by Bryan Kirschner

Can your CEO pass the digital strategy laugh test?

Mar 30, 2016
C-SuiteConsumer ElectronicsDeveloper

If Kim Kardashian can win a top spot in the App Store, Global 2000 CIOs ought to be held to high bar for delivering compelling digital experiences at scale. Here's a by-the-numbers look at competitive digital strategies.

  • A billion customer touch points annually.
  • Over a billion dollars of in-app payments per year.
  • An average annual investment of one billion dollars over the next two years in e-commerce.
  • A digital start-up-within-a-company launched with one billion dollars in revenue with a goal of five by 2020.

Talking about “digital transformation” has become de rigueur in C-suites, boardrooms, and investor briefings far and wide. When I hear companies like Nike, Starbucks, Walmart, and GE make public statements similar to those above, it strikes me that when it comes to digital transformation, “billion is the new black.”

According to analysts at Gartner, 125,000 large organizations have digital business initiatives under way today – and CEOs expect digital revenue to rise by 80 percent by 2020. But that raises two important questions: to rise by 80 percent from what base? And, if for all practical purposes it seems like “everybody” is talking about digital, then what distinguishes window dressing from a serious commitment that has what it takes to defend a company’s market share and profitability?

The following are my criteria, by the numbers, for what I see as minimal requirements for a credible, competitive digital strategy. These are my own subjective and qualitative benchmarks (and do not necessarily represent the position of my employer, Apigee), but I find them to be a compelling basis for assigning some hard numbers to a “digital strategy laugh test” for Global 2000 executive teams.

12: The maximum number of months from now until every CEO includes a clear statement of his or her digital growth strategy in the annual letter to shareholders.

Hundreds: The number of employees 100 percent focused on digital incubation, exploring innovations that are 18 or more months out from mainstream adoption, and discovering start-ups as potential ecosystems or acquisitions. Innovation labs in technology hubs like Boston or Silicon Valley are an increasingly common strategy for attracting talent and building the right networks: CVS aims for 100 employees at theirs; Mercedes-Benz has over 200. Visa’s San Francisco innovation center houses 500. There’s no one size-fits-all, but I’d call dedicating 99 or fewer people to “not getting Ubered” is penny wise but pound-foolish.

Thousands: The number of positions carrying a performance objective that ties compensation to progress on the digital strategy. This isn’t just important in order to motivate your current executives and managers to take risks – it’s also about attracting new talent and establishing your company as a great place for people passionate about digital.   Pearson sets (and reports progress toward) targets for the company’s percentage of revenue from digital and services.

Millions: I’ve made the point that if Kim Kardashian can win a top spot in the App Store, Global 2000 CIOs ought to be held to high bar for delivering compelling digital experiences at scale.  The CIO and CMO should be able to deliver a mobile-centric direct digital relationship with millions of customers.  There have been more than two million downloads of Panera’s loyalty app, while Target’s Cartwheel couponing app has racked up 21 million users.

Billions: Here’s where the rubber hits the road.  If within the next five years digital strategy objectives don’t include the word “billion” somewhere – whether that’s a billion dollars, digital customer interactions, or something else – I believe it’s aiming too low.

The growth in smartphone adoption, minutes spent engaged with apps, Internet of Things sensors and devices, and gigabytes of data flowing across digital experiences that weave them together all look to be measured in billions.  At the very least, the growth of your company’s usage of modern APIs with which great digital experiences are built ought to reflect this scale and trajectory.  In this respect, AT&T’s measurement of API calls (over three years it grew from 300 million to 4.5 billion per month) is an elegant bottom line metric. If you’re a Global 2000 company and you’re not seeing something like that kind of growth, you aren’t on track to be a winning player in a world where Amazon and Uber – and for that matter, Starbucks, GE, or Panera Bread – are setting the pace.

Here’s my final number: 0. That’s my personal prediction for the number of companies in today’s Global 2000 that will still be on the list in 2020 if their CEOs don’t pass this digital strategy laugh test within the next 12 months.

You can come to your own conclusion – but whether you accept that what I’ve laid out here may be an accurate predictor of how competition will play out or if you prefer to come up with your own benchmark and assessment criteria, now is the time to put your digital strategy to the test.

[Disclosures: AT&T and Pearson are customers of my employer, Apigee.]