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Brand-Demand Love: Achieving Success and Satisfaction Together

Informed by the conversations we’ve had with CMOs across industries, this fourth installment from our Brand-Demand Love blog series explores how to integrate brand and demand marketing capabilities to win in a complex and dynamic landscape. 

Even in the most complimentary relationships, financial matters are often a source of significant stress. For brand and demand-gen marketing teams to achieve the fully integrated and highly productive marriage we have been describing so far in our series, they must address the potential friction points involving budgeting, investment and performance measurement.

Agreeing on big-picture goals and investment priorities is the first step, followed by defining metrics to track performance. Receptivity to new approaches and flexibility to adjust as needs change is also key. As our research with marketing leaders has made clear, these issues are critical to unleashing uncommon growth through more effective and agile marketing capabilities across the customer lifecycle. Brand and demand teams ultimately share a pocketbook and prosper (or struggle) together.

Building Balanced Budgets and Allocating Investments Equitably

Many marketing leaders confess to being “obsessed” with finding the right investment mix. There is no shortage of conventional wisdom on how to allocate budgets and balance the investment mix. One common industry standard is the 60/40 rule, an investment recommendation proposed by Binet & Field’s 2013 study. The thesis: Allocating 60% to brand and 40% to demand yields the most effective balance of near-term acquisition and long-term performance.

Such rules of thumb seem to offer quick, evidence-based solutions. They also help defend brand investments, as many marketers want—and feel an urgent need to do—as e-commerce and digital have gained the upper hand in budget battles. However, this may not fully account for the variables of consumer behavior, broader market trends or the unique business contexts faced by different organizations. Modeling investment and measurement decisions against product lifecycle stages (e.g., product launches, mature offerings) can help marketers track progress toward specific goals.

Marissa Jarratt, chief marketing officer of retailer 7-Eleven, seeks to manage marketing investments like a portfolio. She balances higher-risk bets that offer big potential upside while also making safer plays that bring more predictable returns. “This is becoming more of a science,” said Jarratt. “We’ll take risks if we think it can drive a target downstream impact or outcome.” Such a balanced view of risks and rewards helps optimize the media mix across funnel stages and seasons.

Sudden market shifts put a premium on agile planning and budgeting. As Ashley Laporte, director at communications firm RALLY, told us:

“It’s not about finding the perfect proportions to balance brand and demand but finding a flexible framework that understands how everything connects.”

Mastering the Metrics and Digging into the Data

Performance metrics and attribution models continue to proliferate and evolve. There has been a pronounced shift away from brand surveys toward more agile measurement approaches. The leaders we interviewed expressed uncertainty about which metrics and KPIs are the most accurate and how to enable insight-based decision making.

Even firms that can transcend traditional difficulties in measuring brand performance face challenges. As Jennifer Warren, VP of global brand marketing at Indeed, told us, “Business and finance leaders want to know how a 2% lift in consideration translates to sales and revenue.” Such visibility is difficult to achieve, as is determining ROI on long-term, multi-year brand investments. Marketers are now being asked to develop KPIs to measure the effectiveness of purpose-driven strategies around sustainability, for example, or diversity and inclusion efforts.

Despite the challenges, being data-driven enables marketers to speak the language of the business. As Portia Mount, VP of marketing, commercial HVAC Americas at Trane Technologies, put it, “When financial leaders say, ‘let’s cut all the brand stuff and just do demand,’ our job as marketers is explaining what the impact will be if we shut something down.” Better performance data and stronger customer insights make for more productive conversations in explaining that choosing between brand and demand is not a zero-sum game.

“I don’t think that there is a silver bullet for measurement,” said Tyrell Schmidt, U.S. chief marketing officer, TD Bank. “We are really careful not to oversell performance, which is easy to do because it always drives the fastest results.”

A Shared View Builds a Shared Stake

Demand-gen leaders also face challenges in tracking performance as major tech companies like Google and Apple work to shift away from the use of cookies. Consumer goods firms struggle to get point-of-sale performance data from partners (e.g., e-commerce platforms and big-box retailers) and look to fill the gap with third-party data (e.g., credit card records, basket analysis). The bottom line: as much data as marketing leaders have, they are always looking to attain the most relevant data.

The lack of alignment between brand and demand adds another layer of complexity. Today’s “incongruent” KPIs result from a lack of incentives to “play nice,” according to one CMO. Ideally, rich data and aligned KPIs are used within an agile budgeting and forecasting model that incorporates multiple time horizons (annually, quarterly, daily) and enables opportunistic, real-time adjustment.

Integrated performance dashboards accessible by both brand and demand teams have enabled some firms to generate holistic insights by combining both short-term (e.g., search data) and long-term (e.g., Net Promoter Scores) metrics. These efforts reflect the need for marketers to experiment and innovate in their approach to financial matters. At Prophet, we recently partnered with a health services client to develop an integrated performance dashboard across brand, demand and customer experience teams, enabling a cross-functional understanding of campaign performance.

Summarizing the Questions You Need to Ask

Looking ahead, brand and demand teams must commit to open communication and engagement to achieve a strong and harmonious relationship. When it comes to financial matters, flexibility is also key. In order to pave the way to a household of shared finances, you need to ask the right questions and the following are worth considering in setting the right investment priorities and measuring the effectiveness of collective efforts:

  • How much impact does brand marketing have on conversion?
  • What impact do customer acquisition efforts have on brand perception?
  • What’s the appropriate level of investment across brand and demand without sacrificing overall performance?
  • What do specific metrics tell us? Which metrics are most meaningful and why?
  • Are we measuring campaign performance holistically and across the funnel?
  • Do we have a shared view of brand and demand and how they connect to the business in the short and long term?
  • Are key measurements used to inform annual planning cycles?

The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact.
Download today!

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In our next post, we’ll look more closely at how to set up a “happy household” ­– that is, organizing teams and building the right capabilities so brand and demand can have a comfortable nest for their life together. 

If you’d like to learn more about how your organization can overcome common challenges while integrating brand and demand marketing capabilities then get in touch here. 

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The State of Digital Transformation in Europe

The state and success of digital transformation varies considerably around the world, with some distinct disparities between the digital “haves and have-nots.” The latest global research report from Altimeter, a Prophet company, provides not only detailed insights on the differences between individual markets but also some key learnings.

The U.S. market, for instance, is largely looking past digital transformation, having invested heavily during the last 10 years to replace legacy infrastructure and migrate more operations to the cloud. U.S.-based firms today are focused on strategic innovations (e.g., greater customer-centricity, digital product development). However, China, which never had to contend with outdated systems, was able to leapfrog ahead to advanced apps and immersive digital experiences.

