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Now’s the Time to Create Your CMO Transformation Agenda

Marketing leaders need clear ambitions for change–and concrete moves for each ambition.

Victim or Victor? 

That’s a choice all CMOs face today in responding to the multitude of changes rocking the marketing landscape. If CMOs let change put them on the defensive, marketing’s role at their companies (and their job tenure) may shrink. But if they get in front of change, the role that marketing plays at the company can become more strategic than ever, with the CMO’s role on the c-suite team more critical.

The average CMO tenure remains short, just 44 months. In many cases careers are brief because CMOs struggle to master a confluence of changes:

  • The businesses that marketing supports are changing,
    including key aspects of their go to market / commercialization
  • The behavior of customers served by those businesses is changing
  • The way marketing gets done is changing
  • The role that marketing needs to play in the company is changing
  • The talent that marketing must inspire to join and stay with the company is changing

This presents CMO’s with a pivotal question, every Monday morning. Is that marketing leadership hill that I’m climbing a mountain that I’m going to stand atop?  Or is it a volcano that’s going to erupt?

The answer depends in large part on the existence and quality of the CMO’s transformation agenda. It also depends on CMO success in linking their marketing transformation agenda to the company’s overall transformation plan.

“Once developed, refined and socialized, the agenda serves as a guiding light that CMOs use to inspire their workforce and company leadership to invest in new impact.”

Creating a CMO Transformation Agenda

What is a CMO transformation agenda? Very simply, it’s a CMO’s game plan for how a marketing organization undergoing transformation can better serve a company that’s undergoing transformation. Every good agenda includes three elements:

  • Clear ambitions for change
  • Concrete moves per ambition in a roadmap
  • A headline theme that captures the agenda’s overall impact.

Once developed, refined and socialized, the agenda serves as a guiding light that CMOs use to inspire their workforce and company leadership to invest in new impact. Five steps will help CMO’s to effectively develop their agenda.

1. Gather a brain trust who will walk through the agenda development journey together.

The marketing transformation leadership team should be large enough to look at the business and its marketing function from multiple angles, but small enough to keep discussions confidential and minimize politics so that free-thinking ideas can be generated. A team that can be counted on one hand is optimal.

If resources are available, it helps to supplement the effort with an outside advisor in touch with marketing transformation trends across multiple industries to stimulate creative thinking. A good advisor will also provide a helpful sounding board and help synthesize team inputs and outputs into effective communication documents.

2. Prepare the team with common inputs to enable everyone to brainstorm effectively.

The agenda needs to address the underlying forces that are compelling marketing to undergo a transformation. A CMO and team should identify those forces to craft a vision that is on-target for impact.

Start by studying the company’s current corporate strategy and business plans, and compare them to their 3-5-year-old versions. How are the roles of marketing and go-to-market channels changing?  Is there leadership talk today of even more change over the horizon? If so what are the implications? Repeat this thought process BU by BU, region-by-region, customer type by customer type, always looking for major patterns (vs. niche instances) of how marketing needs to show up differently.

Key questions to answer in this exercise include:

  • How are customer behaviors, priorities, and segments changing?
  • How are business models and offer value propositions changing?
  • How are routes to market and post-purchase relationship opportunities changing?

Keep bringing these questions back to the implications for marketing:

  • What new market-facing capabilities does the business need?
  • Which of those capabilities might marketing provide, including new roles?
  • How will marketing need to redefine and shift emphasis from its current capabilities?

Beyond taking inspiration from the company’s business requirements, explore changes occurring in the world of marketing, not only in your industry but in other industries that may prove insightful. This exploration will help identify opportunities for marketing to add value in ways that company strategists and peer executives don’t yet know about.

What are key trends in marketing? Our next blog post is devoted to that topic – we’ll share a handful of marketing trend themes that we’ve observed, each one in its own right a combination of 3 to 4 trends.

As you review external marketing trends, ask yourself:

  • Which trends obviously apply to our situation? Why?
  • What factors underly other trends?  Might those factors apply to our situation?
  • Do some trends link to our corporate strategy choices?   What are dependencies?
  • Will key trends be easily understood and received by the company’s leadership team?  If not, how much socialization is involved?

3. Over the course of several meetings, brainstorm 3 to 5 transformational ambitions, several moves per ambition, and a unifying vision.  

We find the brainstorming process is best served by starting first with ambitions, then moves, and finally vision. That’s because most teams don’t have a clear vision in mind when the process starts. The vision will be more powerful as a “golden thread” expression of what the ambitions have in common rather than a “beacon” that serves as a guiding light throughout for the ambitions.

What does a CMO transformation/change agenda look like? Here’s a hypothetical example inspired by several CMOs who have gone through this process:

Note that the vision statement addresses the “why”, the ambition statements address the “what” and the move statements address the “how.” It’s at the move level that a management team can sequence investment, focus management attention, and harness organizational energy to bring ambitions and vision to life over time.

4. Socialize the Agenda with senior management, the board, and marketing leadership.

When a strong draft of the transformation agenda exists, socialize it with the CEO and other key executives in private. Once their feedback has been incorporated, it’s time to socialize the agenda with the senior management team together.

If possible, strengthen support by presenting an up-leveled version of the agenda to the company’s board of directors. If the CEO arranges for such a presentation, it’s a good sign that the CEO views the CMO’s agenda as a core part of corporate transformation.

After getting buy-in from company leadership, share the plan with the extended marketing leadership team. More times than not, transformation agendas will involve top-down shifts that can be unsettling – a shift in resourcing, a change in skillsets, a re-organization – so become a relentless source of inspiration and encouragement around the agenda to top marketing talent. With leadership, a transformation agenda can mobilize and unite that talent.

