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Why are you so far behind in the digital revolution?

Business as usual is changing. Digital technology is driving the change and as it engages with business organisations, the changes it makes are creating a gap between leaders who are accountable for direction and performance and the technical and digital specialists required to operate effectively in this new world.

This gap occurs from a lack of experience in and exposure to the mechanics and practices of eCommerce for many business leaders, and a lack of experience in and exposure to the operation of a commercial undertaking for many digital specialists. In a large number of organisations, this gap has become a breeding ground for under-performance and frustration. Business leaders frustrated through a low return on investment and a sense of under-achievement and digital specialists frustrated by a lack of leadership engagement with and understanding of what they do, which they see as restricting the performance that they can achieve.

Whilst it is undoubtedly true that technology and its application is a major challenge in many eCommerce operations, what sits behind this is more often than not an organisational issue. Poor processes, lack of capability, unclear objectives, multiple measures, mis-aligned structures, competing priorities and a failure to understand key parts of the operation mean that many eCommerce teams fail to deliver to expectations. These are leadership challenges and they require leadership action.

Digital technology is changing both the business and operating models and many leaders need to revise their understanding whilst trying to run a business in change, often in a market that is transforming much faster than their business can keep up. This is the challenge of leadership and it gets more and more difficult the larger the organisation becomes.

Being in a leadership position is never an easy place to learn, especially where you have little or any direct experience and may feel slightly intimidated by the language and the technology. In these circumstances, some leaders have opted for appointing specialist support and advice that they then rely on to come to their own judgements. This may be the right call, especially if you are genuinely innovating or introducing leading edge technology; but generally, this is not the best approach where a businesses’ primary use of digital technology, in driving its strategy, is as a route to market. This is what the vast majority of businesses will be doing. Business as usual in the digital world is eCommerce and every leader needs as good an understanding of eCommerce as they do the other routes to market for their products or services. 

Like it or not, if we are looking for an answer, a product, a service, a home or a source of entertainment we are now likely to turn to the web and start our search there. For an increasing number of us we stay with our search online through to completion. There are now many signs that digital business is redefining markets in nearly every sector of the global economy and in retailing in particular there are now signs that we are living through a period of creative destruction. 

In this market, customers are made aware of competing propositions not just through traditional activities off- and online, but also through specific online activities such as those associated with optimising the outcome of search engine performance for a brand, product or service, paid advertising on search engine or on other websites or direct mail through email. Regardless of how a customer in the market is made aware of products or services that can meet their needs, increasingly they arrive online looking at the outcome of a search request.

Why most organisations are not fit for purpose

It is our contention from our work with organisations from radically different sectors, of very different sizes, that there are some key barriers that make it very difficult for leaders to drive change in eCommerce even more than it is in other parts of their organisation. It is certainly more difficult to drive change focused on growth rather than cost reduction. It is more of a ‘punt’ as there is little, if any, control over the outcome compared to cost reductions that are far more likely to be internally controlled and therefore more certain to come through. However, this doesn’t explain the problems we have experienced with many eCommerce operations. This has become an area where businesses seem to be more willing to accept failure at considerable costs than they are in any other part of their business. We believe that part of the reason for this is that they continue to see it as a technology problem, where at its heart, it is an organisation one. 

Regardless of sector, it would seem that something is holding established organisations back from responding to some fundamental changes to their markets. This failure to engage at one level is understandable. Whilst cash from sales and investors and financiers is still there, what incentive is there to make changes that require different behaviours, especially if they are required from the very top to the bottom of the organisation?

There is a fault line between many of today’s organisations and the markets in which they operate that will drive business failure. The winners have already worked out what it is and those who are inquisitive and willing to change are exploring what it means for them. At the heart of this fault line is the inability of the organisation to engage with the customer at every level despite the fact that digital technology provides just this opportunity.

A brave new world that needs embracing

This change is one of the significant leadership challenges for businesses today. It is one we have to embrace and galvanise others to achieve. To do this we have to become as fluent in eCommerce as we are in finance, sales and marketing. Regardless of the challenges we face, unless we as business leaders engage with and understand this new world we will never be able to set the appropriate performance criteria, judge which is the right strategy or even more importantly appoint the right people to drive it. We will remain unassimilated digital immigrants dependent on others to interpret and guide: and like any immigrant unable to assess how expert our guide really is.

None of this suggests, however, that an eCommerce operation should be managed in any different fashion from other functions or activities. In organisation terms, this means that we need to apply the same disciplines as those applied to any other activity: targets, performance measures, processes and cost management. We need to be able to sort out the important information from the plethora of data points. We need to be able to understand and assess the capabilities required for success and to establish which of these we think are critical to strategy and should be retained in-house as a source of competitive advantage.

As leaders we have to build an understanding of what good looks like and what levels of commercial performance we should expect. All the leaders we have worked with have one thing in common: they were dissatisfied with their commercial performance and wanted to change it. We may have to learn to do this differently from the way we were managed 20 or 30 years ago, but we still have to do it if we are going to deliver success.

There are a number of killer questions that need to be asked of yourself or others and ensure you get accurate answers. They will help you assess where you are and what needs your attention. We think they are more likely to put the organisation ‘on the spot’ and help you from being diverted by people answering the questions they wanted you to ask. 

Killer questions

Next month we will explore what it takes to understand the customer and how to use this understanding to build an effective eCommerce operation.

This is the first extract from Leading Digital Strategy, a comprehensive book on the challenges of digital leadership, written by Professor Chris Bones and James Hammersley. Over the coming months, Essential Retail will be reflecting on the main themes from the publication, via a series of articles written by James.

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