In Europe, there is a wide variance of digital maturity. The U.K. market looks more like the U.S., but Germany is not quite as far along on its digital transformation journey. It’s also important to note that the most advanced firms in Europe have reached the same level of digital maturity as digital leaders in China and the U.S., but average firms generally lag compared to their global peers.

Europe is Catching Up in Its Digital Transformation Efforts – Quickly Enough Though?

Taking a closer look at Altimeter’s data in terms of C-level sponsorship of digital transformation initiatives, the U.K. has the highest tendency to appoint a CDO or CIO to own and/or sponsor digital transformation. However, Germany and the U.S. tend to rely marginally more on the CIO or CEO. At the same time, more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results.

A potential reason for this is that European firms are somewhat more conservative in their approaches to transformation overall. For instance, German firms prioritize employee engagement, digital literacy and operational efficiencies in their digital transformation agendas as much as they do growth. Innovation, on the other hand, is a much lower priority.

U.S. firms are notably more focused on profitability and revenue in their digital transformation programs than their European counterparts. It seems that many European firms are focused on keeping in step with their peers and competitors and that’s especially true in Germany. The implication is that many established European companies are still building a digital foundation for the future.

“more American and Chinese firms report excellent results from their digital transformation programs, but most European companies report that they only have good or fair results”

U.K. organizations are the most likely (69%) to cite using digital technology as an opportunity to become more efficient, perhaps partially reflecting the need to improve their lagging productivity rate versus the U.S. (46%), Germany (42%) and China (52%).

German organizations (58%) are the most likely to view digital technology as a priority investment to replace outdated or obsolete technology, as compared to the U.K. (40%), U.S. (39%) and China (18%).

Europe Invests Long-Term and the U.K. Adopts Agile Working Methods

Compared to U.S. firms, European firms also have longer-term expectations for their transformation investments. At least 40% of surveyed companies in Germany and the U.K. expect it will take at least two years to see positive results from transformation investments, versus 31% of U.S. firms. One reason for the longer time horizon is the relative lack of sufficiently digitally trained staff, which is a bigger challenge in the U.K. and Germany than it is in China or the U.S.

Of course, Europe cannot be considered a monolithic market. There are substantial differences between the U.K. and Germany. The U.K. firms surveyed have adapted better to digital transformation by, for example, adopting agile working to a greater extent than those organizations in Germany, which are more likely to have process-driven cultures.  Additionally, data silos are a much bigger problem in Germany compared to the U.K., which shows more leadership in data science.

In Germany, digital marketing is still mainly viewed in terms of ad campaigns. And in both the U.K. and Germany, digital marketing is generally below average in owning the customer experience. There are also varying priorities for the future: U.K. firms put less focus on hiring and training in digital transformation and as a result, business model changes are less likely to happen in Germany. Also, cybersecurity and cloud adoption are important priorities in the U.K., while cross-functional collaboration platforms are of less relevance in Germany.

Don’t Focus on Infrastructure, Focus on Creating an Agile Organization

Our digital transformation research, as well as our market experience, suggests that firms are better served by focusing on organizational changes and improved agility rather than updating infrastructure. After all, infrastructure is constantly advancing so that’s a job that will never be completed. But increased organizational adaptability and agility will help organizations adjust to ongoing change and proactively drive it.

Approaching these challenges in the right way is key. To do so, companies should follow a three-step approach:

  1. Digital Benchmarking: Conduct a rapid heatmap assessment of your organization’s (enterprise-wide) digital transformation maturity. Identify where the opportunities for improvement are, and how your business benchmarks against best-in-class digital maturity (both in your market(s) and globally).
  2. Digital Immersion: Run a digital innovation workshop with key stakeholders across your organization to share the latest digital trends (not just specific to your industry, but also apply learnings from other industries) and explore the digital art-of-the-possible to identify opportunities for augmenting your own digital transformation journey.
  3. Digital Mobilization: Build (or revisit your existing) digital transformation vision and roadmap, ensure all roadmap initiatives are tied to commercial value and make certain tracking mechanisms are in place to guarantee the realization of this value.

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Looking ahead, companies in Europe, particularly in Germany, must address many of the same challenges that U.S. firms (and the more digitally mature companies in Europe) have started overcoming already. That means breaking down data silos, converting raw data into actionable insights and adopting more agile ways of working.

How does your company stack up in the digital transformation stakes? Get in touch today if you’d like to benchmark, excite, transform, and unleash the full power of your business.

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How Brand-Demand Love Wins Across the Marketing Lifecycle

The second post of a series about integrating brand and demand marketing capabilities to win in a complex and dynamic landscape, based on our conversations with CMOs across industries.

As we highlighted in the first post in our Brand-Demand Love series, we think it’s time for a more integrated and complementary relationship between brand and demand-gen marketing. Why? Because the current separation isn’t aligned to the dynamic purchase behaviors of consumers across an increasingly complex landscape. As Karla Davis, VP of Marketing at Ulta Beauty, told us:

“What is brand, and what is demand? That’s a little gray now.”

Karla Davis, VP of Marketing at Ulta Beauty

When accomplished senior marketers question the validity and usefulness of the traditional brand-demand paradigm – and many do – then surely, it’s time for a new model. After all, the effective coordination of brand and demand-gen activation strategies represents an integrated and agile marketing capability – the gold standard amongst marketing pros.

Feeling the Brand-Demand Love Across the Marketing Lifecycle

Brand and demand-gen activation cannot be viewed as separate or competing functions, but rather as interdependent and mutually reinforcing capabilities that comprise the core of the overall customer experience.

Each set of tactics has a significant role in attracting buyers and strengthening relationships at every step of the customer journey and across the entire lifecycle. But, taking the perspective of marketers, it’s easy to see why the brand-demand balance is fluid. When considering marketing activation investments, companies might adjust their orientation as:

  • Brand-led
  • Demand-led
  • Balanced

As business objectives evolve and companies navigate distinct phases of maturity, the optimal marketing approach will vary. For instance, a brand needing to differentiate from a competitive pack may need to be brand-led to generate awareness and consideration, while a business undergoing a portfolio launch, expansion or refresh may have more balanced brand-demand priorities.

For businesses focused on customer acquisition or market share gains, demand-led models will serve their immediate priorities in tandem with brand campaigns. Many direct-to-consumer brands, unique in their offerings, initially focused on acquisition only to shift towards brand marketing as their category became crowded. Mature organizations that find themselves at a point of market saturation and businesses without fully defined offers will both rely on brand-led marketing efforts to develop, sustain and enhance customer relationships.

