organization.  This is often unsuccessful for a couple of reasons: 

1. The capacity and capabilities needed in the future are often dramatically different and won't map well to existing organizational structures and processes.
2. People. Silos, sandboxes, personalities, fear of change and human nature quickly make it difficult to have the required dispassionate conversations about tomorrow without interpersonal or political implications.

Instead, we recommend that companies follow a simple approach that starts with the end in mind to prioritize strategic planning and then work backward to define the path forward (a maturity model) to reach 50 Percent.

1. Strategy: Clearly define your (digital) business strategy...what 50 percent would look like for your organization
2. Capabilities: Clearly define what your organization will need to do operationally to deliver 50 Percent and the functional elements of each.  Capabilities might include eCommerce Operations, Business Intelligence, Brand & Experience, and Enterprise Program Management.  These are not technologies...they are people and processes.  Keep in mind these capabilities will need to be highly integrated beyond the digital team.
3. Roles & Responsibilities: For each of the capabilities, articulate the types of roles required to deliver that capability.  So, eCommerce Operations might include roles like Demand Management Manager, Product Content Manager, Director of Sales Support, Inventory Director, Sales Liaison, etc.
4. People: The previous steps will help provide the foundation for a more reasoned discussion about current resources, operational maturity and appropriate milestones, adoption (especially by sales) and timing to guide growth.

50 Percent is likely a BHAG for most companies today. For some companies that tomorrow may never come.  But there's little doubt that the growth and success of B2B organizations will continue to be increasingly influenced and driven by digital capabilities.  And with the ongoing acceleration in the pace and scale of change of digital, the runway to get ready is getting shorter.

The Next Big Thing in Digital: People

"Change or Die"  

That was the not-so-subtle assessment recently made by a senior executive regarding the impact of digital on the future of his business. But he wasn't referring to disruptive new digital technology, a new mobile app, a competitor's new website or even the consumerization of his industry, although all were top of mind.

He was talking about his company's culture. And his view—albeit dramatic—succinctly captures the biggest (digital) business challenge facing companies 2013.

• eCommerce? Who owns the P&L? What about channel shift? 
• Omni-Channel? Is store operations ready to use retail locations as showrooms for online sales?
•  Social Media? Are you ready to abandon lengthy review and approval process?  Is legal? 
• Mobile Aps? Is your company ready to be a software developer?
• Sales? Will your reps share customer relationships?  And lists? And Compensation? 
• Global? Which region gets investment first?  US?  EMEA?  Emerging?  And what about China? 
• Customer-centric? Are your BU leaders willing to transform to portfolios that cross multiple brands and product lines? 
• Industry Leader? Are you ready to make strategic 2-3 year investments?  Create entirely new businesses? Disrupt old ones? 

While these are common digital business challenges, the answers lie in people, legacy organizational structures.

“People focus on technology, but it’s just an enabler.” 

So said William Lynch, CEO Barnes & Noble speaking at a Forrester conference in 2011. While his keynote address was about the transformation of Barnes & Noble from a traditional book company to a digital business, clearly the biggest challenge was organizational change, not technology.

A recent McKinsey survey echoed this, finding that six of the eight "Most significant challenges faced in meeting digital business priorities" were organizational or resource issues, not technology. The single biggest challenge was "Organizational structure not designed to take advantage of priorities" (52%). 

And while 51% noted "lack of technology infrastructure and IT systems" as a key challenge, only 14 percent say their company's IT functions are spearheading new digital-business efforts. In fact, one-third said IT is supportive but lacks the capabilities, one-quarter say these executives to deliver on goals, and another 25% said IT executives was "are not engaged at all."

Two years ago we wrote about the Three Forces Shaping the Digital Future Fragmentation, Convergence and Acceleration.  We were (mostly) writing about dramatic changes in technology, but those same forces are the same that are driving organizational challenges today. 

