, , , ,

A Digital Strategy is seen as something big, scary and difficult, and that perception hinders many CIO and CMO managers from taking the first step toward digital success. But, a digital strategy is not that different from normal strategy work, and the same laws of performance management (plan/do/check/act) apply. Time to boost your performance management capability to enable digital success!

A couple of days ago, I conducted a non-scientific experiment to see how digitally prepared different industries (automotive, bank, insurance) in Sweden are. I sent out a message on Twitter with clear business opportunity to understand what response such message would generate. The background to the experiment was the idea that digital companies competing in the “new normal”, need to be excellent at two-way interaction. Not only at broadcasting their marketing messages (mainly based Jerome McCarthy’s 4P marketing mix from 1960’s – what has happened since then?) but also at receiving thoughts and insights from customers through different digital channels. The idea of two-way interaction is needed to fully interact with the customer and create engagement. Two-way interaction that supports current marketing concepts such co-creation, lean consumption and “moment of truth”.

The result of the quick non-scientific experience was that no response was register during the following two weeks. I do not know what I expected but some sort of response to the tweets. That led me to conclude that no companies in the selected industries are digitally prepared to meet new competition in the “new normal”. On the other hand, when investigating some of the company’s Twitter and Facebook accounts, I saw an embryo to digital interaction (especially in Facebook). In Facebook, anyone can write a message on the live feed and expect to get a response quite quickly. Twitter was mainly used to broadcast the marketing messages, and other interesting information. I do not believe that the selected industries are different from many other industries. Many rely on old marketing theories (4P Marketing Mix) but in new digital channels. Marketing messages are broadcast in digital channels in the same way as on physical billboards and television and radio advertisements (one way communication).

There are a couple of interesting points based on this corporate behavior. First, the customer has to enter a specific channel in order to be open for the marketing message. In other words, the customer has to do put himself in a position where he/she can hear the marketing message. If the customer is not there, then he/she will not hear anything. I ask myself, how many times have I activity placed myself in a position to hear more marketing messages? Not that many. It is not that I daily walk around town trying to find a billboard with the right message. This is a quite ineffective marketing method as not many will or want to listen to the corporate voice. It is probably more effective to post a sign in the subway system.

Secondly, the customer behavior is rapidly changing and purchasing is to a higher degree based on emotional belonging and input from peers. Customers do not want to be overwhelmed by useless information and do extra work to find the right information or product. In the theories of Lean Consumption, the customer wants the right information, right interaction and service now – without any hassle or effort. So, when companies push enormous amounts of information in all channels, how do they want the customer to react? What impression do you want to make? What response do you expect to get?

My point of view is that many companies are very immature in its digital marketing and have the wrong understand of how the “new normal” actually works. It is about understanding how digitalization affects the market and customer behavior – and how to adjust one’s marketing accordingly to fully interact with the customer. A digital strategy (defining the digital approach) is seen as something big, scary and difficult, and that perception hinders many CIO and CMO managers from taking the first step toward digital success. But, a digital strategy is not that different from normal strategy work, and the same laws of performance management (plan/do/check/act) apply. The problem is not that we do not understand the impact of digitalization, but rather that we have difficulties at quickly defining a digital vision and strategy based on these insights. A weak strategic planning process is the main obstacle to digital success. We are not used to work in this way. Performance Management can help – let us have a closer look!

  • Plan: To create a digital vision and strategy based on knowledge about the new market and customer. Define measurements to ensure the vision and strategy is achieved.
  • Do: Carry out the digital strategy in the “new normal” landscape – focusing on customer interaction and experience.
  • Check: Check whether the digital vision and strategy is achieved. Understand why the vision and strategy was not achieved.
  • Act: Adjust the digital strategy.

The performance management cycle need to be complemented by the performance management enablers to drive the cycle in an efficient and effective way.

  • Conceptual design: Do we conceptual idea of how to run our digital initiative? Guiding principles? Are the roles and responsibilities in place? How to engage your employees in each “moment of truth”?
  • Competence: Do we have the right competence to develop a digital strategy and executing it?
  • Tools and processes: Do we have access to the right digital tools and channels to achieve our digital vision?
  • Leadership: Is senior management aware of the new challenges and support the initiative? Level of self-governance and trust?
  • Information:  Do we transfer the right information between the different activities and between key stakeholders apart of the digital initiative?
  • Calendar: Are the activities of the digital initiative carried out in right order and in the time period?

Recent research shows that almost 80% of companies (Forrester research 2014) have no strategy for digital success but struggle with the basic elements of the strategy framework. The effect is at its best a blunt digital instrument that focuses on message broadcasting rather than on great customer interaction and experience. Simply, a large majority of companies have little idea have to address the increased digitalization and met the new digital customer.

My Recommendations:

  1. Understand that Digital Strategy is not different from normal strategy work. Key is having a best practice performance management structure.
  2. Carry out a Digital Diagnostics session to understand your strengths and weaknesses in this domain. Ask The Goodwind Company for more information.
  3. Build awareness in the organization around digital marketing. How does the “new normal” differ from normal market conditions? How has the customer behavior changed? How is marketing methodology changed?
  4. Understand how good your performance management capabilities are supporting strategic planning.

Digitalization is here and many companies and industries will meet new competition with different business models and digital presence. The question is not if this will happen but rather when it will occur. The fact is that approximately 80% of companies are unprepared for this digital challenge and will suffer in terms of reduced market shares and revenues. Even though many talk about a digital presence, few do anything about it. But why does it have to be so difficult? What is the problem? The answer is obviously that these companies have neglected strategic planning in IT and business for long time and are now unprepared for a industry shift that carries huge consequences. It is not to late. It is time to get moving. But think about what the real reasons to your problems are. If you don’t – someone else will challenge them.

– Hans Gillior

Hans Legend 1