5. Build the Foundation for Successful Implementation.

Execution of the change agenda will take several years (vs. months). The team will go farther faster if the CMO builds a strong foundation for change prior to implementing. Depending on the situation this might include steps such as:

  • Re-organize to enable new competencies to emerge
  • Shift resourcing levels from legacy capability teams to future-focused teams
  • Promote new cultural values for new capabilities
  • Request extra investments to make needed transitions
  • Nurture peer relationships to expand marketing’s role in the company –
    often in white spaces involving data, digital monetization, and/or digital CX
  • Institute agile change processes and pilots to make change happen quickly
  • Design enterprise-level programs that change the company, not just marketing
  • Find a way to measure and monitor impact with a keen eye on ROI

Common Ambitions in CMO Agendas

Every CMO transformation agenda we’ve seen has a few key elements in common. The most frequent ambitions that we have seen adopted include:

Digital marketing excellence:

Digital marketing is the greatest zone of disruption and innovation in marketing. Unsurprisingly, digital marketing excellence is the most frequently mentioned transformation ambition. Goals might include expanding the number of business use cases that digital marketing empowers (e.g. adding cross-sell and up-sell marketing to new customer acquisition), improving specific capabilities (e.g. real-time personalization) or marketing through new engagement channels (e.g. a conversational commerce platform). Identifying key initiatives on each of these three dimensions is the first step for driving digital marketing transformation.

Data responsibilities:

Thanks to digital touchpoints, customers generate exponentially more data than they ever have before. Data about location, segmentation, digital journey stage, browsing behavior, preference indicators, physical factors, distribution channels, and purchase triggers are all critical for companies to use in their best-move rules. Yet most companies still struggle with capturing, storing, and acting on this data. Will the CMO Transformation Agenda convincingly offer to step up and take responsibility for 360° customer journey data? If not, new executive roles such as chief digital officer or chief customer officer will emerge, narrowing marketing’s role.

New monetization:

Digital enables marketing to create or enhance 1:1 relationships with customers in a way that used to be the sole domain of the sales force or channel partners. Thanks to new digital relationships, marketing can extend its role to help drive growth through monetization techniques never used at scale before. This use of marketing’s competencies for new growth can take several forms:

  • Direct sales to fragmented, long-tail end users (e-commerce, AI advisory, etc.)
  • Direct management of small channel partners (vs. multi-tiered distribution)
  • Next-best-move support to account leaders, sales reps and customer service reps

Varying Ambitions in CMO Agendas

Despite the common patterns above, every CMO’s agenda is unique, reflecting the fact that no two companies and marketing departments are alike. There are dozens of potential ambitions to adopt – here are 20 to help jumpstart your reflection.

  1. Category Reframing: redefining the company’s value context, proposition and edge
  2. Launch Re-invention: from launching single products to holistic product line updates
  3. Influence Scaling: developing a systematic influencer cascade
  4. Pricing Sophistication: dynamic pricing systems and new value capture approaches
  5. Solutions Innovation: customer-focused design and partner ecosystem enablement
  6. AI Integration: enriching marketing and CX through AI / machine learning use cases
  7. Intelligence Branding: updating Brand Portfolio and Architecture for intelligence
  8. Re-segmentation: blending best of online and offline information insight sources
  9. Content Re-invention: redesigning content for personalization and digital touchpoints
  10. AR/VR Adoption: engaging customers through immersive experiences
  11. Digital Customer Experience: improving CX monitoring and analytics
  12. Customer Re-connection: building digital buyer relationships after channel sales
  13. Social and Experimental Listening: gathering customer insights via digital feedback
  14. Account Based Marketing: collaborating closely with sales to grow top accounts
  15. E-Commerce: developing a new channel for customer convenience and lower cost
  16. Channel-partner Data Sharing: collaborating for win-win business growth
  17. In-Use Marketing: messaging inside cloud hosted applications and digital services
  18. Global-Local Role Shifts: centralizing and decentralizing tasks for flexibility and cost
  19. Silo-spanning: agile funding of integrated marketing initiatives across budget owners
  20. Impact analytics: calculating return on marketing spend in new and better ways

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FINAL THOUGHTS

Wondering When to Start?

Tactically there might be an optimal time of year to carry out the work of agenda-setting:  3-4 months before annual planning and budgeting begin. That enables the CMO and marketing leadership team to head into planning season with a new strategic imperative, a transformation game plan, and a linked funding request.

Strategically, any CMO who hasn’t yet developed a transformation agenda is running late and should start now. Change in the market won’t wait; neither should the leader of marketing.

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Five Ways to Design Impactful Experiences in Financial Services

Our research shows that brands should prioritize changes that focus on growth, agility and holistic perspectives.

Historically, product and price were the go-to levers for financial services leaders looking to drive growth, however, the importance placed on experience innovation today means it is now the most critical area of investment. Strategic and thoughtful experience design addresses the evolving expectations of digital-first customers, the increasing complexity of channels and business models and the growing reserves of untapped data across financial services relationships.

The industry is already taking notice. As uncovered in Altimeter’s State of Digital Transformation report, two-thirds of financial services organizations say ensuring a more consistent experience across touchpoints is a top internal priority, compared to just over half across other industries. But less than half of financial services organizations have taken the crucial step of mapping the end-to-end customer journey.

Designing effective experiences requires following a deliberate process that balances external and internal considerations, and creative analytical approaches. Over the course of working with hundreds of financial services clients around the world, we’ve found that the companies who best capture opportunities in experience innovation exemplify five key principles:

  1. They are human-centric
  2. They are growth-oriented
  3. They are operator-obsessed
  4. They bring a holistic perspective
  5. And they are designed for agility

The 5 Key Principles Required For Experience Innovation

Let’s dive deeper into what these principles look like in action:

Human-centric

In the past, financial services companies might have designed customer experiences from the inside out, building a profitable experience first and then finding a market for it. But experiences today must start with the needs of the people for whom they are designed – whether mass affluent consumers, high-net-worth individuals, captive agents, branch employees or independent advisors.