Fragmentation -- The acceleration of digital innovation is creating need for new talents, experience and management.  With no clear owner (or under-resourced capabilities), multiple initiatives are randomly springing to life across BUs, markets, and services.  Brands racing ahead of IT to purchase content and commerce platforms.  IT deploying communications and marketing platforms with little business participation.  Marketing struggles to keep pace and justify its value beyond customer acquisition. 

Convergence -- Organizational silos.  No phrase creates nearly the eye rolls and knowing nods as this.  Business operations exist largely as they have for decades...driven my discrete markets, channels and product lines.  In tomorrow's customer-centric, Omni-channel digital marketplace, companies struggle to determine ownership and operations.   

Acceleration -- The pace of innovation and change will increase.  As examples: 

• Mint.com’s user base has ballooned 5x in three years and today more than 70% of users are accessing their accounts mobile devices.
• Harvard Business Review reports that digital already influences of 50% of purchases, and will soon reach 80%.
• Accenture reports that from 2010 to 2011 feature phone ownership dropped 20% while smartphone ownership grew by 25%.

Companies that continue to focus on finite projects, short-term KPIs and the latest shiny object will continue to fall further behind.

"We're in the middle of a global eCommerce roll-out
and we don't even know who owns this on the business side."
-- Enterprise Architect of leading consumer manufacturing company.

Gartner recently predicted that "Through 2015, 80% of multichannel implementations will fail, because retailers will retain product and channel-centric strategies." In our experience, it's easy to expect similar success rates as likely in the B2B space as manufacturers and distributors struggle with channel conflict, lack of scalable product management and pricing, disruption of direct sales and a technology-centric approach to business needs.

Despite the current dire predictions -- or perhaps because of them and the consequences of failure -- executive leadership is increasingly raising their bets with significant strategic investment and commitment,

• Digitizing the Business: The expanding influence of digital on the core business has lead many executives to rely on traditional business disciplines such as Enterprise Governance, Business Architecture, Change Management and Program Management to lead the transformation of the organization.  While the change is triggered by digital capabilities, it is driven by business strategy, planning, alignment and management. 
• Innovation Islands: Some executive leaders have determined that Digital business is so significantly different from their traditional business, they are choosing to establish new locations for the Digital business.  A leading B2B distribution company recently opened new offices on a floor of a consulting firm with the goal of completely redesigning the business from the ground up. The head of digital strategy at Discovery Communications recently spoke about why all digital operations are run in Chicago offices, far away from the corporate headquarters in Silver Spring, Maryland, following the lead of Barnes & Noble that did that same. 
• New Co: In an increasingly common decision, the CEO at a traditional financial services organization decided to create an entirely separate company focused on digital business innovation, new revenue creation and market disruption.  Interestingly, first indicators are that companies least prepared for digital transformation seem to show the highest interest in this most dramatic approach.

In the coming year the digital world will undoubtedly be filled with breathless headlines about Omni-channel, apps, cloud, social media, local-based services, big data, showrooming, near-field communication, and the latest-latest-great.  But the key to success is that companies will need to embrace the grand irony of digital to keep pace in 2013 and beyond...your culture and people will be increasingly be the greatest factor in digital business success. 

The Theory of Everything (Digital)

In response to the continuing question of:

"What is Digital Strategy?"

Customers, Channels and Horseless Carriages

(Originally published August, 2012 in Retail Online Integration)

How digital is fundamentally changing traditional approaches to the marketplace

For those who don’t know, the very first cars weren’t called cars. People called them horseless carriages because that was their point of reference. The same happened with the invention of the “iron horse” (train) and more recently “snurfing” (snowboarding). All are examples of how legacy language attempts to describe entirely new paradigms.

It's happening again today as digital transforms the marketplace, brand positioning and traditional channel approaches. Some contend that digital is a channel unto itself. Others talk about cross-channel, and more recently omni-channel, in attempts to reshape traditional channel models to fit increasingly empowered, immediate and personal customer needs and behaviors.

