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Go Big or Go Home? Not Always

Four signals that influence transformations

It’s go time and you are about to finalize the customer-centric strategy roadmap that your team has spent the past few months putting together. It is time to make a decision, and you have to choose how your strategic roadmap will start – with a big bang, or with a more modest start. Starting big would mean that the project would have higher visibility and, more importantly, make a bigger impact. Starting small could mean less risk and a better chance of getting traction in the organization.

What should you do?  The answer is, perhaps not surprisingly, “it depends.” 

Our recent study, “The Case for Change: Exposing the Myths of Customer-Centric Transformation includes Myth #3: “To make this initiative worthwhile, we need to go big”. Not necessarily! For an enterprise-wide initiative, the concept of ‘go big or go home’ depends a lot on certain key characteristics of your organization. 

There are four major dispositions that influence how customer-centric transformation projects should start:

  1. Readiness to embrace change
  2. Company structure and organization
  3. Digital and transformation intensity
  4. Investment required

1. Readiness to embrace change is critical. 

Large-scale transformation requires broad support from key stakeholders and the kind of organizational DNA that is receptive to big changes. Is your organization ready to embrace major change?  Do you have leadership alignment and C-level sponsorship? What type of risk profile does your organization have – aggressive or risk-adverse?  Have spectacular failures of big initiatives left the organization with little appetite for large-scale change? 

If the answers to these questions are supportive of change, and if your company is one that reinvents itself regularly and/or one that recognizes that innovation from within helps withstand competitive threats, you may be poised for transformation. If not, perhaps you’ll want to go slow.

2. Company Structure and Organization

Another consideration is how your company is organized. In some instances, you may want to adapt a hybrid approach that sets a big objective but starts with a sub-set of the business. The example below highlights one such approach for a client with multiple, independent brands. Pilots were used to optimize execution and serve as a benefits showcase.

Merkle recently worked with a mid-sized pharmaceutical company which was facing the challenge of silo-ed sales teams not sharing insights. Salespeople would work with their key accounts and information about those accounts was not readily available to the rest of the organization. The resolution plan was ambitious – to use a knowledge management system to share and integrate sales insights generated by salespeople with the rest of the organization.

There were two paths forward when it came to implementation – roll the changes out across all brands and sales teams simultaneously (greatly improving speed to market and adding centralized system management), or pilot it with a few teams first (allowing for a “test and learn” approach).

After an in-depth evaluation of both options, the company decided to create a series of pilots to launch the initiative.  The idea with the pilots was to generate momentum for the entire exercise, and the most ‘advanced’ brands were assigned to the pilot. This was done not only because they had higher visibility through the organization, but also because the pilots had a higher likelihood of success with those brands.  

3. Digital and transformation intensity

Companies can be classified  into four main stages of digital intensity and transformation management intensity, according to George Westerman of MIT’s Sloan Center for Digital Business. Although Westerman is focused on digital technology broadly, his model definitely applies to digital marketing.    

1. Westerman calls those companies with limited intensity on both the digital and transformation Digital Beginners; they typically lack transformation management skills. Key characteristics include:

  • Basic digital capabilities but lack digital leadership
  • ‘Wait and see’ mode
  • Immature digital culture
  • May be experimenting

2. Those companies with higher digital intensity but low transformation intensity are Fashionistas; they typically have a lot of snazzy digital applications, and while some create value, many do not. Key characteristics include:

  • Many advanced digital features
  • Quick to buy the latest digital thing but not overarching vision
  • Proud of tech trendiness
  • Wastes much of their spend

3. Those with low digital intensity but higher transformation intensity are Digital Conservatives. Westerman sees Digital Conservatives as preferring prudence over innovation. Key characteristics include:

  • Methodically building digital skills and culture
  • Cautious about wasting time, effort, and money
  • Few advanced digital features
  • Under-developed vision

4.The fourth group, Digirati, fully understand the value of digital transformation, and recognize the need for sufficient investment to realize the transformative vision. Key characteristics include:

  • Committed leadership and strong digital culture
  • Strong overarching digital vision
  • Knows how and where to invest
  • Digital drives significant value

4. Investment required

Another key factor is a clear understanding of the potential revenue upside from digital marketing, as well as budgeting priority to support it. Understanding how digital marketing investments will drive value is critical, as is a solid quantification of the actual revenue potential.  Will the upside revenue potential (and resulting profit contribution) over a three to five-year period outweigh the expected investments costs?  A best practice of ours is to estimate potential revenue, then cut the estimate in half  — the revenue and profit contribution (and associated NPV and ROI) can help you gauge how much investment you can afford.  It is okay to go ‘logical incremental’ if the numbers don’t support a bigger change!

Our research also found that high-growth companies tend to be much more likely to implement complex and leading-edge technology solutions, such as channel systems, ad technology, decision management, and identify management, than their average/low-growth counterparts.   We can speculate regarding the reasons, whether they reflect greater availability of investment capital, a greater orientation to risk, or simply a recognition of the need to innovate to support and sustain their growth.  In all of those cases, a realistic roadmap (with big or small steps, depending on your organization) remains a very important part of implementation success.

Learn more by reading the report.