The events of 2020 have caused many organizations to push digital initiatives forward at unprecedented speed. This acceleration of digital business means making choices about which initiatives move forward or slow down.
Kasey Panetta, Gartner Senior Content Marketing Manager, interviews Hung LeHong, VP and Gartner Fellow, to discuss the framework for digital business acceleration and how to use the five lanes to prioritize your digital initiatives for better results.
For the full interview, listen to the podcast or read the transcript that follows, which has been edited for clarity and length.
We’re going to start with the basics. Can you explain the general concept of accelerating digital and why it’s so important now?
Probably the best way to think about it is what we’ve actually been through, what a lot of us would call the lockdown. I mean, the speeds at which we moved digital forward were incredible. I’ve talked with enterprises that have set up e-commerce in two weeks, which is incredible. We’ve never seen that kind of speed and acceleration before. So we’re starting with a base point of incredibly fast acceleration for digital. Gartner recently surveyed boards of directors, and essentially 69% of the board of directors said that they intend to accelerate digital business.
And so the concept of digital business acceleration says that, “Can I keep that momentum going? Can I keep that same level of speed and urgency? Digital helped me during the lockdown, everything from making things virtual, to reducing costs and reaching out to customers. Now customers are used to these things. Can I keep that going?”
Gartner created a framework to help clients think about this concept of accelerating digital. Can you explain it?
The framework has two parts. The first one is about setting the organization up for speed to actually accelerate. For example, funding may be very slow, there are a lot of approvals to go through. Or our decision making process is really slow. So how can organizations streamline to diffuse those drags to actually make and act on decisions faster. Can we amplify or what we call apply force multipliers to things? Can we change to more of an agile based of thinking, not just within IT, but in the rest of our business so that we can accelerate.
It’s also imperative to redirect resources, coming to terms with the fact if we want to focus on speed we must focus on certain initiatives because we can’t do everything. Organizations have to be willing to take resources, like people or time or partners and so forth, and actually put them toward the areas to accelerate. So for example, taking away resources from upgrading some kind of technology system and putting it toward customer-facing digital interactions. That would be a good example of redirecting resources.
We surveyed a number of enterprises and some of them answered that 100% of their interactions with customers recently have actually been digital and they’ve set it up that way
Preparing for speed is not so much a methodology or a process. It’s actually a mindset, and we call it rethinking value. Organizations and leadership teams must consider the way that they deliver value or what value looks like in the eyes of a customer in the future.
The second part of the framework is the immediate direction. If you’re going to accelerate, if you’re set up for speed, well, what directions should you take? We use a car analogy with different lanes on a highway. So imagine dividing digital investments into five lanes on a highway, each having a specific purpose.
Let’s discuss the first lane — the fast lane. You mentioned work from home, but what other kinds of initiatives should live in this lane?
You want to look at everything that you did during lockdown as an enterprise at lightning speed. And the reason we call it the fast lane is because your leadership already granted the funding, right? Your leadership already said it’s okay to reach out to all customers using digital. And you want to take advantage of that funding, that acceptance from leadership and of course the investments in the technology, and essentially take them to the finish line.
Stabilize them. As you mentioned, work at home or the hybrid variation of that is a great example: What is that percentage of work from home versus hybrid versus work in the office? A second example is the nature of customer interactions during the lockdown. We surveyed a number of enterprises and some of them answered that 100% of their interactions with customers recently have actually been digital and they’ve set it up that way.
Again, that was the lockdown version. What is it going to look like in the new normal? It’s probably not going to be 100%, but go ahead and figure out what that will be and actually stabilize it. So that’s another example of something that’s in the actual fast lane.
The second lane is called the growth lane. So what kind of initiatives should digital leaders be looking for in this area?
The growth lane is for enterprises that maybe are more aggressive. They want to leapfrog others in the pandemic. They want to take advantage of opportunities that exist out there because of the pandemic, simple examples, as customer needs start to change. The example of curbside pickup, maybe that becomes really important, maybe drive-through becomes really important. Maybe consumers actually don’t necessarily want to go into a restaurant as much as they do.
And the concept of what some people call cloud kitchens, which are really shared kitchens where you make the meal, but you don’t actually have customers come in and sit, becomes more popular. Or maybe if you’re in the public sector, the notion of renewing your driver’s license by going into office just no longer exists and we can get a lot more volume, a lot more efficiency by doing it remotely. These are all examples of what we would call the growth lane.
A company that’s quite aggressive, that wants to take advantage of digital, can really leapfrog
And so it’s not just about customer needs changing. I think that’s the more obvious thing. What we’ve also seen is our regulations start to change. For example, in the U.K., the land registry is now taking e-signatures. So aggressive companies in the real estate market can take advantage of that, “Hey, now we’re allowed e-signatures, so we can make the process of buying a home a lot smoother, a lot faster.”
Some of the stock markets all over the world have removed the regulation to have physical stock trading, opening up the door for many different kinds of things. Some of our clients have the okay for their buyer, who happens to be the government, where instead of coming in for the inspection of something that’s being built and actually visually looking at it, they’ve had the okay to do it via video for the first time ever.
These changes of regulations or these roadblocks against digital that existed in the past that have been removed. A company that’s quite aggressive, that wants to take advantage of digital, can really leapfrog. So those are examples of what we would classify within that growth lane.
How do you make a business case for a risky investment in this kind of climate?
This is why I actually use the word aggressive. It has to do a lot with what your board of directors, your investors, your CFO think about future growth. A lot of companies that are aggressive have those reserves to make those leapfrog actions. So for organizations that have the cash, or reserves, the business case is fairly straightforward. I think that’s a very best case scenario.