Established financial services firms can learn from newer players who have adopted a human-centric mindset to design for latent needs. Ellvest, for example, is an investment company that recognized most providers cater to a definitively male audience and saw an opportunity to build a brand designed for female investors’ unmet needs such as clearer access to female advisors, and a broader range of investment strategies. Ellvest has designed experiences that directly address these challenges, from providing tailored recommendations based on gender-specific salary curves to including larger retirement targets for longer female life expectancies. Taking a human-first approach has positioned Ellvest to capitalize on significant economic opportunity, given that women are expected to hold $72 trillion of private wealth by 2020.

Growth-oriented

While better catering to customer needs and behaviors, experience investments must drive business growth. In financial services especially, legacy business models can hinder brands from moving quickly enough to capitalize on growth opportunities to get access to new revenue sources and untapped customer data.

One way in which incumbent brands can better shift to market dynamics and customer needs is through strategic partnerships or purchases to get access to new platforms and technology, rather than building entirely in-house.

AXA recently partnered with insurtech company, Slice, to offer on-demand cyber insurance to small businesses – specifically, taking a policy normally sold with a $5-$10 million limit, and bringing it down to $250,000 to $3 million. The platform, powered by Slice, allows small business customers to purchase comprehensive coverage in a matter of minutes, submit the first notice of loss through claims bots and offers insightful data to help SMBs understand their cyber risk exposure. Customers also see an individualized dashboard with an overall cyber risk assessment and scores along with benchmark scores of their industry peers across each risk category. By partnering with an emerging player, AXA was able to bring the first-in-kind product to market in just three short months – delivering unique value to a new customer base while growing the business and tapping into new data.

Operator-obsessed

Experiences must be designed as much for the people and operators responsible for delivering them – employees, agents, call center reps, front-end developers or data scientists — as for the end-user, keeping feasibility of implementation and management top-of-mind.

When Prophet redesigned the treasury management experience for a large US bank, we took operators’ considerations into account throughout – understanding the business context, technical constraints and needs of the users responsible for serving the target clients. Through key use cases for both operators and clients, we designed and delivered a reimagined digital treasury management experience that followed an ideal journey with a responsive and mobile-first interface.

Holistic Perspective

While considering the needs of internal operators, financial services companies must also ensure organizational silos don’t lead to fractured ownership of experiences. Ultimately, financial services customers don’t care about organizational complexity; they just want solutions that consistently meet their needs across channels and touchpoints. Part of addressing internal challenges well means taking a holistic perspective to experience design.

The largest legacy banks in the US recognized this opportunity when they partnered to create Zelle, a peer-to-peer payments platform that integrates directly into existing banking apps. Eliminating the need to leave the secure environment of users’ personal banking apps, Zelle enables seamless money transfer through a single, trusted experience. Beyond successfully collaborating across internal groups—analytics, IT, marketing, and more — to bring this to market, these brands managed to break down competitive siloes to create greater value for the end-user.

“Ultimately, financial services customers don’t care about organizational complexity; they just want solutions.”

The result? Last year alone, users moved $119 billion through Zelle – nearly double the $62 billion moved through Venmo, which requires users to connect their bank account with the external app. And the holistic nature of the experience only continues to improve, with the number of participating regional banks increasing by over a third in early 2019.

Designed for Agility

Perhaps the most obvious difference between legacy financial services companies and their younger, fast-growing competitors is the rate at which they can move and adjust. Yet even the largest financial services firms can design experiences adaptable to rapidly evolving customer expectations and market conditions.

For example, Chase invested in new tools and processes to move with greater agility when launching experiences. The strategy included adopting an open API store and micro-services in its digital development, capitalizing on the rich data of its 47 million digital customers and implementing Scrum work processes. Chase’s agile design process led to the complete overhaul of its online and mobile experience in just 18 months.

Designing for agility should not be confused with the “move fast, break things” mantra of many Silicon Valley digital disruptors. In legacy financial services businesses, breaking things is not an option. Chase’s agile transformation has only improved its operating efficiencies, achieving a 99% straight-through processes rate on more than $5 trillion daily wholesale payments and lowering the cost per check deposits by 94% through digital transactions.

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FINAL THOUGHTS

As legacy financial services brands continue to focus on building experiences that allow them to challenge and surpass their disruptive competitors, these five principles can serve as north-star guides.

If you’d like to learn more about how experience-led innovation can drive growth in your business, please contact us today.

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Supporting Progress On and Off the Field with the US Women’s National Team

This major branding effort for women’s soccer has been a labor of love, amplifying women’s voices everywhere.

Nearly four years ago the US Women’s National Team (USWNT) defeated Japan 5-2 to win their third World Cup in front of the largest TV audience (26 million) in U.S. soccer history. In 2015, some of America’s most famous footballers – including Alex Morgan, Abby Wambach and Carli Lloyd – were building on the success of 1999 World Cup champions like Mia Hamm, Julie Foudy and Brandi Chastain, while making a case for equal pay with their US Men’s National Team counterparts.

Since then, our champions have been leading the charge for equality, both on and off the field, by elevating the level of the women’s game and fighting for causes like gender equality, parity to the US men’s team in terms of pay, coaching and medical treatment, frequency of games, quality of fields and even how they train and how they travel to matches.

Prophet is proud to support the USWNT players as they look to repeat as World Cup Champions and more importantly, make advances in their fight for progress.

As part of our Prophet Impact (formerly Prophet for Nonprofit) initiative, a team of strategists, designers, copywriters and developers volunteered to create a new brand and digital experience to capture the essence of the players—both as world-class athletes and as passionate activists. All the spirit, hard work and positive energy has been channeled into a new brand: OOSA.

