Four Strategy Tips In The Age Of The Customer

Nigel Fenwick

Blog word cloudI just concluded six months of research looking at how firms plan strategy in the age of the customer. Perhaps unsurprisingly, I concluded that companies that fail to adapt to increasingly powerful customers, and disruptive competition, will not simply face near-term disruption — they risk their long-term viability.

I also found evidence of firms making changes in how they plan business strategy. High-performing companies look at strategic planning as a continuous process with a focus on customer value and loyalty.

In my latest report on strategy, I identify new responsibilities for CIOs, CMOs, and business-unit leaders in strategic planning. The report focuses on three ways CIOs and CMOs must step up and serve as a shaper of customer-obsessed business strategy that generates greater loyalty and drives better performance.

To succeed in the future, CIOs need to collaborate effectively with peers across the C-suite, especially the CMO and business-unit leaders, to build strategies and a shared business technology agenda, focused on customer outcomes.

Here are four tips from the research:

1.     It's time to separate strategic planning from the annual budget cycle. Annual strategic plans hold firms back from quickly reacting to fast-evolving markets. While strategies must be funded, continuous test-and-learn approaches will more quickly reveal opportunities and weaknesses.

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The Data Digest: Align Technology Investments To Thrive In The Age Of The Customer

Marc Jacobson

Forrester is helping its clients better understand the Age of the Customer, a tectonic business shift characterized by technology innovations that have empowered customers in new and disruptive ways. With computing power we could only have dreamed of just a generation ago now in the hands of well over a billion individuals, businesses are scrambling to keep up with relentlessly growing customer expectations and demands.

A recent Forrester report, called ‘The CIO's Blueprint For Strategy In The Age Of The Customer’, provides CIOs with a strategy to help their companies thrive in these new times. In addition to transforming customer experience with a measurable approach, the authors argue that customer obsessed organizations must:

1.       Accelerate digital business to deliver greater agility and customer value

2.       Embrace the mobile mind shift to serve customers in their moments of need

3.       Turn big data into business insights for continuous improvement

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For CIOs The Journey To Digital Business Begins With The BT Agenda

Nigel Fenwick

Digital FootprintIn “Unleash Your Digital Business”, I highlight the need for all companies to embrace digital business as a new business model – one in which the nature of the value exchange with customers is fundamentally changed. Since then, CIOs frequently asked me what they should be doing to help their firms become a digital business.

The answers lies in the difference between Business Technology (BT) and Information Technology (IT). BT focuses on the systems, technologies, and processes to win, serve, and retain customers. Whereas IT focuses on the systems, technologies, and processes to support and transform an organization’s internal operations. To become a digital business CIOs must adopt the BT agenda.

Our research on digital business highlights the need for the organization to focus on six core digital strategies that drive digital customer experience and digital operational excellence in support of customers. Each of these strategies is an integral component of the CIOs BT agenda:

  • Digitize the end-to-end customer experience
  • Digitize products and services inside the customer’s value ecosystem
  • Create trusted machines
  • Digitize for agility over efficiency
  • Drive rapid customer centric innovation
  • Source enhanced operational capabilities within a dynamic ecosystem
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How Telstra drove global operations through business-led IT Transformation

Charlie Dai

IT complexity hurts business.  This is even more the case when a company has global markets and global operations.  Essential business needs such as a single integrated view of global customers, or consistent product or service portfolio become impossible to achieve. 

Managing IT complexity to support business strategy is a big challenge for enterprise architects at large companieswhen a company has global operations, as is the case for Telstra, an Asia-based telecommunications firm. However Telstra’s enterprise architecture (EA) team addressed its challenges by focusing on customer engagement, improved agility, and global business strategy enablement.  Because of their success, they were one of the six firms to win the InfoWorld/Forrester Enterprise Architecture Award  in 2012. 

In my recent report “Case Study: Telstra’s Business-Led IT Transformation Facilitates Global Operations”, I analyzed the key practices they made to support their business-driven transformation. These practices include
  • Build Capability Maps To Link Business Goals And Transformation Requirements. Business capability maps are a core tool that enterprise architects use to identify their organization’s strengths and gaps and support its business strategy. Architects should leverage industry standard frameworks like eTOM to build a custom map, overlay it with business goals, and use it to assess and prioritize needed changes.
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Sourcing Capabilities: What Big Business Can Learn From Startups

Nigel Fenwick

It's been clear for years now that small business startups don't build massive IT departments and big operations teams. Instead they focus on the capabilities which truly differentiate them in the marketplace - their strategic capabilities. They hire experts in these capabilities as employees and continue to improve their differentiation. At the same time, they look to source their more generic business capabilities from business partners and technology service providers.

We are going to see a seismic shift in big business in the coming years: there will be an increasing appetite to source generic capabilities from vendors and business partners; at the same time CEOs will focus increasingly scarce human capital resources on improving their strategic capabilities - the capabilities which give them a competitive edge.

While digital technology will remain at the heart of these strategic capabilities - leveraging cloud, big data analytics, mobile and social - the majority of technology services will be sourced from partners and vendors. The company's own technology resources will become more and more intensely focused on developing unique systems of engagement around strategic capabilities.