Learning from Airbnb

Airbnb’s decision to cease all demand generation activities coming out of the pandemic suggests just how much the brand-demand pendulum can swing. When the pandemic shut down all travel, the company eliminated its marketing activation spend, which totaled $1.62 billion in 2019. As lockdown restrictions eased, Airbnb saw most of its traffic return to pre-pandemic levels, prior to re-investing in marketing activation campaigns.

“I don’t anticipate doing a lot of incentives because we have a huge amount of demand for the service already,” Airbnb CEO Brian Chesky told CNBC. “We are never going to spend the amount of money on [demand] marketing as a percentage of revenue as we did before the pandemic [because] our brand’s incredibly strong.”

Not every brand is Airbnb, of course, and it’s far more common for brand marketing spending to get in the crosshairs of budget cutters. The brand-demand mix is fluid for large and small marketing organizations. Other companies will find they need a different balance at different moments within their growth curves and maturity cycles.

External factors also play a role in defining the right balance at the right time. Social issues, including diversity and inclusion and climate change, are leading some companies to deploy brand spending to align with important causes.  Ashley Laporte, director at the communications firm RALLY explained her company’s approach as “Less about cause marketing, and more about helping companies take part in driving systemic change.” Taking positions that consumers support may lead to some increase in demand, but it will be hard to attribute sales directly to, say, thought leadership regarding a company’s commitment to net-zero admissions.

Another CMO in the manufacturing industry said she wanted “credit from business leaders, the board and institutional investors” for effectively positioning the brand relative to these issues, especially since it made the business more attractive to rising generations of workers.  An industry analyst told us, “Brands are being tortured with the cultural and societal unrest that’s out there,” and not just because investments related to these tricky issues are extraordinarily hard to measure.

What’s Love Got to Do With It?

Mastering the brand-demand mix means being flexible and committing to making necessary adjustments over time, like those that take place across the course of loving relationships. One partner’s needs may take precedence during a certain phase of life, but afterward, things rebalance as conditions change. It’s never exactly 50-50 (or 60-40 as in the famous Binet & Field model for budget allocation, which we’ll explore in more detail in a future post). Such a rigid formula may cause opportunities to be missed and doesn’t match the real world, where marketers must continuously adjust based on changing market conditions and business needs.

The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact.
Download today!

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We suggest speaking the “language of love” to business leaders and other stakeholders who struggle to see beyond the numbers in evaluating the merits of brand investments. The key is to connect business objectives to the power and resonance of brand. Marketers that can bring empathy and emotional intelligence to these conversations will be more likely to find supportive partners – and isn’t that what we’re all looking for?

In our next post, we look more closely at proven principles for shaping effective go-to-market strategies – the “vows of the brand-demand marriage.”

Get in touch today if you’d like to learn how to bring brand and demand together to win across the full marketing lifecycle.

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A Guide for New CMOs

For a crash course in what to do first, plan your listening tour and ask the right questions.

Are you in a new role as chief marketer, or perhaps new to your category? This simple guide offers straightforward ideas and insights that can help you succeed.

To start, think about what you need to do in your first 100 days. It is important to consider:

  • Do I need to develop a transformation agenda?
  • Can I create a more compelling go-to-market strategy?
  • How can I make our brand more relevant to customers?
  • Are there foundational tools to put in place, such as a documented customer journey or a marketing plan?

Given the rapid change in marketing and the greater need to prove immediate impact, we help new CMOs flex the most impactful levers including content, data and digital marketing, as well as reimagine their marketing organization for the modern era of growth engine marketing.

Here’s a quick guide of what to ask, what to do and where to look in the first 100 days.

What to Ask

Asking the right questions up front can help craft the right agenda, identify potential initiatives and create an actionable roadmap. Below are six questions you should explore with your team, colleagues, and agency partners.

  1. How relevant is/are your brand(s) to your most important customers and stakeholders? How relentlessly focused on the customer are insights, strategies and tactics?
  2. Is the marketing strategy aligned to the business strategy? What is marketing’s contribution to the enterprise? How do the rest of the C-suite and the board see marketing’s role?
  3. Are brand and demand priorities clear and integrated—or in competition and at odds? Is there a portfolio marketing strategy in place or is the strategy purely product-focused?
  4. How are you going to engage and empower the sales, communications and product teams? Is there a shared end-to-end customer journey? What culture of collaboration exists or doesn’t exist?
  5. What is the maturity level within the marketing organization for key digital capabilities such as customer data, content, personalization and attribution?
  6. Is your marketing team organized in the most efficient way possible and around your business priorities? How might you set up your operating model?

 

What to Do

Here are some recommended actions passed on from other leaders, proven to get you on solid footing and off to a smart start.

1. Schedule your listening tour

Meet with your direct reports and colleagues across the organization, and ask these questions: What do you want me to create? What do you need me to protect? What do you need me to prioritize? Be sure to share back the results and your plan.

2. Create these CMO assets

  • Introduce Yourself Presentation: Prepare a “top 10 list” presentation that addresses these questions: Who are you? Why are you here? What kind of change initiative are you leading? What do you believe about marketing? What do you value? How do you like to work with others? What are your top priorities? What are key milestones for your first six months? What do you expect from your team? What can they expect from you?
  • Vision, Agenda and Roadmap: These are often created in a workshop over a few weeks with a suite of collaborations They should include a description in which the brand can fulfill the business potential, and the springboards, or starting places, that exist now. One key artifact to create is a dashboard to help track progress.
  • Growth Era Marketing Plan: This plan is a modern replacement for the integrated marketing plan and has many of the conventional elements updated for marketing’s new role as a growth engine for the enterprise. Topics include business vision, opportunities, strategies and tactics, customer data strategy, calendar, investment, and key enablers (e.g. content, technology, people, partners).

3. Work in outcomes

Translate your priority initiatives from marketing objectives to business impact. For example:

  • Reducing cost: Investing in a content strategy that leads to search engine optimization will, for the business, reduce the cost of digital marketing that may need to be done.
  • Increasing revenue: Engaging in brand and marketing campaigns that increase customer loyalty can, for the business, increase the share of wallet and customer lifetime value.
  • Improving efficiency: Improving digital experiences can be a reason for a prospective client to work with you, therefore improving the volume of incoming leads, lead quality, conversion rates and retention.
  • Product innovation: Customer insights gleaned from marketing activities and shared with product management can optimize product performance and uncover new opportunities.