Since digital is so pervasive and disruptive, it's far more than just another channel. The growth of digital is turning the whole notion of channel or even cross-channel into a horseless-carriage conversation. Legacy language is being used to describe entirely new paradigms:

• Digital is pervasive — channels are intentionally discrete.
• Digital is people-centric — channels are traditionally product and internally focused, driven by company objectives, structures and processes.
• Digital is dynamic, contextual and personal — channels seek to focus, organize and standardize.
• Digital enables community — channels optimize distribution.

From Channel Centric to Customer Focused

It’s perhaps easy to dismiss the discussion as simply a matter of semantics or buzzwords. Besides, marketers and agencies have been talking about being "customer centric" for decades, right? So how is this any different?

The issue isn’t just about labels. It’s about a fundamental change in the marketplace in which channel-focused companies are unable to respond efficiently and effectively to changing customer expectations and behaviors. Today’s customer-centric marketplace is driven by the right engagement at the right time and place, as well as critical “moments of truth.” In other words, there are often fleeting opportunities that can no longer be defined and controlled by marketing calendars, media plans, in-store programs or channels.

Forrester’s Welcome to the Era of Agile Commerce puts forth an excellent model of the customer-centric tomorrow. This research provides one of the more clear visualizations of the nature of customer journeys and the almost random manner in which customers choose to engage brands, businesses and products.  

In a practical sense, the concept of customer centricity plays out daily with an increasing number of consumers roaming retail aisles while getting advice from friends, reading reviews from other consumers, comparing competitor prices, or viewing ads while touching base with the babysitter and keeping up on the news (and then buying online to avoid the hassle of checkout). The question remains: Who owns that channel — omni or otherwise?

Even the easily defined separation of B-to-B and B-to-C is quickly unifying into B-to-X (i.e., an undefined audience), as our experiences as consumers often set expectations in the workplace. The shopping and buying behaviors of construction contractors, small business owners and bench scientists are looking more like the above retail shopper every day.

It’s a Business Problem That Marketing Alone Can’t Solve

This shift from a channel-focused to customer-centric business model is creating significant challenges for companies. Most responses start at the marketing department and the inevitable alphabet of strategies (m-, e-, t-, w-, s-) in an attempt to better synch multiple campaigns, messages and programs across brands, business units and markets.

But marketing alone can’t do what’s needed. Seamless brand experiences across products, solutions and portfolios are all but impossible to deliver in siloed, sandboxed business environments. Sustainable success depends on more than a marketing transformation or excellence in brand positioning. It often depends on significant business transformation to deliver the brand promise that impacts departments across the organization, including:

• brand management
• sales
• service
• supply chain
• technology
• intelligence
• products/portfolios
• innovation/R&D
• finance
• external partners

Building a Better Buggy Whip?

It’s easy to set a goal of adopting new paradigms and business processes that focus on the customer, but harder to execute successfully. The "horseless carriage" was derided by many as too noisy, too slow and too expensive compared to existing horse-pulled carriages. We can imagine that the buggy whip makers weren’t too keen on these new innovations either. But making better buggy whips didn’t drive the innovation of cars. 

Success is far from ensured, and the path forward is far from obvious. However, something is becoming increasingly clear: Continuing to ask channel-focused questions can’t deliver the customer-driven answers, ideas, innovation and fundamental change needed to build sustainable advantage and growth.

2012 and the Agility Advantage

This is usually a good time of year to make predictions; in the digital world the opportunities are endless.

But instead, I think this year is a better time for recognition, an affirmation if you will, that agility is not only important, but it’s becoming the primary digital business advantage.

(Digital) Business Advantage
We’re all pretty aware that the pace of business is moving faster. Companies have been talking about accelerating, optimizing and innovating for years. Agile software development has been around for over a decade, so what’s different now?

The difference is how disruptive agility is becoming to the core business and how unaware and ill-prepared most companies are for the coming change.

