Are you at risk of “getting Uber’d?” With smart devices accepted as the new standard, and more and more start-ups reinventing tried and true industries (like Uber and taxis), ignoring the disruptive qualities of digital is no longer an option. Whether your organization has grown from digital roots or is a traditional brick-and-mortar developing a targeted digital innovation, the need to include digital in your business thinking is crucial for future success. What follows is a set of five “must-haves” that your organization should include in its thinking when developing a digital strategy, as well as three keys for long-term success.
1. u0007u0007Define the problem. honestly.
Before heading down the digital-solutions path, qualify the real problem in front of you. Often harder than it looks, begin by conducting an analysis of your competitive landscape, market externalities, and consumer behaviors, and reflecting on your company’s own conduct and performance. This process will inevitably reveal some painful realities, but the benefit is that it allows for treatment to be localized rather than misdirected. So, once identified, create a set of problem statements with clear, focused and measurable language, and seek comfort in the uncomfortable—for the path toward solution begins here.
2. Create a Digital Vision that Future-Proofs.
Informed by an external analysis and some internal reflection on your organization’s aspirations, the crux of any well-planned digital strategy is an inspiring vision. For digital specifically, a powerful vision is one that future-proofs your organization’s relevance.
The spectrum of digitally-minded vision statements may range from improving customer experience (“make commerce easy for everyone”) like mobile payment service Square, to disrupting an industry business model (“become a platform for music”) like the on-demand music provider Spotify. Where possible, involve a cross-section of your organization’s leaders in the creation process; this is your first chance to test their tolerance for digital transformation.
3. Capture the Customer Experience.
As organizations’ business models evolve from being product-centric to customer-centric, the user takes an even more prominent position in your digital strategy development. Invaluable customer insights can be discovered through in-context interviews, analysis of social networks, and studying consumer behaviors. Think critically about how you can best connect with your customers to create the best experiences possible. Walt Disney put this best when he was creating the Disney experience: “You don’t build it for yourself. You know what the people want, and you build it for them.”
4. Conduct a Reality Check on Your Capabilities.
Pressure-test your digital strategies and pose the question: Can we realistically deliver on the objectives we have set before us? Perform a high-level business and technology audit focused on assessing your current capabilities and their ability to perform in an ever-evolving world. This exercise will assist in identifying the key relationships, strengths, and pain points in your existing business model, and how those will affect your ability to deliver on the strategy. The role your company’s culture plays is not to be left out of this analysis. Without a corporate culture that enables and empowers employees to participate and support digital initiatives, pushing start on any digital venture risks almost immediate stalling.
5. Construct a Results-Focused Roadmap.
The anchor of any strategic planning effort is the roadmap. You know, the beautiful multi-colored graphic on which you invested all of your designer’s time and effort? A necessity for sequencing and prioritizing your plans, a well-laid strategic roadmap outlines your agenda across a multi-year timeframe. What makes a digital roadmap unique is the need to show tangible results in rapid fashion to gain momentum with impatient consumers and stakeholders that may question its true value and utility. Consider the use of prototypes to test-pilot what a digitally-connected solution looks and feels like to your user community.
A CLOSER LOOK AT CREATING A DIGITAL VISION THAT IS FUTURE-PROOF
Long dominated by major department stores, the prestige beauty business model was one centered on heavily service-focused cosmetics counters where customers were bombarded by overzealous salespersons. With Parisian origins in the 1970s, Sephora opened its first U.S.—based concept store in 1998 and sought to “shake the industry model” with an open-sell shopping experience—one with unbiased service from experts that puts the power of decision-making in the hands of the consumer.
Fast-forward to 2015 and Sephora’s inspired digital strategy has positioned them as a leader in incorporating digital tools into the overall experience: when you enter a Sephora store, iPads display new online features and allow for comparison shopping, and mobile checkout has become the norm. The results speak for themselves as their penetration of digital to physical retail sales is double that of the prestige beauty industry.
The tip of your digital strategy’s spear must be your vision. But, for organizations seeking a lasting competitive advantage in today’s industry disrupting world, vision plays an even more critical role as it must drive true transformative business change. Accompanied by insights from the Sephora case study, here are three concepts to consider in future proofing their digital vision.
1. u0007u0007Set Your Tolerance for Transformation.
Just prior to designing a digital vision that will drive substantive change, your organization must evaluate their risk/reward quotient, or in more plain-spoken terms, their tolerance for transformation. The importance of this step cannot be understated as it establishes clear expectations for success. Sephora’s CEO set the tone for their tolerance for transformation when he included the term “innovation” in their dual vision-mission statement: To bring relentless innovation to the way consumers shop for beauty. This guidance leads to the development of strategic initiatives that have an inherent level of risk and reward tied to innovate thinking. For example, Sephora announced in March 2015 that they are fully supporting an internal initiative called the Sephora Innovation Lab.
2. Define your Digital Vision Type.
When analyzing your organization’s market positioning and value proposition, a duality exists for the type of digital vision that you wish to create. On one end of the spectrum is the digitization of your internal business processes. Organizations whose profitability is tightly coupled to the performance of their supply chain may focus their digital vision here. On the other end is digitization of your customer engagement, where businesses choose to focus their digital transformation efforts on creating amazing experiences for their customers. Organizations need not be so black and white in defining their digital vision, but rather find where they want to position themselves on this continuum. Sephora has chosen this hybrid path. In 2014, they focused their investments in improving their in-store customer experiences with a broad set of interactive tools, digital displays and their highly successful mobile app.
3. Foster the CMO and CIO Relationship.
The roles of the Chief Marketing Officer (CMO) and Chief Information Officer (CIO) have significantly evolved with the emergence of digital technologies that sit at the nexus of the two. Capital and operating expenditures once traditionally earmarked for IT are now flowing into the hands of the CMO, Chief Marketing Technologist (CMT), or other technology-savvy marketing leaders. The CIO is now becoming firmly established as the back-office enterprise application visionary for the organization. Although distinct in their positional duties, both teams should be tightly coupled for digital vision to ignite.
At a recent conference, Sephora’s CMO referred to the Sephora CIO as her “best friend” and went on to comment that they see their relationship as a partnership that is a huge asset because digital lies at the core of every Sephora customer engagement. Relationship quality varies in all organizations, but the importance of openness, transparency and strategic alignment between IT and marketing cannot be ignored in designing a successful digital vision.
David Whitehouse is a Director, Business Consulting, Sapient