Ask your teams to quantify and report their work against broader business impact, not only marketing KPIs. A dashboard that integrates marketing KPIs and business performance can help sustain that conversation and connection.

“When asked business questions (e.g. what have you delivered for the business?), don’t give marketing answers (e.g. NPS).”

Raja Rajamannar, Chief Marketing & Communications Officer, Mastercard

Where to Look

Prophet helps new and tenured CMOs set an agenda and transform their marketing inside and out. Talk to David Novak, Mat Zucker, Marisa Mulvihill and our brand and marketing strategy teams. Here are some additional resources which might be helpful:

Books

  • The Next CMO: A Guide to Marketing Operational Excellence, Peter Mahoney, Scott Todaro and Dan Faulkner (2020)
  • Lies, Damned Lies and Marketing: Separating Fact from Fiction and Drive Growth, Atul Minocha (2021)
  • Chief Marketing Officers at Work, Josh Steimle (2016)
  • CMO Manifesto, John Ellett (2012)
  • Owning Game-Changing Sub-Categories, David Aaker (2020)
  • Creating Signature Stories, David Aaker (2018)

Articles & Speeches

Podcasts

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The Chief Marketing Officer is a C-suite role that can lead, shape, and help deliver uncommon growth for the organization. Marketing is evolving fast, and every leader—new or tenured—needs the mindset and toolset to stay in front.

Reach out to our brand and marketing experts for advice and support on getting started with your agenda.  Have a resource we should mention? Let us know.

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Brand and Demand Marketing: A Love Story

Marketing has always been shaped by shifts in consumer behavior, expectations and technology advancements, as well as its contribution to the enterprise. As the scope and speed of such changes expand and accelerate, it is more difficult for brands to know which types of campaigns and media work best, and the growth to which marketing can contribute.  

They must make hard tradeoffs in deciding where to invest finite resources, how to differentiate amongst competitors and how ambitious they need to be as a growth engine. Are the tradeoffs—and competition between forces—helpful or harmful? 

Today’s marketing industry feels different, according to our recent candid conversations with a dozen senior marketing leaders across industries. Customers are harder to reach and engage, even though we have vastly more data and insights about them and stronger personalization tools. Budgets are tighter and internal stakeholders more demanding. Tried-and-true best practices no longer apply. There’s a sense that rules are being rewritten in real-time. The once useful “marketing funnel” concept seems less relevant given that consumer behavior changes constantly and paths to purchase are increasingly non-linear.  

As a result, many marketing organizations experience significant tension between brand marketing and demand generation – a tension we believe undercuts growth and harms performance. Brand marketing typically describes long-term efforts to drive awareness of and preference for a company, product or service, while demand marketing seeks to get audiences to take action immediately (e.g., click on an offer, sign up for a newsletter).  

“This topic is one of the things that we’ve [been] trying to understand – where in the funnel do we need to spend our dollars in order to really drive business results and drive growth.”

– TD Bank, CMO

As the CMO of a challenger consumer goods brand told us, “Brand is about growing awareness and affinity over time,” while the primary objective for demand, or performance marketing, is “driving short-term conversion.”  

The “either-or” bifurcation of marketing into these categories presents huge challenges as marketers seek to optimize budget allocation, track performance and structure their teams and operations to drive uncommon growth. The worst part, the split between brand and demand generation isn’t aligned with consumers’ consumption patterns in today’s world.  

As a senior industry analyst told us, “Consumers have zero separation between the brand being communicated and their experience. In finding the right investment for brand and demand, it’s both, not versus.”  

Stop the fighting and find the love.

This article, the first in a series, is based on our recent market research with senior marketing executives and focused on the specific internal and external challenges CMOs face today related to brand and demand. These marketers also highlighted the levers they have at their disposal to create effective and integrated brand and demand strategies.  

Every marketing executive we talked to confirmed the importance of finding the right balance between brand and demand. We also heard repeatedly what a difficult balance it is to strike; everyone agrees that brand and demand efforts must be coordinated and synchronized. However, how to do this is much less clear. Despite the interdependence of brand and demand marketing, many tricky questions remain: 

  • How much impact does brand marketing have on conversion?
  • How does customer acquisition efforts influence brand perception?
  • What’s the optimal level of investment across brand and demand?
  • How can brand and demand show up most effectively across channels?

“This topic comes up all the time, in the B2B context, the brand piece is a hard sell because our team doesn’t understand why it’s important.”

– Trane Technologies, SVP of Marketing

In our brand and demand blog series, we explore this important conversation with a modern lens, examining how marketers can embrace the brand-demand love. Specifically, we’ll cover:  

  • The seasons of love: Understand why brand and demand are meant to be together and how they can overcome obstacles to love across the marketing lifecycle – we’re playing a long game 
  • Writing the vows: Set a strong strategic foundation, because every brand-demand marriage needs a rock-solid foundation of what it stands for and how it will approach the market – when to say “I do” and when “I don’t” 
  • Shared finances: Create shared goals and an investment agenda, define smarter metrics for allocating the shared pocketbook, or budget, and track the performance of those shared investments – brand and demand should not fight about money 
  • Setting up the household: Determine how to organize teams and build the right capabilities – brand and demand need a comfortable nest 

The new research report, “Brand and Demand: A Love Story” is here! Learn how today’s Brand and Demand Generation leaders are bringing their functions together to drive greater impact.
Download today!

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We think it’s time for brand and demand to stop thinking of themselves as competing interests fighting for the same precious resources. Rather, they must be complementary companions with a shared agenda and intertwined goals. We believe it’s time for brand and demand to fall in love because together, they are the ultimate power couple to build relevance and unlock uncommon growth.   

Get in touch today if you’d like to learn how to bring brand and demand together to unleash the full power of your business.

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Nine Digital Shifts to Sustain B2B Companies During Trying Times Trends in Digital Innovation

Supply chains and alternative channels take on outsized importance.

The biggest challenge for today’s businesses is to consistently produce personalized content at a large scale, deliver it at breakneck speed, and credibly have an impact on revenue. The businesses that are successful in this endeavor have invested in an innovative set of capabilities that make up an “Agile Content System”.

Digital transformation in normal times is usually considered a growth opportunity – and it is.  B2B companies coping with the pandemic are also demonstrating that shifting to digital can provide important benefits in sustaining the business through:

  • Alternative channels for customer engagement – the use of Zoom, Teams, Slack, and other forms of collaboration and meeting apps have skyrocketed
  • Keep parts of the supply chain operating – ecommerce has proven less vulnerable to disruption than call center or face to face channels
  • Lower costs – by using data analysis to uncover and target expense reduction
  • Preserve cash flow through business model redesign – SaaS business models are providing a valuable cash flow buffer in the face of decelerating demand.