Top themes in our discussions with business leaders:

• Agility is the advantage: Companies can’t afford to be “done” with projects in a world where competitors can quickly copy (and nullify) whatever competitive advantage your new web site or mobile app was promised to provide. Agility itself is often the defining advantage in the marketplace.
• Change is the constant: Transformation, disruption and adaption are no longer single events to be managed. They are the new normal of business, and they are accelerating.
• Fast follower is a losing option: What value or advantage is created by examining what competitors have already done, particularly when it will likely change again before you can respond to their first effort?

If your primary focus and investment is in redesigning your web site or creating a new social media marketing campaign then it might be time to look a little further down the road.

The Paradox of Agility
Most initial efforts to increase agility will usually result in the company slowing…the paradox of agility. Not slowing in activity—that’s usually off the charts—but a slowing in the ability of the company to create new value, advantage or even fully complete one digital initiative before bouncing to the next in ever-increasing cycles (sales-driven companies, I’m looking at you).

Instead, the faster you want to go, the more strategic and dedicated to the long term you (and your leadership) need to be.

• Want the agility of Amazon?  CEO Jeff Bezos often talks about planning 4-5 years out for “new” digital game changers
• Innovate like Apple? Former CEO Steve Jobs described his vision for the iPhone and iPad in 2001, talking about the Digital Hub
• Change the game like Barnes & Noble? They invested in creating an entirely new (and separate) digital team dedicated to redefining their future

Digital Agility Requires Forgetting about Digital
Rather than focusing on how to do more digital initiatives faster, first put digital aside.  There are three foundations you’ll need before digital discussions will be helpful

1. Understand customer needs—the problems you solve, not the products or services you sell.
2. Understand how your company can consistently differentiate and win, given customer needs.
3. Define what business capabilities you need to deliver on points 1&2.

Get through these are you’re ready to start talking about how the design of your people, process and digital platforms can enable new capabilities, accelerate innovation and growth, and (of course) increase your company’s agility and advantage in the market.

Mobile is Dead. Long Live Mobility!

Scan and Scram. Digital Wallet. Social Shopping. 3-Dimensional commerce, Augmented Reality, Showrooming, Virtual Assistant, Location-based Search

Question:  What do all of these have in common?

If your answer is “mobile,” you’re missing major (digital) business transformations that are changing the game across every industry.

• Channel shift as customers increasingly turn to smart phones and tablets instead of sales reps and service centers
• Value Transformation as real-time references, recommendations, specifications and instruction become an integrated part of “product”
• Disruption as manufacturers are able to leap-frog distribution and retail to connect directly with customers right at point of sale

The Answer: they’re all behaviors (“capabilities” is also acceptable and most relevant to business).

“We need a mobile strategy.”  

In most cases, this is just business-speak for saying “We want a mobile app.” The focus almost invariably, and mistakenly, starts with the platform.

The good news is that mobile apps are cheap and easy to make. There are few barriers to checking that box. Of course, the likelihood that this approach would provide much value for your business or your customers isn’t very high either, as evidenced by success rates of mobile apps.

• Nearly one in three downloaded apps are used just once
• About half of mobile consumers delete apps within the same month they buy the app. Up to 90% are eventually deleted
• Most (68%) of smart phone owners use five or less apps on a regular basis
• The top 10 Android apps (of 250,000 total apps) account for 43% of all app usage

In the healthcare space alone there are already over 4,000 apps, including drug databases, medical calculators, reference programs, decision support for physicians, nurses, tracking (weight, blood pressure, etc.), patient history (accessing, managing, and documenting), collaboration tools and payer tools.

At the same time, combined smart phone and tablet sales are passing desktop and notebook sales. The “third screen” is already the first choice of highly integrated, connected experiences. Morgan Stanley is also predicting that mobile will be the primary platform for small business by 2015. Based on the current pace of adoption, they may have underestimated.

And the bar is being raised every day as customers and partners try and integrate newer, more innovative mobile capabilities into their everyday lives.