Introducing OOSA

The name OOSA is a nod to the team’s 20-year-long tradition of players chanting “OOSA, OOSA, OOSA-AHHHH,” as a rallying cry before they take the pitch. And now, OOSA is a brand, that capitalizes on the collective value of the players, while providing an avenue for supporters to get involved in their efforts to push for meaningful progress. The brand provides something tangible to rally behind while helping to defray the cost each player incurs to lead the cause for change.

Prophet is thrilled to share the new OOSA website and brand video, just in time for the 2019 Women’s World Cup.

Chant with Us

We are proud of the yearlong effort of many Propheteers to help build a brand that supports a cause that aligns so closely with our values as a firm. Our partnership with OOSA is just one element of our dedicated effort to elevate women and strengthen their voices, and we look forward to continuing our partnership with such an inspiring and passionate group of powerful women. In the meantime, we wish the team the best of luck throughout the World Cup. And while we’re a global team, don’t be surprised if you hear chants of “OOSA, OOSA, OOSA-AHHHH,” vibrating from Prophet offices across the US.

“The name OOSA is a nod to the team’s 20-year-long tradition of players chanting “OOSA, OOSA, OOSA-AHHHH,” as a rallying cry before they take the pitch.”

REPORT

The State of IoT In the Home

As consumer interest in connected home devices grows, home security, health and safety get star billing.

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The “Internet of Things” (IoT) market for the home — in which disparate devices work together to create a “smart home” — is in its early days. Some connected devices have long been in use in municipal life, at work, and in our personal lives (e.g., smartphones and “wearables”). But while home security systems and smart utility meters have been around for years, the “digital transformation” of the home is still just getting off the ground.

Our research shows that while adoption for home IoT products is in the early stages — only 23% of consumers own at least one IoT home product, like a smart TV — purchase intent is very strong. We anticipate three waves of adoption over the next several years and, if consumer intent is realized, an average global growth of 265% (in units sold) in the next 12 months.

In this report, we answer questions that help brands position themselves for this market: Who is the smart home IoT product buyer? What does the next wave of buyer look like? What drives consumers to purchase, and what obstacles do they perceive? What products for the home do consumers want to be smarter and connected?

Key Findings

To form a clear picture of where the smart home IoT market is headed, we started by researching who’s buying connected products today, who is likely to buy in the next phase, and longer-term prospects. This is what we learned:

  • “Early Adopters” are frustrated by a lack of automation at home and view connected technology as the solution. They are young, skew male, and are less price-sensitive. Once aware of a new connected product, they are more likely to purchase it
  • “Fast Followers” are more concerned with the ease of use of home IoT products and expect them to learn their habits, becoming more useful over time. Although their incomes are on par with Early Adopters, they are much more price-sensitive, less brand conscious, believe connected products shouldn’t cost more, and less likely to value premium products
  • Although “Laggards’” awareness of IoT for the home in some product categories is on par with awareness of Early Adopters and Fast Followers, they are much less likely to convert to purchase. Having the latest technology products is less important to Laggards, who skew older and just slightly more female
  • The Chinese market for home IoT products is particularly promising, especially when it comes to ownership of connected devices and intent to purchase. Chinese consumers are the least price-sensitive of any region and focus more than consumers in any other region on health benefits when making purchasing decisions
  • Our research findings point to three waves of home IoT product adoption. We believe near-term adoption will focus on the Home Security and the Home Environment Control product categories, followed by the Home Entertainment and the Health & Fitness categories, and, lagging, the Bed, Bath & Kitchen and the Pet, Child & Elderly Care categories
  • Consumer priorities for health and safety — and for product attributes like relevance and value — are leading drivers for the next wave of adoption. Device aesthetics and prestige of ownership lag in priority. Again, significant cultural differences between China and Western cultures should be studied by brands that target both markets

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Catalysts: The Cultural Levers of Growth in the Digital Age

Disrupted markets demand dramatic changes to strategy and infrastructure. Cultural transformation is the toughest.

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The importance of organizational culture is now beyond question. No matter how digital they may be, all organizations are human and it’s the human factors of digital transformation that have grown in prominence. The ability to transform and create uncommon growth in the digital age obviously demands dramatic changes to your strategy and infrastructure, but it’s the challenge of culture which remains the number one hurdle holding many back from success.

Our latest research with business leaders from around the world outlines cultural levers that need to be prioritized to ignite digital transformation and create a path toward accelerated change.

In this report, you will learn:

  • What culture is and why it matters.
  • Where to begin and why a digitally-led transformation is different than others.
  • The hidden accelerators that make a significant difference to speed and sustain growth.

Download the full report below.

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Inside The Experience of Relentlessly Relevant Brands

How hyper-personalization, contextual shifts and intelligent offers are reshaping consumer expectations.

Culture is being re-coded, and people expect very different relationships with brands: more human, immediate, seamless and responsive.

Across every category, from healthcare to household goods, auto to automation, B2B to B2C, the companies that are building the most cohesive businesses—through what we call “dynamic and digital brand experiences”—are expanding their relevance and are growing faster than competitors.

Dynamic brand experiences are the new standard. A company that can functionally integrate around the customer with regard to technology, data, marketing and the customer experience is delivering its product and service not simply as an offer, but as an experience ecosystem: a hyper-contextual, empathetic, cohesive and humanized experience that responds to, learns from and anticipates its customers’ next moves and needs.

What Is a Relentlessly Relevant Brand?

We call them relentlessly relevant brands because they understand that they must prove themselves every day, that they operate within an ecosystem of customers and other brands, and they adapt their behaviors in real-time based on context.

They have both a brain and a heart. They are strategic and emotive, contextual and aware. And they lead with data-informed stories. Customers love these experience ecosystems.

“A relentlessly relevant brand is continuously testing its approach and optimizing it in real-time.”

In the modern brand world, relevance trumps consistency; the brand shifts and adjusts in the quest for individual relevancy, explicitly at the expense of being consistent. A relentlessly relevant brand is continuously testing its approach and optimizing it in real-time.

