Horizontal Integration – The Direct Path to Digital Success

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When tackling digital transformation, many CEOs chose to structure their digital teams as separate entities. They believed that approach would be less disruptive to their core businesses and will be easier and faster to get off the ground. However, we now know that adding digital vertically limits its benefits. Though there are short term gains to building or buying a separate digital arm to your organization, integrating digital across your business can leverage valuable existing company assets in ways that a separate unit cannot. And aligning digital closely with a firm’s other capabilities fosters the internal speed and agility critical to meeting the “anytime, anyplace” expectations of today’s digital marketplace.
Nike is a prime example of a company that has transformed itself by weaving digital organically through its enterprise to strengthen customer engagement and drive sales. The business has long recognized the need to focus resources on digital initiatives, establishing a direct-to-consumer division that oversees both in-store and online activities. The division added a dedicated e-commerce group, which has worked to strengthen and expand Nike’s digital expertise, drive greater online sales, and maximize synergies across the Nike organization.

Three Tips on Integrating Digital Holistically Across your Business:

1. Embrace a Shared Growth Agenda: A common shared digital agenda can help companies do whatever they do better, faster, and cheaper. Holistic integration helps the company’s divisions and functions move together. Marc Lore, now CEO of Walmart eCommerce, sold his company Jet.com to Walmart CEO Doug McMillon after being offered the compelling directive from McMillon to “take the best of both worlds and drive this thing forward.” And as Lore seeks to combine all of Walmart’s assets under one eCommerce roof, his driving mission is the belief that this new partnership will help both companies build their business. “Our shared outlook on where we are going can get us there faster than we could get there on our own.”

2. Rethink Your Customer Journey: Today’s customers expect personalized, streamlined experiences and value from every interaction with your brand. Those companies with the best success are prioritizing the development of an omnichannel customer journey; fusing physical and digital capabilities into one easy, consistent, and seamless customer experience for clients. Cosmetics retailer Sephora recognized early on that it needed to think digitally. It hired a CDO, moved its digital infrastructure inhouse, and aligned its digital and traditional teams via incentives and digital partnerships. Investing in a robust CRM system allowed teams to better understand and respond to customers’ needs. It also created touchscreens in store to help customers’ search for the right product, gathering valuable ecommerce data at the same time.

3. Develop a Common Business Language: In order to integrate digital effectively into all aspects of a company’s plan, businesses need to move away from the tech speak mindset that so often dominates the discussion of technological change. A key finding in a recent Sloan/MIT research study among business professionals was the belief that leading a digital company does not require technologists at the helm. In fact, forcing that learning curve risks disempowering and frustrating the brilliant minds needed to interpret the results, and harness the business benefits of the technology. At CVS, the health care company that has topped Fast Company’s list of the most innovative organizations in the world, digital leaders are not hired based on technological expertise. Their main attributes are the ability to inspire, manage complexity, and develop flexible cultures that are conducive to success in rapidly changing environments. Adobe’s senior management team, seeing the importance of aligning employees cross-functionally with each other and with their customers, created their Experience-a-thon program. Designed to put employees in their customers’ shoes and spur change, the program turns employees into product users, who provide immediate feedback to Adobe and other units within the company.

Digitally savvy companies think strategically about each piece of the customer experience. They develop innovative components and blend them into a holistic system that enhances competitive advantage and accelerates growth. While these three steps make digitization sound easy, integrating digital across the value chain can be challenging. It requires new operating models and capabilities. Companies must build agile cultures that fail fast and learn often. In today’s ever-changing climate, as imparted by Walmart’s Lore “you can’t get married to decisions… You have to be open and constantly rethinking things.”

deb2Deb Henretta is Partner at G100 Companies and spearheads SSA & Company’s Digital Transformation practice.

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