Making Digital a Core Part of Business Strategy.
This article was originally published on the Engine Digital blog.
Recently we attended a national digital strategy and marketing conference in San Francisco, where over two days, one of the most discussed issues centered around what future role digital plays within the business strategy of an organization. This issue was discussed amongst some of the largest and most recognized U.S. brands such as Kraft Foods, Nationwide Insurance, Under Armor, Target, Oracle and Coca Cola.
More Than Marketing.
It’s no surprise, today’s digital business landscape is complex, spanning a number of online and offline customer-facing touchpoints from desktop and mobile websites to native mobile apps, social channels and well into the physical retail experience itself. A sound customer experience strategy is quite literally driven by digital strategy. Match that with a variety of sales, customer service, employee engagement, IT and operations orientated digital platforms. It’s no wonder that the role digital strategy has within any company must be considered throughout the organization, not simply within the function of marketing.
For the marketing group, taking a short-sighted, reactive approach to leveraging the latest digital opportunities simply doesn’t support a move towards being a more connected brand – consumers see through short lived marketing programs that don’t fit into the greater vision of a brand, and many of these experiments fall flat if not supported by a long-view digital engagement road map.
Outside of marketing, the influence of digital thinking is beginning to drive operational change, impacting the tools, processes, and approaches to how businesses manage internally, and how they engage with their customers.
Blurred Lines.
As digital (in its many forms) continues to gain attention across organizational silos, the line between who owns what continues to blur. So, when marketing develops a branded utility app, integrated with social, and tied into customer data, who’s responsible for overseeing this when, by default, this is really more of a business innovation initiative, not a marketing one?
With that, if digital is a real driver for organizational change, how do you get buy-in from the C-Suite if digital is simply viewed as a marketing and IT responsibility?
The Buy-In.
From what we see, there are three key aspects to ensuring that digital strategy is embraced and embedded into a brand’s overall business strategy.
1. Executive Ownership
The common challenge most organizations face when setting out to leverage digital as a business growth tool is really a cultural challenge, not a technological one. While digital business drivers must be embraced at the C-Suite (top down), many organizations still view digital as a bottom-up strategy, focusing on the foundational ‘must haves’ rather than considering a more strategic approach. With executive ownership (or at very least, executive engagement) only then can a true cultural shift occur, allowing digital strategy to be embraced and integrated throughout the organization; especially as it becomes prioritized for those responsible to execute on the strategic vision.
There’s no shortage of war stories of businesses like Blockbuster simply not reacting fast enough, even though they had more than sufficient financial resources to stay ahead. Even more incredible – this is not an unusual story. It’s staggering to consider the number of legacy businesses across the U.S. and globally, being challenged by upstarts that move quick, innovate, and take a completely different view of the category they’re in.
Without executive ownership, it’s difficult for businesses to see the path forward, to safeguard their head-start, and to evolve, even with accessibility to technology, insight into user needs and behaviors, and the threat of disruptive brands entering their space. In this context, digital is clearly more than a marketing and IT consideration.
2. Management Partnership
As organizations recognize and embrace the need for a cross-functional digital strategy, the next step is giving each department a voice at the strategy table. Making digital a core business strategy means defining the needs across the organization while looking at opportunities to combine and overlap efforts, keeping in mind that customers (or users) don’t see a gap between how they engage with a brand online, through mobile, or in the physical retail space. And while silos almost always exist, an environment of collaboration needs to exist to eliminate these gaps wherever possible.
As defining the digital roadmap becomes a combined effort between marketing, sales, IT, operations, human resources and the C-Suite, each group becomes responsible for defining and articulating their own needs – both short-term and long-term, in building a digitally connected organization – one that has the data to make insightful decisions on how to evolve.
Often is the case that this approach leads to a broader understanding of how digital can be utilized to improve business metrics that may have previously been overlooked. If HR assumes their own needs could only be met through a very limited reach into digital marketing, this approach provides the opportunity to look at digital platforms and processes that go beyond recruitment campaigns and starts to establish efficiencies, reduces redundancies, and increases the performance and success of HR activities – all measurable and actionable, supported by a broader digital strategy shared across the organization.
Interestingly, we commonly see a client-side challenge in getting the right stakeholders into the room to define what a high-level digital strategy might look like. As an agency partner, our role is often one of facilitator, bringing these teams together, coordinating the discussion, and asking the tough questions. Even more incredible is when we bring teams together that have never connected within an organization.
3. Budget Allocation
Without question, budget allocation is the most challenging aspect of having digital embraced as part of business strategy. How much to invest overall, and how to prioritize that investment against each department’s goals are both common challenges. This can become complex math best left to the CFO working within the C-Suite to set budgets against broader strategic corporate goals, aligning department goals to the over-arching corporate strategy. Department leaders should unearth the digital opportunities that can best strategically meet these broader corporate goals, and set appropriate budgets.