It’s People, Not Platforms

What’s missing in all these scenarios is a clear understanding of people, their needs and behaviors. Without this foundation, the probability of failure is high. Benchmarking competitor mobile efforts won’t ensure success. Neither will reading Fast Company, studying Forrester and eMarketer, doing a workshop or checking out the Marketing VP’s cool new app.

The focus needs to be on value, utility, immediacy, relevancy and context, anytime, anywhere and continually (re)defined by each individual.

Like any other business or marketing initiative, mobility efforts must be grounded in core customer (unmet) needs.

Key questions that need to be answered:

• What need does this satisfy for this individual?
• How is this substantially better, faster, easier than what our customer already does?
• How does this interaction provide the customer seamless interaction with the brand across all touchpoints?
• How does this provide differentiation in the marketplace?
• How sustainable is the advantage we expect to gain? (read: how fast will competitors copy us and catch up?)

Three Signs You’re Headed Down the Wrong Path

1. Trying to create a smaller version of your web site. Most companies tend to start with their Web presence (it costs the most so it must be most important, right?) and adapt it for a smaller screen. Yes, the brand experience needs to be consistent, but mobility is fundamentally different. Today, many companies are already designing for mobility first, then adapting that solution for the web. Forget the smart phone and think customers and magic wands. What do your customers care about in their lives? What if there was some way you could solve some need anytime, anywhere? Could technology be (part) of the answer?
2. Being “Done.” Mobility is a journey, and a fundamental expansion of the relationship with your customer. Any initiative or app, no matter how brilliant, will ultimately fail if you don’t commit to a long-term strategy. The landscape is changing too quickly, competitors can copy you too easily and customers get bored with your solution too soon. Continuing – and accelerating – intelligence and innovation are the keys to success.
3. It’s just an app. The actual mobile applications are just the tip of the iceberg. Complex integrations and interaction of systems and information are required to deliver the personalized experience customers expect today. One client invested heavily in an advanced mobile commerce capability – a very slick app that customers loved – only to find that their back-end systems and architecture was never designed for the “chatter” of mobility. Performance suffered, the app failed and the company alienated customers and lost tens of millions in potential sales.

Like all transformational changes before it (cars, TV, Internet), success in mobility requires a fundamental shift in paradigms and approaches. And while change will continue, starting from a people- and needs-based foundations and making strategic commitments (instead of app-based leaps) are required first steps toward building sustainable success and realizing the full potential and benefits of mobility.

(Originally posted February, 2012 @ Acquity Group)

2010 in Review: The coming Digital Transformation

If there is a single thought that sums up what 2010 has meant to Digital's impact on business, it should be that this was the year that signaled the coming of the next great phase in Digital: Transformation.

• 360-degree customer contact transforming into 3-Dimensional relationships, 365 days a year through the explosion of location (and time)-based services such a Facebook Places, Foursquare and Gowalla
• Emerging conversations about 'offline digital engagement' that are replacing buzz about the shiniest new app with focus on individual human needs and real-world behaviors, and how brands can maintain relevance...driven by growth of social shopping, m-commerce, and mobile couponing.
• Increasing struggles to clearly define Digital (or is it technology?) ownership across IT, Marketing and the Business with talk about emerging needs for new hybrid leadership roles such as a Chief Marketing Technologist.
• Companies' digital strategies expanding from marketing calendars to market disruption, risk management and digitization of the business.
• Channel marketing becoming more cumbersome as Digital blurs traditional boundaries, evidenced by Kraft's integration of Digital marketing with Shopper marketing and traditional B2B companies transforming to B2X as Digital efforts spread across business units, sales, service and innovation.
• Forrester's Splinternet being joined by forces of convergence and acceleration that are exponentially increasing complexity while pulling the planning horizon ever closer.
• This year's launch of iPad?  An important but expected next step as the Three Screens of TV, Web and Mobile have blurred into 4.5 screens (and counting) that seamlessly blend Web, social, data, voice, video, communications, applications and communities on the way toward platform-agnostic operating systems such as the Sony's Android-powered TV.
• Mobile Strategy? Social Media Strategy? Web Strategy?  All inseparable parts of a broadening whole increasingly integral to achieving core business objectives.