Here’s a simple metaphor: An individual behaves differently with her spouse, her children, and her colleagues. Each expression is authentic but unique. We each have a personal “code” that allows us to behave differently in different settings but still makes us recognizable across all our relationships.

Key Characteristics of Relentlessly Relevant Brands

Relentlessly relevant brands are already flourishing around us. The easiest way to identify them is by looking for entities that are already exhibiting these key characteristics:

Relentlessly relevant brands are hyper-personalized.

The experiences that brands offer are driven by empathy and are designed to feel personalized to each individual. With a rich data set on returning users, TurboTax makes filing taxes a breeze—with prefilled data and explanations about why tax returns might be different from past years, based on personalized events such as moving, getting married, or having a baby.

Relentlessly relevant brands are contextual.

The brand shifts how it acts, feels, and looks according to the environment in which it operates. With the addition of separate kids, music, and gaming environments, YouTube adapts depending on a user’s context. The YouTube Kids interface, for instance, offers icons instead of text navigation and family-friendly content only.

Relentlessly relevant brands are intelligent.

These brands are in learning mode all the time and use this knowledge to inform how they think, act, and engage with consumers. Netflix learns from its users’ viewing habits not only to offer recommendations on what to binge-watch next, but to actually create original content. The company famously commissioned “House of Cards” because it knew a wealth of users had streamed “The Social Network,” which was directed by “House of Cards” producer/director David Fincher.

Relentlessly relevant brands are continuous.

Infused with a digital pulse, brands maintain ongoing conversations with customers. Marriott’s new Li Yu program helps Chinese tourists traveling outside of China feel at home wherever they go. Through a WeChat program, these tourists can engage with a local concierge who can assist in Chinese with anything from restaurant recommendations to in-room amenities requests.

How to Become a Relentlessly Relevant Brand

Where to start? There is no single journey to becoming a relentlessly relevant brand and engaging customers through dynamic and digital experiences, but there are important features that empower brands to succeed in today’s transforming world:

To make your brand more contextual:

Update brand guidelines and toolkits to support adaptive design elements, data-driven content, and personalized, persona-specific experiences. Wrap core products with value-added services and experiences.

To make your brand more intelligent:

Offer customers opportunities to exchange data for improved service levels. Leverage predictive analytics to create proactive offers. Embed AI and machine learning into your data environment and smart (data-enabled) solutions.

To make your brand more continuous:

Use APIs to create seamless connections with ecosystem partners. Integrate customer data records and provide customer single sign in. Embed product extensions or solution recommendations in customer service and digital assets. Create value-added service layers and platforms for customers to expand customer utility and reward loyalty.

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FINAL THOUGHTS

We are living in an experience economy. Today, we understand that brands are no longer static logos or advertising campaigns, but total, immersive experiences.

For companies to grow, they must evolve from selling, distributing, or communicating to building dynamic brand experiences. To do this, they must be purpose-centered and powered through culture, capabilities and employee engagement.

They must become “humanized” organizations prepared to deliver experiences people remember and love—experiences that matter in both function and emotion, and consider the entire person—the head and heart. Brands no longer just have an opportunity, but they have an obligation to come to life in order to remain relevant and drive profitable growth.

Download Prophet’s Brand Relevance Index® to learn more about the brands that consumers simply can’t live without.

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Turning Small Acquisitions into Big Business Transformations

Integrating the new capabilities, technology and people is important. So is understanding its leaner culture.

You Acquired a Shiny, New Technology Company, Now What?

Mergers and acquisitions help many organizations accelerate digital transformation through the acquisition of new products/services, technology, processes or talent. For example, McDonald’s recently acquired the machine learning start-up Dynamic Yield for $300M to scale their use of machine learning technology and improve the customer experience.

While there is nothing new about large corporations acquiring small specialist products or capabilities; these “digital M&A” deals are often different because:

  1. The acquirer is typically a more traditional business
  2. It’s not a “mega” deal, but more likely a small acquisition of a start-up or growth stage firm with an enterprise value of few hundred-million dollars
  3. The motivation isn’t always about the products or capability but about the brand, culture, ways of working, processes and experiences
  4. The acquisition is being used as a vehicle to accelerate business transformations, though has little in common with the acquirer

The target acquisition company is likely to be less than 10 years old and has “grown up” in the digital age. Its business model, processes and structure are much more likely to look like a “lean startup” business and has never operated outside those principles (e.g., customer-focused, data-driven, empowered decision making, rapid/iterative product development and innovation).

Typical Integration Approaches Will Prevent Maximum Value Capture

The traditional approach to M&A, with its focus on integration and synergies, was designed to extract value from an acquisition, not to enable the transformation of the acquirer (by the digital characteristics or products of the target company). The traditional “victor” approach risks damaging three of the most valuable aspects of digital acquisition: people, customers and growth.

People

The employees of targeted small technology firms have been part of a rapidly growing start-up company with a distinct culture and ways of working. They are committed to the culture and company, and proud of what they have accomplished. Yet, after an acquisition, only 36 percent of founders expect to stay at their company (CBInsights, 2019) and 33 percent of employees will have left within a year (Kim, 2018). This attrition is value destructive in two ways:

  1. These employees are the talent who created, and knew how to operate the value, that was acquired in the company.
  2. The people are often the types of new thinkers and cultural change agents that are key to helping the acquirer pivot into a more digitally-enabled organization.

Describing these differences simply as a culture fit issue understates the challenge. These differences are deeply embedded in processes, organization and behaviors – even technology choices (pretty much the whole business model). A rapid flight immediately caps the value creation potential of the deal by stunting the acquirer’s ability to learn from and be more thoroughly transformed by the new, digitally-centered team.

Customers

The merger or acquisition will undoubtedly result in changes to the customer experience. Sometimes these changes can seem relatively trivial (minor billing changes or web page navigation) while others are more significant (new pricing structures or sales relationships). Big or small, changes in customer experience are magnified in the context of digital acquisitions.

