With every industry undergoing some level of digital disruption, business and IT leaders are faced with a set of unique challenges—but also opportunities. They must think about creating a new approach to maximize business performance.
We spoke with Michael Maoz, research vice president and distinguished analyst and leader of the Gartner Symposium/ITxpo 2016 track “Driving Business Performance,” about the value proposition of a digital business strategy.
Q: What impact can a digital strategy have on driving business sales and growth?
A: The idea of a digital strategy is all about driving more customer engagement and intimacy. While the form it takes will vary greatly across models, digital strategies are able to unlock and create value across industries and in all geographies.
IT leaders are expected to help define the specific business outcomes that will flow from digital investments. One of the many ways in which this is achieved is by creating combinations that were previously inconceivable or unachievable due to technological or other resource constraints.
“ Businesses must be able to decipher what is most valuable to the individual customer or customer segment...”
For example, the Internet of Things (IoT) has digitized how food service businesses will manage beverage inventory levels through the use of sensors. As a first step, businesses are able track and optimize replacement cycles, driving down costs. In subsequent steps, data scientists can analyze consumption data by location and demographic and point-of-sale metrics to drive more targeted marketing and better business performance across markets segments.
Q: What are best practices businesses should be cognizant of as they look to successfully leverage digital strategies?
A: It is critical that businesses look not just at their competition, but across to other industry verticals as well. Think about the ATM from years ago, which has led to the airport check-in kiosk, and now to the infotainment screen inside your automobile. An important byproduct of looking across adjacent industries rather than focusing solely on “one-upping” the competition is businesses may benefit from thought-leaders and first-movers of digital strategies.
Retail is a good example of an industry leading the pack in its use of technology with consumers, from allowing the customer to visualize how clothing will look on them, or virtual, digital product showrooms and “experience stores” that integrate mobile, web, social media and physical store.
“ An important aspect of undertaking a digital strategy is having the right tolerance and attitude towards small failures and to appreciate the need to constantly iterate.”
Another best practice is putting the customer at the core of the decision-making process. Businesses must be able to decipher what is most valuable to the individual customer or customer segment, and as close to real-time as possible, to determine the strategies most relevant to the business at each digital moment with the customer. This approach will also help mitigate any potential downside risks to the investments.
Businesses that have successfully formulated and executed on a set of digital strategies have done so by creating an empathetic, partnership-like role with their customers, resulting in their ability to capture the true experience of the customer and develop various gradations, or segments, of their customer base by specific demographic, psychographic, and geographic segmentations, among others.
Q: As companies look to manage budget constraints with the need to invest and innovate, what are some important considerations in striking the right balance?
A: An important aspect of undertaking a digital strategy is having the right tolerance and attitude towards small failures and to appreciate the need to constantly iterate. For many companies, even in the 21stcentury, digital strategies represent new ventures into unchartered waters.
Thomas Edison was well-known for his numerous unsuccessful attempts at inventing the light bulb, for which he famously explained the process as one “with 1,000 steps.” Budgets are easily influenced by management tolerance for (or intolerance of) failures; when some defined value-add isn’t felt in a particular investment, managers are less willing to allocate financial resources to further development. To help mitigate this, IT leaders need to work with sales/marketing as an embedded function rather than in isolation to be most attuned to what drives customer acquisition and retention.