BrazilRevisit technology and organisation for commercial success
With new trends and digitisation reshaping the way people and businesses buy products and services, the secrets to commercial success are shifting. Marc Andre Lein and Simon Andreas Hofmann from management consultancy Impulssum outline why a renewed approach for technology and organisation is core for commercial success.
Technology changing the game
Digital is transforming the way we do business. Let’s take a look at the world’s largest firms in 2006. The top three places were taken by ExxonMobil, General Electric and Gazprom. The top of the list today belongs to players such as Microsoft, Google and Amazon. In just a few years these ‘digital’ players amassed fortunes unseen before, and they did so by exploiting new business models or disrupting traditional ones.
The word ‘digital’ is used in many different contexts, it appears difficult for most companies to fully grasp what ‘digital’ means to them.
If we take a step back, digital is not about digital, but simply an enabler allowing us to fulfil customers’ needs. Often these needs are unaddressed by existing players, and the catalyst opening up new opportunities is an advancement in technology. These advancements allow businesses to (better) address previously unmet needs, and we see players grabbing this opportunity in virtually every industry. Success belongs to those companies that understand this change and use it to their advantage.
Taking a closer look, what most of the rapidly growing and dominating companies have in common is a relentless obsession with the customer, putting them at the centre of everything. To quote Jeff Bezos on Amazon’s success: “The number 1 thing that made us successful by far, is obsessive compulsive focus on the customer”.
This same principle applies in both B2C and B2B environments, where the individual recipients of your product or service are your consumers, and their expectations are shaped by front-runners across industries (e.g. “why would I not be able to compare reviews of products or services in a D2B order portal when I am so used to relying on reviews in my private searches”).
Business led technology and organisational setup
The above-mentioned dynamics can only be reasonably used to your advantage if technology and its business application is set centre stage in your organisation. There are a few guidelines on how technology should be handled:
Technology should be seen as a growth driver, not a cost. This includes:
Increasing & structural IT investments, spent on innovation and linked to business KPIs (such as sales), instead of variable IT investments that are subject to cost pressure and results in prolonged use of legacy systems (with high spend on maintenance). Technology development needs to be continuous and should adapt to changing consumer needs and advancing technology.
Management & allocation of IT budgets are traditionally done case-by-case and hierarchically, where management teams have a fragmented wish list, and teams fight for budget. Management teams in digital winners set strategic domains, weight the priorities & allocate budget pools.
Business and IT departments are traditionally separated and not integrated. IT needs arise in business, added to wish lists, reviewed & approved. Digital winners do not separate the business from IT and vice versa. IT needs arise and are immediately acted on (budget already in domain) within the business teams (which include technology professionals). These winners typically do not make IT departments report into the CFO where it is often looked at as a cost centre.
You should also rethink business metrics across the organisation. We are often trained to think in terms of what was right in the past. The new environment may require you to look at slightly different metrics – for example set targets for marketing ROI instead of marketing budgets.
Additionally, some metrics may have different healthy values in the playing field, e.g. revenue per FTE in an online or omnichannel environment tend to be higher, as e.g. such as salaries for specialised talent tend to be higher. On the flipside, impact per FTE may be more scalable.
Fundamental success criteria
There are three fundamental success criteria which every business needs to adhere to:
- Be customer-first: You must provide the best (end-) customer experience that meets core (unmet) needs and expectations. Understand your customer deeply, and act accordingly.
- Be self-learning: Own the (end-) customer data and continuously generate data-driven business improvements. Apply a business-led, data-driven approach to prove value first then scale learnings.
- Have a high learning-velocity: Adapt to evolving consumer/ end-customer needs and expectations structurally and quickly. Higher learning velocity means ‘moving ahead of competition’.
Marc Andre Lein is a partner at Impulssum in Amsterdam, while Simon Andreas Hofmann is an associate partner based in London. Impulssum is a consultancy specialised in customer centricity and commercial excellence.