These benefits are crucially important in this unsettled period, but they will also be valuable once the crisis recedes. Digital marketing and selling, digital experience innovation and digital operating model renovation stand out as three digital transformation shifts that leaders can use to sustain their business as much as possible during this crisis as well as to accelerate customer demand once the economy rebounds.

Identifying and pursuing quick digital wins that can also elevate future performance has become an immediate imperative for B2B leaders.  The purpose of this article is to provide guidance on where to look and what to prioritize in each of the three transformational shifts. Our recommendations are based on the discussions with B2B leaders and examination of successful cases of B2B digital transformation we conducted for our forthcoming book The Definitive Guide to B2B Digital Transformation

Digital Selling and Marketing:

In such uncertain times, the best customer for most B2B businesses is the customer they already have.  Current customers are much more likely than new prospects to buy, have a lower cost to serve and will be more willing to endure the delays and interruptions their current suppliers encounter.  Using collaboration and virtual meeting tools to enable sales teams and intermediaries to connect with buyers who are working from home is only a first step.  Customers have a need to be connected to a bigger picture about what’s going on in the market, in the supply chain and even in different parts of their own company. They may require frequent updates on even small issues that previously wouldn’t garner their attention but are crucial to keeping their business afloat. And, customers need help to figure out new paths forward and rapidly find alternatives as business conditions change.  There are several use cases to increase the use of digital to focus on existing buyers:

Account-Based Marketing (ABM) has never been more important.  It is a superior way to coordinate the efforts of sales, digital marketing and service to meet the information and relationship needs of the full set of stakeholders, influencers and decision-makers in current accounts.  ABM can be set up in the basic form in a matter of weeks and then can expand and grow. When the economy improves it can take on the added task of improving prospecting and new customer acquisition.

Digital customer insights and analytics become essential when the routine ways of monitoring a category through face-to-face interactions among industry ecosystem participants break down.  Consider opening up an industry “war room” to buyers who can join virtually or receive insights through an email or online feed. Enable the war room with social listening, digital surveys, scouring the internet for news and monitoring key data sources.  Once the current crisis is over the war room can become a source of insights for innovation or a value-added service that can build a competitive advantage.

Direct Ecommerce may be the only way to keep the parts, accessories and supplies flowing that keep customers in business.  For service providers, it may take the form of shifting in-person services to digital channels.  Barriers put up by intermediaries such as agents, distributors, and systems integrators can prevent suppliers from undertaking commerce directly with their customers.  In times of crisis, these barriers will come down; enabling both supplier and customer to sustain a revenue stream while establishing a direct connection that will be very valuable, and hard to turn off, when conditions improve.

Digital Experience Innovation:

Most mid-size and large corporate customers have a built-in divide between the purchasing department and the user of the supplier’s goods and services.  In situations like the pandemic, operations become more siloed and day-to-day connections between the buyer, supplier and user can fray. Users can feel isolated and unserved.  Digital experience innovation plays a valuable role by meeting the needs of the user around the clock with less human intervention from the purchasing team or the supplier. The use cases for user support span the entire customer experience. They include:

Virtual Technical Support can be the lifeblood for corporate users struggling to find new ways of working and encountering new or unexpected bottlenecks as they try to patch together approaches to keep doing their jobs. B2B suppliers should consider ways to open up their expertise online.  Can training guides, specification sheets, and other materials intended for the technical support team be made available to customers online? How about setting up a Virtual Technical Support SWAT team that can swoop in after an initial online meeting and use collaboration tools to solve complicated problems (systems integration challenges, supply chain workarounds, etc.) more quickly than normal? The service may be essential during the pandemic but could save travel and speed problem resolution when times return to normal.  Collecting data on problems and their resolution can later enable AI-driven systems to automate the service in the future.

Online Learning becomes a necessity when there is no readily available source for corporate users to learn how to work with new components, become familiar with a crucial application, or manage a novel service because a supply chain disruption changed their normal routine. Avoid becoming entangled in long lead times to develop a new curriculum by setting up an online listening function to understand what challenges customers are facing. Then, empower sprint teams to create videos and audio-assisted documents to fill the need.  The production flaws will be forgiven in a time when help will be so appreciated.  Later on, the content can improve the larger curriculum and responsive listening can inform technical support and solution innovation.

A Digital Bulletin Board is an excellent and inexpensive way to keep customers informed of what’s going on from a supplier and industry point of view.  It can span multiple topics from immediate steps to mitigate health challenges, to information about shortages or substitute offers to information about how others in the industry are coping with important challenges.  It can be a tool for employees to stay informed as well as customers. At a time when many in an industry are looking inward, it can elevate the presence of the supplier within the customer as a source of information and expertise and provide a platform for continued use once the pandemic has receded.

“Digital marketing and selling, digital experience innovation and digital operating model renovation stand out as three digital transformation shifts that leaders can use to sustain their business as much as possible during this crisis as well as to accelerate customer demand once the economy rebounds.”

Digital Operating Model Renovation:

Many of the world’s companies may be heading for a cash crunch and resource imbalances over the next few months. Now may not be the time for thinking about how the operating model can be redesigned, pursue new customers, or enter new markets.  It is time to consider important, and significant moves to improve the effectiveness and efficiency of the business in ways that will be sustainable for the next few years.

Subscription Revenue Models provide a more sustainable revenue stream in times of uncertainty and in normal times.  They also lower the initial outlay customers must make for important purchases. A shift that can be extremely valuable for cash conserving customers.  There is usually a huge timing hurdle to overcome when converting transactional purchases to subscriptions because large initial revenues must be given up by the supplier in favor of a revenue stream that is spread over months or years.  This period of economic pause may be an ideal time to move to subscription because demand is already depressed, interest rates are low, and investors may be willing to endorse any move that sustains revenue.  The long-term benefits will be substantial, and the normal short-term barriers may be easier to overcome.

Cost to Serve Reconfiguration is a topic, that although very sensitive, cannot be overlooked. In normal times it includes thinking through how automating processes or investing in new digital platforms can reduce labor costs and generate bottom-line savings.  However, this is not the time to install major new systems or make uncertain employees fear for their jobs even more than they already do.  It is the time to collect data, measure, and evaluate whether the new selling, marketing, technical support, online education and digital communication approaches can be optimized and scaled after the crisis has subsided to lower cost to serve, boost employee work-life balance and improve customer service.  Treating the crisis as a series of pilots and experiences requires collecting data and measuring impact. The benefits for ongoing operations can be as profound as the short-term gains these changes produce.