“The traditional “victor” approach risks damaging three of the most valuable aspects of digital acquisition: people, customers and growth.”

These companies have been built from the market back, products of fierce customer obsession and rapid, often daily (or even hourly) updates to products or service experiences. Even the slightest variation, like slowing the release of new updates or adding a new approval layer, can reverberate negatively with customers that have come to expect a more frictionless experience.

If not managed carefully, changes that impact customer experience can cause customers to look for alternatives, taking with them not only revenue but the types of engagement, feedback and insight that are components to driving broader digital transformation.

Growth

When working on “digital” mergers and acquisitions, we find that the primary driver is to drive significant growth. This is atypical to most M&As which tend to be focused on finding cost synergies.

As a result, the post-merger integration that is applied to the acquisition is biased heavily towards the identification and realization of cost synergies in technology, finance and operations. This “traditional” integration methodology was never designed to drive growth, and it certainly was not designed to consider brand, customers and a digital operating model.

Four Integration Actions to Create Value and Ignite Business Transformation

To maximize the full value of your next small digital/technology acquisition, make sure your integration process preserves, and is ultimately transformed by, the full assets of the firm – it’s people, customer relationships and operating models. There are four integration actions that will help you preserve these assets:

Consider Brand and Customer Experience Early and Often

Ensure all functional discussions include conversations around customer impact and set the precedent that customer impact and experience is a priority. Assess how the integration is impacting your customer experience in terms of disruption and potential opportunity from initial deal planning through to deal close. You should leverage your existing customer journey maps to assess the potential impact. Consider creating a standard set of journeys that you can show side by side between yours and the acquired company’s customer journey to define a future consolidated journey.

After the deal close, you may want to discuss details of the acquisition with your largest and most strategically important customers (particularly the key customer of the acquired firm). For your own customers, this provides a great opportunity to discuss what it could mean for them and how they could benefit from the new products or capabilities.

Broaden Your Culture Assessments

Standard culture assessments help businesses understand the broader cultural and ways of working differences between the two organizations, but rarely provide enough insight into how the cultural differences will impact the ways of working. Nor do they place an emphasis on what the acquirer can or should do for the acquired business. You should broaden your culture assessments to identify key processes where digital capabilities are likely to have a high impact such as product development, experience, marketing and sales.

Quickly Integrate New Talent

The most effective ways to integrate the new organization and accelerate your digital journey is to quickly include talent from the acquired digital organization. You can do this in two ways:

  1. Look for individuals who you could move into your existing digital transformation program or team.
  2. Place one of the digital founders into a leadership role within your organization where they will be a significant stakeholder for your digital transformation activities.

You will need to reshape incentives and governance across the enterprise to meet and support the expectations of your new digital-first talent and start to change the behavior of your existing talent. In addition, you will need to help reskill your existing workforce so they can play well with their new digital native colleagues.

Shake Up or Test New Operating Models

Acquiring a new company provides an opportunity to shake up your existing operating model. Examine a few areas of the operating model where characteristics of the acquired business might help you move toward a more evolved digital enterprise. For example:

  • Governance: Does the acquired business have greater delegation in decision making which could help improve agility in certain more innovation driven functions?
  • Product: Is their product development process using customer feedback more effectively to drive higher customer satisfaction?
  • Measurement: Are their KPIs more consistent with digital products, and therefore driving improved performance?
  • Service: Do they have a stronger service and customer first culture which improved customer retention and loyalty?
  • Data: Are decision-making processes based on data or more effective?

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Digital mergers and acquisitions create a specific set of challenges that force us to think differently about our integration methodology. Given the rapidly changing world, and increased emphasis on growth, companies that embed digital transformation principles into their M&A integration process will driver higher returns on future digital M&A.

For more information on capturing greater value in the M&A, please get in touch.

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Experience-Led Transformation: Where to Start & How to Measure Progress

There’s harmony and happiness in the “X frontier.” Here’s how to find it and make it work for your customers.

When Charles Dickens said, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness,” he may have been comparing a typical customer journey map to an ideal state experience.

The Benefits of Experience-Led Transformation

Look around: the “big four” Amazon, Apple, Facebook and Google all achieved initial critical mass by providing singularly satisfying, consistently outstanding experiences.

The world’s top innovative companies of 2019, such as Meituan Dianping (handles virtually ANY type of booking and delivery in China), Grab (squeezed Uber out of Singapore and broadened into food, travel booking, financial services and now even health insurance service delivery), Stitch Fix (the radically data-driven personal styling at scale fashion business), or Sweetgreen (fast casual, farm to table restaurant chain empire) – are all built on the backs of consistently satisfying experiences, at scale.

These companies move far beyond optimizing customer experience (CX), they are reaching the new “X frontier” – creating a harmonious environment for employee experience (EX) and partner experience (PX) in their respective value chains.

Because of these disruptors, expectations for general experience delivery has been raised everywhere. Sixty-seven percent of customers say standards for good experiences are higher than they’ve ever been; 76 percent expect companies to understand what they need and meet their expectations; and 64 percent find customer experience to be more important than price when it comes to making a purchase. Clearly experience drives customer value creation and loyalty.

We know it pays off for businesses, big time. Experience-driven businesses report between 1.6x – 1.9x higher YoY financial value growth because of improved retention, repeat purchase rates, average order size, and as a result, higher customer lifetime value (CLV).

In a nutshell: the rules have been reset and expectations raised. Experience is critical to success and risk of inaction intensifies– so WHY are so many organizations STILL nowhere close to transforming their approach to experience?

Common Challenges of Transforming Experiences

Two of the biggest challenges we hear from executives are:

  1. CX is a systematic and daunting task that involves every single muscle of the organizational mind, body and soul. Where do I start?
  2. The payoff sounds nice in theory, but how do I know if we are making progress? How do I measure this?