And most of all, 2010 was notable because companies and their leaders increasingly recognized that the biggest barrier to Digital growth is often not technology (as challenging as that can be), but their own organizations, structures, processes, people, and ability to transform in preparation for a dramatically changing future.

Three Forces Shaping the Digital Future

For companies trying to plan their digital future it can often feel like jumping onto a speeding rollercoaster...afraid to miss all the 'fun' yet keenly aware of the tremendous risks of doing it wrong, and with few reliable examples to follow as a guide. 

Consider the incredible change taking place:

• Apple's App Store has some 250,000 applications, downloaded more than 5 billion times to some 100 million devices. All in just 2 years.
• There are more than 400 million active users on Facebook. There were barely 1 million just 5 years ago.
• Time spent on social media sites has doubled from this time last year. 1 in every 4.5 minutes online is spent on blogs or social networking sites.
• This year digital music sales will equal CD sales.
• The number of AOL subscribers dropped from over 25 milllion down to 5 million in just over 6 years.

Forrester Research has even begun referring to the next phase of the Web as the "Splinternet," describing the rise of powerful connected devices, the spread of social technologies and the end of the golden age of Internet standards.

Too often companies' lack of clear direction results in an expanding series of loosely connected tactical reactions without needed organizational commitment to a specific strategy.  And while each initiative may generate positive results, this approach leads to ever-increasing complexity in execution, lack of needed alignment and support, redundancies in costs and effort, and minimized total benefit to the organization.

So, how can leadership possibly commitment to a long-term course of action when faced with this increasingly complex and blurry future?  The first step is to recognize the three primary forces driving this change.  

The Three Forces:
Fragmentation, Convergence and Acceleration

Force #1. FRAGMENTATION: This is Forrester's Splinternet. Yesterday's internet-enabled global Web community is quickly becoming a vast network of individual (and often highly separate) experiences, interactions and devices. And with the explosion of mobile capabilities, these digital experiences are increasingly untethered and triggered by and integrated with real world activities through location-based capabilities.

In short, the virtual world is now racing to catch up with the real world. Experiences and interactions are expanding beyond the two dimensions of computer screens to include the  dimensions of space and time.

Even the ubiquitous nature of search is transforming from today's algorithms that sift through a global bucket of public information to infinite, discrete social/community-driven recommendations based on user-generated content that (currently) is often not visible to search engines.

Force #2. CONVERGENCE: Think back just a few years ago and consider the choices of electronic devices--cameras, PDAs, computers, phones, CD players, DVD players, video game consoles, GPS systems, remote controls, calculators and even pagers. Today, one device will do all these tasks and more.

Apple CEO Steve Jobs spoke directly to the impact of convergence when he introduced Apple's "Digital Hub" strategy at Macworld 2001.

 

As another example, video game consoles don't just create new ways to play games. Through integrated Web capabilities and social tools they create a completely new way to participate and engage. Digital technologies—once accused of pulling kids away from human interaction—are now enabling people (not just kids...today's average gamer is 34 years old and over 40% are women) to socialize with each other in completely new ways. In the process they continue to create important new centers of gravity in the digital space.

Force #3. ACCELERATION: Question: What do iPhone, Android, Facebook, Hulu, YouTube, Twitter and Google Apps all have in common? Answer: None existed five years ago. And this pace is only accelerating:

• Of the 5 billion App Store downloads in 2 years....4 billion were in the second year alone.
• It took Facebook over 4 years to reach 100 milllion users. They added the next 100 million in just 8 months, and the next 100 million in only 5 months. 
• Projected sales for the iPad in the first quarter after launch was $1billion.