Agile Process Redesign is at the heart of going faster and incorporating customers into the design process for many organizations.  The importance of quickly bringing new solutions to market or rapidly adapting current solutions has been made abundantly clear in the past several weeks.   Most corporate leaders have dramatically stepped up their planning but are struggling to accelerate the pace of the work that actually gets done. This is an ideal time to introduce agile teaming methods to the workforce.  There is no shortage of projects that need rapid attention, the case for change is apparent to employees and these methods can be deployed quickly with fairly low investment.  Agile methods have numerous additional benefits in driving leadership accountability, clarifying project status and ensuring that projects remain customer-focused even when moving rapidly.  The payoff is immediate and the benefits for the organization when things improve are substantial.

By Fred Geyer (Prophet) and Joerg Niessing (INSEAD), authors of the forthcoming book The Definitive Guide to B2B Digital Transformation. 

Watch this video to learn more.

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The nine digital shifts described in this article are a starting point for thinking through moves to make to sustain B2B businesses in an unprecedented time while laying the groundwork for future success when this crisis recedes.  We have tried to be pragmatic by recommending moves that can be implemented in the short term and will be valuable to customers, employees and the business for the future. This is not the time to wait.  Leaders who act now can strengthen their options and improve their chances for success.

If you need help figuring out what path to take now, in the next 6-8 months, or beyond, please don’t hesitate to reach out. We’re happy to have a conversation. Also, if you have any questions you’d like answered by our experts, drop them into the comments below or reach out directly here.

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Webinar Replay: The 2021 State of Digital Transformation (Asia Edition)

Some firms just want to become more digital at what they do. Others want to transform their entire business.

57 min

Omar Akhtar, Senior Analyst and Research Director at Altimeter, Chan Suh, Chief Growth Officer at Prophet, and Jacqueline Alexis Thng, Partner and ASEAN Lead at Prophet, present key takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China.

Our expert speakers discuss key trends in transformation, as well as how companies in China approach digital transformation differently compared to other countries, providing important insights for businesses in Asia.

If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.

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The Healthcare Industry in 2022: What’s Ahead?

Labor shortages aren’t improving, virtual care becomes old news, and the behavioral health boom continues.

Will 2022 be the year when the new normal finally kicks in? Will digital transformation in healthcare pick up steam? Who will acquire whom? Will the pandemic finally be behind us or will new variants keep it front and center?

After several tumultuous years in a row, we expect 2022 will bring plenty more disruption, much of it driven by the usual suspects of rising consumer and patient expectations, ever-advancing technology and intensifying perennial pressure to reduce costs and increase access. Per tradition, here are our annual healthcare “hot takes” as we think about the year ahead.

We’ll Stop Talking About Virtual Care

Just as cable television and streaming became TV, mobile phones became phones, and  online retail and e-commerce reverted to being plain old retail, virtual care will become just “care.” Increasingly, patients don’t differentiate between telehealth from in-person visits – it’s all just one connected experience of care.

This is partially a semantic development but highlights a critical – and unstoppable – trend. Some residual discussion of omnichannel care will persist, as health systems and providers continue to adjust. But final pockets of resistance will fall; even specialties like dermatology and pediatrics will expand their use of virtual (whoops – you see how hard it will be to stop using that word, but we’re convinced it will happen!).

Labor Shortages Won’t Be Solved with More Healthcare Workers

The talent gap and worker shortages will be recognized as unsolvable – at least with current strategies. There are simply not enough doctors, nurses and paraprofessionals around to fill all the open slots. The same is true of data scientists, experience designers, financial analysts and all the other skill sets that are in huge demand within healthcare and just about every other sector.

Rising wages (especially for nurses) highlight how talent shortages can’t be addressed by simply throwing money at them. According to Mercer, 900,000 nurses are expected to permanently exit the healthcare workforce, causing 29 states to face a shortfall of registered nurses in the next five years.

Seeing that they can no longer simply try to win over more nursing students, healthcare orgs need to embrace new talent strategies. They must find new types of workers they can train to play specific roles. Think engineers-in-training to map out new care pathways or data scientists and AI experts designing diagnostic tools that replace nurses’ intake forms and handle initial reviews on medical images.

Kaiser’s foray into medical education suggests how different the thinking will have to become, though, of course, such capital-intensive approaches won’t be an option for every health system. Digital solutions and smarter workflows that replace steps in care delivery, rather than simply automating routine steps, are also key. It’s a matter of succeeding with fewer workers, an operating model, workforce and tech portfolio that has the flexibility and scalability to deal with future growth.

Home Care and Diagnostics Get More Active and Outcome-Based

Post-Theranos and uBiome, the diagnostics boom continues, but we get no bonus points for predicting that growth accelerates in 2022. After all, diagnostic startups had raised $5.4 billion in 2020 – up 19% from the year before, according to Pitchbook. The prevalence of at-home COVID testing will pave the way for many new classes of tests – from fertility and prenatal to cancer and heart conditions, to stress and hormonal issues.

More significantly, we’ll see an important shift from monitoring to active treatment. For chronic care conditions, patients will become equipped with tools they need to solve common issues on their own and at home. For instance, remote patient monitoring tools will provide automatic alerts to patients (e.g., to adjust medications) and providers (e.g., to trigger nurse visits) when patient conditions deteriorate.

“There’s a device for that” will become a strategic default, as treatments are embedded in – or at least accessible from – monitoring devices.

Behavioral Health Evolves to Be A Standard Workforce Benefit

Employee demand for mental health and wellness will inspire large employers to greatly expand access beyond EAPs and therapy. This evolved employee expectation also prompts HealthTech firms to innovate with a fresh wave of tools and solutions available for providers and patients that seek to identify and address behavioral health challenges before they’re exacerbated, including solutions like Sanvello, an app that uses clinical techniques to help dial down the symptoms of stress, anxiety, and depression.

This momentum is another example of the confluence of trends in the post-COVID landscape; everyone is more aware of the need for better behavioral health monitoring and treatments. And employers navigating the Great Resignation must do everything they can to keep employees.

Pharma Takes the Lead in the Drive to Data Unification

Data unification across healthcare has been an “imagine if” proposition – and a huge barrier to innovation. This year, pharma, with its substantial capital and ability to disrupt at scale, makes a major bet to break through the traditional data hoarding problem.

Pharmaceuticals are primarily motivated by the opportunity to use real-world data (RWD) to inform and streamline drug delivery and development. Specifically, they will find new ways to securely blend and anonymize data from EHRs, home care settings, mobile devices, social media and other sources.