Next post: Capability-As-A-Service And What It Means For Technology Vendor Strategy

Previous post: Chasing KPIs That Matter

SingTel Makes Good Progress, But Questions Over IT Services Capabilities Remain

Fred Giron

Clement Teo, Dane Anderson, Frederic Giron

At an analyst briefing in Singapore on November 7, newly minted SingTel Group Enterprise CEO, Bill Chang, laid out his vision on how the group’s reorganization aims to build the foundation for SingTel to become the largest ICT services provider in Asia Pacific in an ambitious five years.

For Sourcing and Vendor Management professionals, here’s a quick summary:

  • SingTel Group Enterprise: SingTel Business Group, NCS, Enterprise Data and Managed Services (EDMS) and Optus Business (including Alphawest) are now one entity as of 1 Nov 2012.
  • Converged capabilities: This organizational transformation converges SingTel’s Telco and IT service competencies for a one-stop ICT experience, and simplifies delivery capabilities to enable large scale global deployments. In a nutshell:  SingTel is aiming to create a repeatable and more scalable product set.
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SingTel Makes Good Progress, But Questions Over IT Services Capabilities Remain

Clement Teo

At an analyst briefing in Singapore on November 7, newly minted SingTel Group Enterprise CEO, Bill Chang, laid out his vision on how the group’s reorganization aims to build the foundation for SingTel to become the largest ICT services provider in Asia Pacific in an ambitious five years.

For Sourcing and Vendor Management professionals, here’s a quick summary:

  • SingTel Group Enterprise: SingTel Business Group, NCS, Enterprise Data and Managed Services (EDMS) and Optus Business (including Alphawest) are now one entity as of 1 Nov 2012.
  • Converged capabilities: This organizational transformation converges SingTel’s Telco and IT service competencies for a one-stop ICT experience and simplifies delivery capabilities to enable large-scale global deployments. In a nutshell: SingTel is aiming to create a repeatable and more scalable product set.
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Seeking The Elusive Zone Of Disruption

Nigel Fenwick

As I analyzed examples of digital disruption I’ll be highlighting at the upcoming CIO Forum — “Leading Digital Disruption” — I was struck by the way in which every example could be tied to a shift in customer experience along two dimensions: pleasure and time.

Along the pleasure dimension, disruptive technologies significantly increase the pleasure (or reduce the frustration) derived from the customer experience. For example the iPad significantly increased my pleasure in browsing the web and engaging with brands I like through tailored apps.

And on the time dimension, disruptive technologies save customers significant amounts of time; time being the most precious commodity in the world. My iPad allows me to do many things much faster than I could before because it is easy-to-use and contains many apps which connect my lifestyle together.

So I began to explore how CIOs might use this understanding to help shape the analysis of prospective disruptive strategies. What I came up with is the customer experience zone of disruption (or CxZOD for short — see illustration).

In the zone of disruption, the impact on pleasure and/or time is so great as to cause a disruptive force in the marketplace. When coupled with an assessment of potential market impact, this becomes an easy-to-understand visual model for comparing potential disruptive initiatives.

In my session at the forum, I’ll be exploring this model and showing how to use it to better understand existing technologies, such as mobile apps, and their potential to become disruptive.

What disruptive digital technologies would you place in the CxZOD? Post your comments below or Tweet #CXZOD

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Will Amazon's Deep Pockets Strangle Netflix?

Nigel Fenwick

IronMan2Amazon’s recent distribution agreement with Epix is a big threat to the dominance of Netflix in the movie streaming market.

Last year Netflix attempted to shift its business strategy to focus mainly on streaming video. Although I wasn’t present in the boardroom discussions, it’s a reasonable bet that Reed Hastings and his team had decided the future was online streaming and that physical discs were a dinosaur. Since the war for content would be fought over streaming, Netflix would focus on adding value to its streaming customers and spin off the disc customers. On the surface this seemed to many a reasonable strategy, especially since Netflix reported that its digital streaming customers and the disc-in-the-mail customers were mostly not one and the same. So Netflix execs crunched the numbers and decided this was the right move for them. Perhaps they had hoped to spin off the disc side of the business to raise some capital. Whatever their thinking, their strategy choices left some gaping unanswered questions for observers like me:

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The Ultimate Question

Nigel Fenwick

As fans of The Hitchhiker’s Guide to the Galaxy will recall, the answer to the ultimate question of life universe and everything is something a group of hyper-intelligent pan-dimensional beings demand to learn by building the ultimate computer — Deep Thought. It takes the computer 7.5 million years to compute and check the answer.

Of late I’ve been considering a more mundane version of the ultimate question — what is the ideal metric to use when evaluating business technology strategies? The challenge is that we already have a diverse set of investment metrics from which to choose. There’s Return On Investment (ROI), Net Present Value (NPV), Internal Rate Of return (IRR) and Payback period to name a few of the most common. Yet I can’t help feeling they all lack a little something — the ability to connect the project with the desired business outcome, which for a strategy is the attainment of the goal.

Recently I’ve been working with clients to apply a different measure — the T2BI ratio:

BI/T2BI*CRC

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