However significant the impact of the first two forces of Fragmentation and Convergence, their influence will only continue to increase in speed and intensity, fundamentally changing everything from how we go to market to the ways Moore's Law meets Generation M (or is it I? or Z?)

So Now What?

No matter the dramatic changes Digital is driving, the basics of business still apply. Strategic success requires long-term commitment. As Amazon's CEO Jeff Bezos notes: "If we have a good quarter it's because of the work we did three, four and five years ago."  

And there's the rub:  
How can businesses stay competitive in an environment that changes by the week when the company requires months and often years to adapt? More to the point, how can leadership possibly decide on and commit to a strategy that may be obsolete before it can ever be realized?

• Only commit to short-term strategies? Minimizes risk and is responsive to the market, but is often highly reactive and lacks needed resource to generate any significant impact or sustainability.
• Fully commit to a longer-term strategy? Critical to ensuring needed organizational momentum and advantage, but has a high risk of missing not only the long-term mark, but also numerous short term opportunities along the way.

Certainly, there are no silver-bullet answers, but here are some keys to help your company prepare:

• Think People first...then Technology: Trying to stay ahead of (or even keep up with) the latest greatest digital shiny object is a high-cost, high-risk game that offers slim opportunity for sustainable success. Instead, keep focus on the fundamental needs of customers, employees, partners, etc., and then think about how technology helps satisfy these needs. Social media may seem new...but people being social isn't. 
• Focus on alignment with corporate strategy: Start by looking at how Digital enables the organization to achieve established goals. Think through the business opportunities (and possibly new risks) that Digital capabilities could create. 
• Look upstream: As I wrote about in The Risk of Competitve Benchmarking, many companies become so focused on competitors that they miss important learnings from other industries that are early Digital adopters.  It's a unique opportunity to literally see into the future. B2B companies in particular are in an excellent position to watch and learn from B2C companies and leapfrog the competition. Unfortunately few do and continue to waste valuable time and money on lessons already learned by others.
• Build your Digital DNA: To compete in the Digital space a company needs Digital DNA, meaning Digital needs to be more that just marketing tactics...it needs be a part of the culture for everyone in the organization. It's not always easy, but it's rarely optional.

Predicting the future is always challenging...particularly in the Digital space. But the price paid for inaction continues to climb as Digital continues to transform the landscape. By understanding the underlying, long-term forces at work, companies can move from disjointed, reactive efforts to establishing a clear path forward that drives consistent, sustainable success.

The Risk of Competitve Benchmarking

"Benchmarking competitors will ensure this effort will fail."

Not the most welcome (or expected) statement you can make to client leadership. Especially when you've been hired to do just that. But that doesn't make the statement any less true.

Competitive benchmarking is roundly accepted as a key foundational element to any digital strategy. It's often the first step companies take in gathering insights...and too often the only one, which is the problem.

Let's be clear...competitive benchmarking doesn't inherently create risk...but the narrow approach many companies take does.

There's questionable incremental value in conducting yet another extensive, formalized competitive benchmarking effort
This is especially true given the healthy, ongoing obsession most organizations have about their competitors. It's the rare company that can't already recite every digital initiative in their industry. And between existing research, trade publications, industry experts, blogs and strategic hiring there are usually few stones left unturned.

Mirroring competitors behaviors often mirrors their mistakes or misses important evaluation.
Technology is a perfect example...Company A wants to use the same technology solutions as the industry leader. Often a very bad idea because it ignores two critical factors.

1) The competitor may be years ahead from a technical/organizational maturity POV, so Company A risks overspending for overly robust systems that increase development and onboarding costs while often decreasing adoption and productivity due to complexity.
2) Just because a competitor has a technology doesn't mean it works. One leading CPG was the envy of the industry, winning countless digital awards. What wasn't as widely known was that their systems were being held together with twine and tape, costing the organization millions.

