Ecommerce Success Starts With Getting the Organization Right
It’s a problem most business leaders will recognize: technology is costly but rarely delivers the promised results on budget and on time. Indeed, research right across the Forbes Global 2000 index found that seven out of eight companies were failing in their digital transformation plans.
To lay the blame for failure at the feet of technology, however, would be a mistake. The responsibility rests firmly with people. It’s people who agree on the specification, allocate the resources, plan and manage the projects. It’s people who run the channel and other people who measure their performance and are supposed to hold them to account.
To misquote a former US president: it’s the organization, stupid. Organizations can, indeed, be stupid. In the absence of leadership, they fragment, creating smaller units that lose focus on the customer and drive forward with their own agendas. This is what happens when digital doesn’t work. So, what should leaders watch out for? In the new book, Optimizing Digital Strategy, the drivers of failure are grouped into three categories: an organization’s culture, capability and capacity.
These factors in digital failure tend to reflect questions at the core of what an organization is trying to achieve. They include:
- Getting the business model wrong – understanding where margins are greatest but also at risk and how to mitigate what separates the successful from the less so.
- Working a new channel but using operating models from an existing one – using digital to deliver products or services requires new processes, standards and behaviours.
- Failing to operate to a single process and common standards across all key functions involved – the most obvious example here is the failure to set a drumbeat for IT support so that business-critical changes minimize any loss to profitability.
- Assuming that digital transformation equates to a new website – transformation comes from any application of digital technology to the business that it either makes more money or saves costs, or ideally both (not always a new website).
- Failing to establish the primacy of customer insight as the key driver for change – if the customer is going to drive your business then you need to ensure that insight about the customer and their needs can be met, sits at the heart of any change you make.
Capacity drivers are associated with an organization’s failure to think through resourcing, structures and how/where to use external expertise. These can also be planning failures. They include:
- Not thinking through the transition from project to business-as-usual – it is rare for anyone with the capabilities to deliver a technology platform will be able to run it commercially, for example.
- Not agreeing on a long-term understanding of functional alignment to the new key processes and who has ownership for it – functions work in tribal silos but they will need to work seamlessly in any e-commerce operation.
- The absence of principles against which key commercial and operating decisions will be made and where – too far up the line can create bottlenecks in a world that moves far faster than any heritage business model. Too decentralized - and the tail will end up wagging the dog with the inevitable consequences of inefficient operations.
- The lack of a ‘test and learn’ process that creates the evidence to justify investment in change – expert-led change is the antithesis of a business driven by data. Making sure there is a robust framework, process and adequate resources to support, test and learn, is a differentiator of superior performance.
Just as we can cite significant failure there are also many available stories of how to effectively drive digital transformation. In Optimizing Digital Strategy, we set out examples and models which demonstrate that organizations succeed in their digital strategies when there is:
- a fixation with the customer and investing to ensure that the customer experience meets or beats expectations;
- a belief in design-thinking and applying this to create solutions to actual problems faced by customers;
- an understanding of how to use data to create insight and how to use that insight to drive experimentation and innovation to improve performance;
- the adoption of agile customer-led processes that move fast and put the customer at the centre of the conversation;
- focused use of creativity to support the design of solutions that work for the customer;
- a commitment to measuring the commercial outcome and demand for quality returns from an investment made in technology, infrastructure and people.
The pace of development in digital technology is faster than ever. For organizations, reacting to this pace and letting it drive internal decisions can become an overwhelming pressure. As sales falter or margins decline, it is easy to think that technology can provide a silver bullet. Yet the drivers of digital failure outlined above, mean that leaders are at risk of making decisions that destroy shareholder value.
By providing practical ‘Leadership Actions’ at the end of every chapter, Optimizing Digital Strategy provides the tools needed to successfully implement an organization’s digital strategies.