If you’re in a situation where the cash reserves are fairly limited, or you have a lot of problems actually funding it, it actually becomes quite problematic. To continue momentum, we encourage more of a portfolio-style thinking.
For example, maybe 80, 90, 95% of your investment is in the fast lane or the fix-it lane, but you hedge your bets a bit and maybe have a little bit in that growth lane. So that relative thinking of portfolio thinking allows companies that have a hard time finding the funding and the resources to pursue the growth plane to have a foot in that door.
How do you identify what initiatives would be best for your organization? It seems like there would be a lot of different options and opportunities.
I’d say the first thing, usually the first thing in all cases, is following the customer, where’s the actual customer going? For aggressive companies, that may mean being in places before the customer wants or knows to want to be there.
The second thing, frankly, and, and I know this sounds a little bit loosey goosey for me to say this, but opportunistically, think about mergers and acquisitions. Think about situations where other companies or competitors, or even fintechs, you know, some of these startups, it’s a tough climate for everybody. They of course are in a financially bad situation. So the opportunity comes up to be merged, acquired, converged, whatever language you want to use.
Because the opportunities are not defined, because you don’t know ahead of time, we recommend reserving some capabilities or capital essentially to do these kinds of things.
Read more: Use COVID-19 Downtime to Upskill for Digital
The third lane is the fix-it lane. It seems like it’d be very relevant to businesses right now. Can you explain a little bit about who should be thinking about these types of investments and initiatives?
A lot of organizations in various stages of pandemic recovery are thinking as an enterprise, ”We’re just not set up correctly for this new world.” For example, the cost structure may be too high and digital tools, such as automation and self-serve tools that help reduce the cost, might not be there. That’s where the fix-it lane starts to come in.
But what’s also interesting is the mirror image of that, where we have enterprises out there that are actually going through the exact opposite of bigger reductions in operations or sales. They’re seeing increases in volumes and growth. So a very simple example of this is maybe the digital commerce business unit, or some parts of healthcare. Their volumes went through the roof and they’ll probably continue to go that route. So the fix-it lane goes both ways. Are you too big? Are you not big enough? Can you scale up, can you scale down?
The fourth lane is the slow lane. What kind of initiatives belong in the slow lane?
First of all, why is there a slow lane? The slow lane is there because to go fast, often our clients have to slow some things down. The slow lane is about looking at the list of digital initiatives that you were working on even before the pandemic, and of course through the pandemic itself, and determining resources. For those initiatives that shouldn’t be killed, consider treading water with them, meaning keep them going, but at a minimal level so that resources can be redirected toward other things.
So for example, maybe you were looking at something like an ERP upgrade and on top of your ERP upgrade, you had all these bells and whistles that you wanted to pursue. By putting the ERP upgrade in the slow lane, maybe you do the upgrade, but you hold off on the bells and whistles.
I’m not saying that you’re going to stop them. What you’re going to do is you’re going to meter them so that they get implemented over a much longer period of time, because they’re not as critical as working on a digital initiative with customers like creating a customer portal, mobile app or customer-facing things.
You mentioned completely stopping and killing, which is not the idea in the slow lane, but is the idea for the final lane — the exit lane. So what kind of initiatives are you seeing in this area?
That’s exactly the right understanding of the exit lane. You will kill some projects. The first category of projects that you’re likely going to kill are those risky bets that you made pre-pandemic. Maybe you were going to move into a new adjacent industry with a new digital product of some kind, but because of the pandemic, you put it on hold.
And then as you’re emerging out of the pandemic, you’re seeing that the market is just not ready to absorb that new digital product or service. So you actually stop it and take those resources that you’ve now canceled and move those people, that funding and the time toward other projects.
Do you find executives really struggle to identify areas that they can put in the exit lane?
Absolutely. I think all of us, as leaders, get attached to our pet projects and so that becomes very complicated. To be able to do this whole portfolio-type exercise, you must consider the bigger picture. If you go into the weeds and ask middle management, of course they’re going to say we can’t kill that project. You actually have to bring it up a notch for the better of the company, or even more specifically for the better of the customers or citizens and look at it within that light.
What about companies that want to embrace digital acceleration, but they might not be able to afford investing in new initiatives at this point?
For those organizations, there are a couple of alternatives. The first one, of course, is they can do nothing. In other words, go very, very slowly. The danger in that is that they upset their customers. They’re not in tune with what the market wants, which in a private sector situation means competition gets a lot harder for them and bad things happen.
The second thing is to look for funding elsewhere. We’ve had companies that maybe the culture and even the way that they actually fund is not pro digital, but by creating a separate group — and in some cases, literally a separate legal entity — that allows you to do two things:
- Contain the risk only to this little separate entity
- Allow the separate entity to move forward unimpeded by the culture or the ways of funding or whatever it is that was slowing down digital before, and they can move on their own
And then after that, what the organization can do is take a look at that separate entity and say, yeah, here’s some things that we can take within our organization. Or you can even fold the entire organization back into that organization to then kick-start the legacy” organization.
So those are rather extreme ways to get digital going for a company that’s really not into digital, but frankly it has to be extreme. And I don’t have to point any more to lockdown to say that that was an extreme situation that got a lot of companies going.
Is there any final thought that you want to share?
Remember the acceleration that happened during lockdown. We’ve had some of our clients even call the lockdown the honeymoon period because for the first time ever, projects and initiatives were pursued in a matter of days, if not a week or two, because the leadership team was aligned. Everybody knew that they had to do it because the funding was there and at no other point in history have we had something that easy for digital. So remember that and try to port some of that into the near-term future so that you can actually accelerate. It’s that kind of speed and urgency that you want to capture.