Where to Start with Experience-Led Transformation

There is such a thing as CX maturity. Knowing where your organization is on the maturity curve will help you determine where to start and prioritize battles to fight now vs. later. There are six criteria that typically defines an organization’s CX maturity level:

  • Vision & Strategy: to what degree does the organization (from CEO to frontline) share a CX-centric vision and govern CX with a formal, top-down, enterprise-wide process?
  • People & Culture: to what degree does the focus on CX drive the formal and informal cultural rituals and processes; do CX dedicated teams, cross-functional integration, and on-demand access to formal training exist, and is consistently adopted?
  • Design & Deliver Experiences: to what degree does the organization translate the CX vision to detailed blueprints and use it to manage the day-to-day operations and understand the degree to which the delivery matches the designers’ intention and deliver on the specific customer needs?
  • Segments & Data: to what degree does the organization have clear alignment on the customer segment(s), their priorities, and integrate multiple sources of data to track the holistic customer experience across online and offline channels, and have a clear data integration, live dashboard reporting, socialization & governance process in place?
  • Analytics, Measurements & Continuous Improvements: to what degree does the organization utilize integrated data and advanced analytics to guide continuous decision making, investment prioritization, improvement process and pinpoint ROI?
  • Agile Management: to what degree is the CX management process dynamic, real-time, based on maximizing value capture and is tied to key individual incentives?

The Power of Organizational Alignment

Most organizations are at an “ad-hoc” state, characterized by having siloed functionality and lack of commitment to holistic CX training, no coherent governance process or CX aspirations, limited conceptual journey mapping that treats all customers alike, and reactionary insights meant to describe the past rather than prescribe future actions.

If your organization is at the “ad-hoc” state, aligning leadership on the vision of transforming CX and justifying the investment by creating a case for change is crucial – without leadership alignment and focus businesses prolong the vicious cycle and incur wasteful costs.

“These companies move far beyond optimizing customer experience (CX), they are reaching the new “X frontier” – creating a harmonious environment for employee experience (EX) and partner experience (PX) in their respective value chains.”

Once organizations achieve alignment, the next step prioritizes the most critical use cases (i.e. prioritizing CX investment, reducing churn) and identifies the things standing in the way from delivering against these use cases. Approaching CX in this way ensures that the transformation will have the greatest impact and more importantly allows for the creation of a targeted initiative pipeline to close the gap.

One of our financial service clients wanted to prioritize CX investments to maximize value, and quickly realized the organization achieved greater maturity for data integration and analytics.

They were drinking from the proverbial data fire hose and had the data scientists in place to analyze these disparate types of data; however, they lacked connection to the customer or the business to provide a data-driven way of prioritizing opportunities.

3-Pronged Approach to Transform Customer Experiences

To overcome these challenges, we engineered a three-pronged approach to help transform CX:

  1. Lead with the Customer: fine tuning the segmentation to lend more insights about customers, identifying needs and motivations of highest value customers
  2. Connect to Business Impact: making sure all analytics and data process is empowered and managed so that the results can tie to business impact
  3. Drive Data-Backed Decisions: pointed the insights gained through analytics toward specific business leaders and their KPIs to drive better/more informed decisions

These three areas were then translated into specific work streams with assigned owners from various functions of the organization to can start to create the first wave of quick wins for the CX transformation journey.

How to Track Your Transformation Progress

Once the transformation gets initiated, how do you know if progress is being made?

Big leaps in technology, data, process and governance will register on the maturity assessment itself in a year or two. For less significant improvements a finer odometer needs to be used more frequently – to demonstrate quick wins and proper momentum, testing and learning, or quick course correcting.

A best-in-class B2B CX measuring system includes four components, each with a distinct role to play:

  • Annual Customer Survey: provides a comprehensive view of customers on ongoing topics of interest – a mechanism to track progress over time. Offers an opportunity to test a greater variety of questions and stimuli, including new hypotheses from BU leaders and marketing teams. Typically, CX metrics included in the annual customer survey would include customer satisfaction, NPS, specific touchpoint assessments based on recent experience, and competitive benchmarking.
  • Transactional Survey: provides a more nimble and frequent view of the most critical leading and lagging indicators identified by internal leadership and the annual surveys – all to help drive short- to mid-term decision making. This might be in the form of a website pop up survey right after you finish a transaction and have that experience fresh to mind.
  • In-Depth Customer Research: provides an opportunity to conduct in-depth research (typically qualitative) on specific subjects based on acute or broader strategic questions. Helps generate new ideas and opportunities to track/test in the annual survey efforts. For instance, the sales are down this month in a specific region and leadership is wondering if there are CX mistakes they need to learn from – given the narrow concentration and timely manner of this issue, in depth qual is best chosen over a survey
  • Account Conversations: plays a vital role in identifying account-specific issues and insights through the relationship managers.

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FINAL THOUGHTS

In summary, the elevated importance and urgency of experience-led transformation is widely evidenced both by the success and demise of companies on the two ends of the spectrum. Knowing where to start, and how to measure progress might just help some get started on this crucial transformational journey.

Begin your experience transformation journey.

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The Evolved Healthcare Enterprise: An Intro to the Three Archetypes

Are you a transformer, an invader or creator? The answer can change your growth trajectory.

Recently, it was announced that Amazon will start marketing PillPack pharmacy services to Prime members, and healthcare is watching. Today’s digitally-native organizations are inherently more agile than their decades-old competitors. Companies that think about digital differently are focused on driving growth – not just implementing the latest technology.