Their success will prompt other players – providers, payers, tech platforms, consumer apps and devices – to establish new standards for sharing and using data. For example, Cerner launched Cerner Enviza to sell EMR data in a secure way while protecting patient identities. Ciox merged with Datavant to help accelerate token adoption and increase usage of RWD and real-world evidence.

Bonus prediction: we might see some regulation shifts to give consumers unprecedented degrees of data control, portability and security. Further good news: all the investments and work on the countless data monetization initiatives underway across the industry are not lost but provide a foundation for future success.

ESG Goes From Feel Good Topic to Uncomfortable Issue in Healthcare

In 2020, there were healthcare heroes everywhere and the industry’s pandemic-fighting efforts were rightly applauded. There was also much discussion about access to care and health equity. In 2022, the media, government and public will once again ask these challenging questions of healthcare organizations. Beyond the normal inquiries into the high cost of care, senior executives will be asked why equity and access have not improved more in the wake of the pandemic and how their organization’s purpose statements play out in day-to-day operations.

Increasing health equity is extremely difficult in a world of thin margins; start-ups will deliver some innovation in the public health space, but it’s clear that the largest incumbents will be challenged to “walk the walk” on health equity in ways that match the considerable amount of talk about it.

Similarly, healthcare’s climate impacts will be increasingly in the spotlight. The industry’s carbon emissions represent about 5% of worldwide totals, according to the New York Times. C-suites and boards will make stronger commitments and clearer plans. Public companies will face especially sharp pressure, as they face up to the reality of ESG ratings and the risk of stock price hits if they are excluded from rapidly expanding ESG index funds.

“2022 will bring plenty more disruption, much of it driven by the usual suspects of rising consumer and patient expectations, ever-advancing technology and intensifying perennial pressure to reduce costs and increase access.”

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As much change as healthcare has seen in the last few years, many organizations remain focused on the pre-pandemic goals of designing better patient experiences, streamlining care delivery and using data and tech more effectively. Those perennial issues are reflected in our 2022 predictions above and we’re willing to bet they’ll underpin our 2023 outlook as well.

Contact our healthcare team today. We’d love to talk about the transformation opportunities at your organization.

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Brand Migration in M&A: Seven Factors for Success

Amid record merger activity, companies continue to underestimate the complexity of integrating brands.

Global M&A activities have seen record levels this past year and are expected to grow even further in 2022. With this, Post Merger Integration (PMI) – the bringing together of two organizations, each with its own processes, structure, culture, and management – will be high on many organizations’ strategic agendas.

PMI is profoundly challenging and one of the most cited reasons for M&A failure is poor PMI. It demands massive executive attention and resources, both in terms of financial investments and people.

While most organizations have established robust processes for the integration of IT systems, HR policies, financial reporting and other vital business model elements, brand migration is a frequently underestimated factor in the PMI equation. And the results of this neglect could be devastating. Switching from a familiar brand to a new one is massively disrupting to customers, business partners, employees, and anyone else who has enjoyed positive experiences with a brand bound to be retired and replaced by a new one.

“PMI is profoundly challenging and one of the most cited reasons for M&A failure.”

Over the last three decades, Prophet has supported numerous organizations with post-merger brand integration. From this work, our teams have learned what works and what doesn’t. While every PMI scenario is unique and requires a bespoke approach, we’ve found that there are common ground rules regardless of industry, region, or market dynamics.

Before diving into the factors of successful brand migration, let’s start with a few of the most common mistakes made post-merger. They are:

  • Leaving brand migration to the marketing or comms teams
  • Positioning brand migration as a mere re-naming exercise
  • Waiting on brand migration planning until after deal closing
  • Developing the brand migration plan without detailed customer input
  • Defining a fixed end date for the brand migration without understanding the full range of implications

Make only one of the mistakes above, and brand migration will end in a disaster.

The Most Important Objectives and Key Success Factors

Successful brand migration starts with defining appropriate objectives. On top of company-specific objectives, these three generic brand migration objectives have proven to be very valuable for steering all related activities in the right direction.

Brand migration must:

  • Ensure the facilitation and enablement of the synergies expected from the merger
  • Unlock incremental growth
  • Happen in a way that avoids losing important customers, business partners or employees

After the appropriate objectives are established, it’s time to move forward with the seven key factors for successful brand migration. They are:

1. Prioritize the Brand Topic Early On

Make brand considerations a fixed topic from the beginning to the end of the M&A process, this includes:

  • Using brand fit already as a filter criterion during target screening
  • Understanding employee and customer concerns before moving on
  • Assessing brand equities and the ability to migrate during due diligence

2. Define Objectives and a Roadmap

Develop a brand migration plan early on, during or right after the due diligence. Define and agree on the target picture for the post-integration brand portfolio. Be sure to include that in the letter of intent as well as later in the contract.

3. Connect the PMI Workstreams of Brand Migration with HR and Culture

Marry the PMI’s brand migration project stream to the culture and people stream. Brand migration is nothing short of a business transformation for the acquired organization. Brand and culture are inseparable, and in terms of organizational migration need to be covered in conjunction.

4. Utilize Existing Values

Systematically transfer valuable equities of the brand that will be retired onto the surviving brand to enrich the customer experience. Make the final switch from the old to the new brand only after this has been accomplished.

5. Make the Necessary Investment

Before making the switch from the old to the new brand, invest sufficient time and resources to demonstrate the benefits of brand migration to all employees affected by it. Resolve any concerns they may have so they feel enabled and motivated to tell the migration story.

6. Define the KPIs

Define and track brand migration KPIs throughout the process. Make progression from one phase to the next dependent on hitting pre-defined KPI thresholds (e.g., the awareness level of the continued brand with customers of the to-be retired brand).

7. Go the Distance

Do not stop halfway. Dual branding can be a necessary interim step on the journey to full integration. It is tempting to get stuck with dual branding because it creates the least resistance internally and externally. But rarely is it the most effective long-term solution since it prevents the stronger of the two brands from unfolding its full potential.

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Successful brand migration in M&A can have a disproportionate bearing on protecting and creating value for the entire integration. Taking into consideration these seven factors will create a solid foundation for effecting that impact.

Does your M&A approach require a new playbook? Our M&A strategy consultants can help you to drive growth while minimizing risk, get in touch.

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How Open Innovation is Driving the Next Era of Growth for Singapore

How the government is fostering a deep tech ecosystem, designed to encourage open innovation.