But take into considering the following when building a case for funding:
— Marketing Needs CAPEX Access
With marketing initiatives starting to bleed over the line from campaigns to platforms, providing added value to consumers, and typically, a longer shelf life for the brand, this requires both a marketing and capital expenditure (CAPEX) budget. To provide the marketing group the means necessary to evolve past disruptive paid media and start to build real, valuable connections with customers, there’s now a clear need for CAPEX dollars to better invest in channels and longer-term experiences.
— Innovation Needs Allocation
Setting budgets based on last years’ spend will always limit an organization’s ability to innovate. And innovation requires exploration, experimentation, and unfortunately, comes with a good deal of risk. For an organization to consider new technologies, new customer experiences, digital products, or enterprise platforms, a realistic allocation of budget is necessary. While innovation budgets can be difficult to set, it’s important to consider the pace of change in the digital space and the needs of an organization to not only protect it’s place, but set a course for leading within its vertical. As Peter Drucker famously said, “Business has only two functions – marketing and innovation. All the rest are costs.”
— Spend Less. Expect Less
The key point here is, set your expectations appropriately. By looking at the market and seeing what’s already being done in mobile, on the web, with connected devices, it’s easy for an organization to say ‘we want that.’ But the reality is, digital is costly. It requires time, the right resources, and the right partners – all costs that need to be considered. We’ll keep this point short, as we’ve written extensively on this topic in the past.
Full Disclosure.
What often makes setting digital budgets so challenging is the endless possibilities for what a digital strategy might include. The often used analogy is comparing this to the construction of a house – without determining fundamental requirements such as scale, quality of materials, detail, and location, it would be completely impractical to determine an accurate budget.
So, the inverse approach needs to be defining your scope (what can and can’t get done), based on available funds. This is true for digital marketing initiatives, enterprise projects, in-store digital integrations, and general innovation.
Starting with a defined budget is the only way to safely bet that your agency partners have the input needed to effectively define a digital strategy that can be fully executed. And this doesn’t mean that the thinking needs to be contained, as long as the approach taken allows for a digital roadmap to be developed that includes a roll up of near-term initiatives and those that simply don’t fit within the constraints of the current fiscal year.
Sharing a defined budget provides your agency partner with a much clearer lens through which to research and plan in collaboration, or on your behalf.
Short-Term & Longer-Term Planning.
Typically, clients come to digital agencies with a specific need; often a pre-determined output intended to solve a business challenge or leverage some new opportunity in the digital space. And while the defined output may be the right solution, the agency’s job is to explore the brief further to ensure they’re heading down the most appropriate path. This form of engagement is still very common, however, a far more complex digital environment means there are far more ways to solve a business challenge through digital strategy, and isolated solutions often overlook the longer-term opportunity.
With this, we’re seeing a shift in the value we as an agency provide our clients by helping to contextualize the requested output within a broader digital engagement roadmap – one that focuses both on near term opportunities, and the longer-term, over-arching digital strategy. This often takes the form of a customer experience map (also known as a user journey or customer journey), and always involves the broader leadership team from across the organization, or within the business unit we’re working with.
Look Before Leaping.
The value of taking a big step back before jumping into solutioning provides a clear view and a holistic plan for future initiatives that can be properly accounted for within budget setting.
As an example, consider the difference between a web redesign project and developing a true web strategy. The former being more focused on short-term improvements and optimizations required to meet more immediate business goals for the client (i.e. fix what’s not working). Web strategy is a longer-term effort that looks past the immediate goals of the project, uncovering the business growth potential the web channel is able to provide. This second approach may still lead to a redesign of a brand’s website, but also contemplates a more aggressive strategy that goes beyond supporting basic KPIs, reaches outside of marketing to ensure all business group’s needs are met, and considers both the short and long-term vision of the web channel in driving business forward.
Taking Stock Together.
As we enter the final quarter of the calendar year and budgets are being set for 2015, now is the time to consider what will be allocated towards digital strategy and innovation. Within marketing, this means setting aside the right funds for foundational activities like paid media, display, search, and content, as well as larger-scale initiatives like web strategy, mobile strategy, and experimentation with new channels.
For CFOs specifically, now is the time for setting aside an adequate budget that ensures digital transformation can be effectively considered across the organization and not just within marketing. Enabling a proactive “test and learn” approach to innovation provides the environment for organizational change, supported by data, and effectively leveraging new ideas, approaches, and technologies to move the business forward.
If taking stock requires more effort than you have resources available, consider reaching out to your digital agency partner. We’re technically built to be innovative and culturally driven to think ahead.
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Written by Stephen Beck, Founder & CEO of Engine Digital.
Engine Digital is a Vancouver and NYC digital agency focused on helping organizations like the NBA, Lululemon, Western Union, Adidas, and Pirelli Tires, improve the overall customer experience through foundational web, mobile, and social platforms, products, and services.
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