Evolved Enterprises: Driving Uncommon Growth

Prophet characterizes these companies as evolved enterprises because they are committed to three fundamentals of our digital age to drive uncommon growth.  These companies are:

  • Customer experience-centric: No matter who their customers are, these companies understand they are in the business of experience and they design their business models explicitly to compete on experience and innovation.
  • Building exceptional brands: Because digital businesses are interactive by definition, customers must have positive associations with your brand, which requires a radically reimagined marketing machine.
  • Mastering demand-generating capabilities: From aligning and deploying the salesforce to be more effective, to designing and curating martech stacks that are relevant and timely, these organizations know how to be efficient and effective with customer interactions.
  • Unleashing the talent of their people: Empowered, autonomous teams at the help organizations operate at the speed of digital. They are fast, flexible and responsive. When grounded in a shared purpose, this freedom unleashes innovation, engages employees and attracts critical talent.

These characteristics have proven to hold true across industries, including healthcare. Many healthcare executives would argue that they are not only true, but most traditional healthcare organizations are lagging behind. Historically, this is largely because healthcare organizations have had a somewhat captured market.

When they were founded, operations were frequently the sole challenge. Whether it was labor-management of a health system, manufacturing and distributing products, underwriting a diverse portfolio of insurance plans, etc., simply getting the work done, was the key challenge. There was a need to be product or service-focused. Digital has changed that, and winning organizations today are customer experience focused (not just customer-focused).

The Three Main Archetypes of Healthcare Consumer-Centricity

In my colleagues Jeff Gourdji and Scott Davis’s latest book, Making the Healthcare Shift: The Transformation to Consumer-Centricity, we see a number of organizations showing promise on their transformation journey. These “transformers” are one archetype of the evolved healthcare enterprises. In the following blog series, we’ll explore the following archetypes of Evolved Healthcare Enterprises that are emerging across the healthcare ecosystem:

Transformers

As mentioned above, these are traditional healthcare organizations seeking to transform and adopt traits of modern Evolved Healthcare Enterprises. These are often companies that fit nicely in the payer, provider, and life sciences sectors Geisinger Health is a great example of a transformer. The Geisinger Medical Center was founded over 100 years ago, as your typical hospital. However, it’s experience-first initiatives such as money-back guarantees and other innovative consumer, clinical, and cost approaches make it an evolved healthcare enterprise in the transformer category.

Creators

These are organizations that start as evolved healthcare enterprises, typically in the last 20 years and are digitally native, and synonymous with start-ups. They sometimes fit within traditional healthcare categories, such as the health insurer, Oscar. Frequently they are creating new sub-categories such as Patients Like Me that provide patient peer groups, helping support each other as well as sharing and discussing a variety of treatment methods that aid in research. Or Exact Sciences and their product Cologuard brings lab testing into the convenience of people’s homes.

Invaders

These are proven evolved enterprises outside of the healthcare industry that are moving in, often grabbing headlines such as Amazon, Apple, and Google. And with good reason, Apple Health Records and its ability to enable more portability of patient medical records is helping to break down EMR silos as patients move through the larger healthcare system. Amazon is now making bonafide medical devices that are HIPAA-compliant. Their “invasion” is quite real and is gaining more momentum every day.

“Companies that think about digital differently are focused on driving growth – not just implementing the latest technology.”

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In the subsequent parts of this series, we will dive deeper into each of these archetypes. We will highlight the inherent strengths  as well as the disadvantages of each archetype. Regardless of whether you’re a transformer, creator, invader, or none of the above, this series will underscore the amount of change we’re seeing in healthcare today as well as the opportunity the healthcare industry has to unlock growth by by embracing the digital age. Change is here, and it’s coming from everywhere.

Learn more about the ever-changing aspects of impactful healthcare customer experiences.

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Leveraging Organizational Culture to Achieve Uncommon Growth

Today’s leaders are beginning to understand that true transformation always requires a cultural change.

2 min

Why is Culture So Important Now?

According to Prophet Partners, Tony Fross and Helen Rosethorn, culture is so important now because in the past 20 years, the way we define and discover value has significantly changed. Organizations founded within this time period are thinking much differently than those founded before; and those more traditionally founded companies are looking for ways to also thrive in the digital era.

Our upcoming study will provide actionable strategies for digital transformation so that organizational leaders can get the outcomes they truly want.

Leveraging Organizational Culture to Power Business Growth

Organizational culture can be a powerful driver of growth in today’s landscape of transformation. But, is your culture helping or hindering your business to achieve its goals? Luckily, we have the secrets to success in our latest global study.

Culture is undoubtedly the most powerful fuel for maintaining a competitive advantage in business today. Our upcoming study by Helen Rosethorn and Tony Fross, both Partners at Prophet, provides processes for building a strong organizational culture.

This study provides insights from discussions with over 50 business leaders and 400 survey participants from across the United States, United Kingdom, Germany and China, arming executives with a set of concrete steps to drive high-performing, fit-for-strategy cultures.

In today’s digital age, organizations’ efforts to adapt are ongoing. Now is the time to harness the power of culture and help your organisation achieve uncommon growth.

Download the report.

PODCAST

Healthcare Transformation: How Do We Get There?

On the Healthcare Rap podcast, Jeff Gourdji, co-author of the new book Making the Healthcare Shift, breaks down the 5 necessary shifts for becoming consumer-centric, and how marketing and technology are involved. All that, plus an inside look at launching his book and a shout-out to little moments that make a big difference.

Listen here

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How to Craft the Perfect About Us Page

These days, there are countless ways for consumers to conduct research on a brand. But before social, review sites, and other online directories, a company’s About Us page was really the only digital space that provided insight into its mission and identity.

Mat Zucker, Partner at Prophet, analyzed the About Us pages of some of the world’s top companies and was surprised to find how many fail to deliver real value with the stories they tell there.

In this interview with Zucker, he shares some vital takeaways from his analysis of successful About Us pages. You’ll learn steps for clarifying your brand’s voice and communicating that identity to your audience in the most intentional way possible, using one of the most essential (and undervalued) components of your online presence.

Listen to the podcast.

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