At best, benchmarking can only help a company achieve parity.
And even that is increasingly unlikely with the ever-quickening pace of change digital continues to drive. Consider that Facebook grew from 175mm to over 350mm active users in less than a year. Now think about how long it took your company to build their last Website...and add at least another 6 months if it was on a new platform...and all of that just to start to drive more customers. Meanwhile, the competitors you benchmarked have moved on to...?

The last point is often most critical to creating an effective digital strategy. Even if your strategy is to defend share, competitive benchmarking alone will not provide the needed insights to prepare for future competitive threats.

Competitive benchmarking is best leveraged as part of a greater whole that provides a balanced vision of the marketplace and your customers.

• Start with your customers. This can't be restated enough. Put aside the Web analytics and focus on the basics of who your customers are, their needs and how you do (or can) help them. Knowing what your customers are doing is important...knowing why they do it creates advantage.
• Look outside your industry. Customer behaviors are rarely specific to a vertical. People apply existing experiences and behaviors to new situations. Banking and insurance shopping/buying patterns are very similar to each other. People will look for a new vacation home in much the same way they found their last car...or TV. Identifying parallel industries creates broader insights and provides needed perspective to evaluate competitors.
• Look upstream. By definition there are very few companies leading digital innovation. And many of those are start-ups...not industry-leading businesses (i.e., your competitors). Following on the previous two points, looking upstream to digital innovators expands your digital horizon and helps your company better anticipate future opportunities and threats. So what if Moms aren't socializing about your cereal. What's important is that they are socializing more and more, which means it's your next important opportunity or threat...no matter what your competitors are doing now.

So, a more accurate opening statement probably would have been "Only benchmarking competitors (with the implied 'as you are now doing') will ensure this effort will fail."

More accurate...but less startling...and what's the fun in that. Try it for yourself and let me know how it goes.

Three Paths Forward For Healthcare

“What Should We Do First?”

Redesign our Website? Deploy a new intranet platform? Find a way for employees to collaborate? Build a patient portal? Launch some Social Media…something?

These are common questions we hear every day from healthcare leaders trying to balance seemingly infinite digital opportunities with clearly finite resources. The challenges aren’t new, but they are becoming more urgent.

• Healthcare providers are falling further behind in meeting the expectations of healthcare consumers / patients.
• Most healthcare organizations lack the agility to keep pace with the exponential changes in Web technologies.
• Gaps are widening between departmental/employee needs and the organization’s ability to deliver.

In truth, there is only one question healthcare organizations need to answer: What digital path forward are we going to take?

There are three possible answers:

1. Triage – Keep the lights on

• Lowest short-term cost
• Does not address organizational challenges
• Highest mid/long-term risk and cost
• Potential negative impact on ‘real world’ investments

2. Targeted – Investments/upgrades in select Web technologies

• Reduces short-term risk
• Limits short/mid-term investment requirements
• Limited impact on organizational challenges
• Limited opportunity to move beyond parity in market

3. Transformational – Take patient experience to the next level

• Greatest short-term cost
• Greatest mid/long-term risk reduction
• Minimizes organizational challenges
• Establishes sustainable excellence
• Creates significant competitive advantage

By selecting one of these paths, healthcare organizations can quickly define the scale and scope of future efforts. This also establishes a clear goal to evaluate how effectively each opportunity (e.g., Web redesign, intranet, patient portal, Enterprise 2.0, social) helps achieve that goal.

Organizations should be cautious about applying a “good, better, best” evaluations to these options. While Transformational may appear the grandest and most impactful of the options, the Triage approach can be the most appropriate for many companies based on organizational/technical maturity, agility, existing systems and processes, and time horizons.

Instead, the choice of Triage, Targeted or Transformational should be based on:

1. Support of organizational strategy and leadership goals
2. Alignment to audience needs/expectations
3. Effective Governance

Of course, resources are always an influencing factor but should not be a deciding factor in selecting the digital direction for an organization.
As the rate of change in digital technologies and audience expectation continues to increase, so will the variety and complexity of opportunities…and the critical need for healthcare organizations to clearly define a path forward.