Something surprising happened amidst the gloom and doom in the early months of the Covid-19 crisis — companies began to come together to collaborate on an unprecedented level, putting the ability to create value before profits.

To fully reap the rewards from innovation, companies need to prepare for the transformational challenge ahead. Successful innovation often requires operational and structural changes to how business is done. Such changes are difficult for any employee, team or even business unit to undertake. Smart companies, however, will seize this opportunity to rethink their innovation infrastructure.

To reinforce this effort, the Singapore government launched various initiatives to support technology-focused start-ups – one of these initiatives is SGInnovate, a private organization wholly owned by the Singapore government to develop a deep tech ecosystem in the country.

Recently, Jacqueline Alexis Thng, partner at Prophet, and Dr. Lim Jui, CEO of SGInnovate, held a webinar to discuss the importance of open innovation for businesses today and share their predictions on what the future holds. Here, we share some of those key insights:

How is SGInnovate working to create an ecosystem where innovation can thrive?

Dr. Lim Jui: SGInnovate is facilitating the building of a deep tech ecosystem in Singapore by adopting a triple-helix approach that consists of considerations of investment, community building and talent.

On the investment front, SGInnovate is currently Singapore’s only deep tech career and skills development platform and this platform allows us the opportunity to notice and invest in deep tech companies at their earliest formation. To date, we have about 80 portfolio companies and have catalyzed over $700 million of follow-on investments.

On the talent front, we support the development of entrepreneurial scientists by partnering with institutions to enhance beneficial collaboration at the earliest stage. We also hold regular events to help entrepreneurial scientists connect with companies to raise awareness of their new technologies and then take these ideas further.

We hope to build a community that connects every party, including not only deep tech scientists, inventors and entrepreneurs, but also regulators, investors, vendors and manufacturers, helping them to push their innovation agenda.

Why is adopting an open innovation approach important?

Jacqueline Alexis Thng: Open innovation is a business model that incorporates traditional corporate capabilities with external talents and innovations. This business model challenges the traditional silo mentality where companies have conventionally upheld secrecy around R&D as a means to protect their assets. It not only allows for businesses to find new ways to solve pressing problems but through unlocking new relationships with partners with complementary skills, it also offers the potential for future collaboration.

“To fully reap the rewards from innovation, companies need to prepare for the transformational challenge ahead.”

Siemens, for instance, opened up its Additive Manufacturing Network to anyone needing help in medical device design. Similarly, Ford worked with the United Auto Workers, GE Healthcare and 3M to build ventilators. This recent burst of collaboration reminds us of the massive potential that open innovation brings, whether you’re in a crisis or not.

Dr. Lim Jui: These initiatives are often the tip of the iceberg. When it comes to innovation, the challenge faced by many companies in recent years has been the lack of knowledge, skills and best practice. Organizations such as SGInnovate thus help to foster these networks of collaboration through open innovation, building a community that involves an active free flow of ideas and best practices.

We encourage established companies to do what we call ‘reverse pitching’. While normally it is entrepreneurs who pitch to investors and companies for funds, at SGInnovate, we also encourage companies to review innovations from a different perceptive by inviting them to pitch to entrepreneurs.

Where is the future of innovation headed?

 Jacqueline Alexis Thng: Accelerated by COVID-19, digitalization and connectivity has become more essential than ever. We’ve seen a shift in consumer behaviors towards more personalized, contactless and immersive experiences enabled by digital technologies, from healthcare, e-commerce to entertainment.

To respond to these future trends, the Singapore government is said to invest SG$24 billion ($18.1 billion) over the next three years to help local businesses build “deep, future-ready” capabilities for innovation and transformation. They will also enhance programs to support innovation efforts especially in areas such as MedTech and food manufacturing that has seen growing demand across Asean members.

What are SGInnovate’s top two priorities for 2022?  

Dr. Lim Jui: Since our founding in 2017, we have been very invested in digital deep tech, which enabled us to be an early investor in areas such as AI, cybersecurity, transportation tech and so on. However, starting from last year, we moved more to digital health, acting as an advocate for areas in drugs, diagnostics and agri-food that don’t necessarily receive the attention they deserve from private companies.

1. Medicare

Medicare has always been a key focus for SGInnovate because of our ability to work closely with researchers and institutions at an early stage of innovation. With Covid-19, many previously under-addressed needs have been unearthed.

Telemedicine solutions, for instance, are gaining traction in SEA, as consumers now wish to meet their medical needs remotely due to their fear of the virus. The pandemic also exposed the fragile public healthcare system and the lack of healthcare professionals. As a result, there has been an increasing demand for telemedicine to fill this gap in healthcare.

For example, WhiteCoat, Singapore’s leading telemedicine platform for on-demand remote healthcare services, has been backed by SGInnovate to launch a mobile application that connects consumers to an extensive and curated network of medical practitioners and allied healthcare professionals for a best-in-class telehealth experience.

We expect the growth of digital healthcare solutions to continue to catch steam as Covid-19 has made the subject matter a top priority for consumers and institutions alike.

2. Agri-food

Agri-food tech is our spearhead to the sustainability space. We look at innovation in food as a means to tackle climate change because the methane impact from eating meat is resulting in such sizable carbon emissions. In Singapore, where we don’t have farms or livestock, our focus could be on things that we already know, such as how to manipulate certain wavelengths of light to accelerate plant growth.

Covid-19 has also greatly accelerated the growth of this industry. A silver lining of the pandemic is that we have successfully unified all research power in the fight against a common enemy, which gave birth to solutions like the vaccine we have today. In the same way, global scientific intelligence has also come together in the fight against climate change. That is why at SGInnovate, the ability to look externally and collaborate with global research power is an important strength we harbor to help drive innovation within this space.

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Open innovation is a more profitable way to innovate because it can reduce costs, accelerate time to market, increase differentiation in the market and create new revenue streams for the company. With COVID-19, businesses experienced an opportunity to innovate through the crisis and now it’s about how they can continue to fully embrace open innovation beyond. Companies must consider how they can make these altered ways of approaching innovation truly stick in order to unlock speed, creativity and business growth.

Are you interested in increasing your innovation capacity? Prophet’s Experience & Innovation experts can help you to underpin a superior approach to innovation. Get in touch here.

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Webinar Replay: The 2021 State of Digital Transformation

Average companies start transformations to “catch up.” The most successful firms? They want innovation.

56 min

Omar Akhtar, Senior Analyst and Research Director at Altimeter, and Chan Suh, Chief Growth Officer at Prophet, present the biggest takeaways from Altimeter, a Prophet company’s flagship report, The State of Digital Transformation – which surveyed nearly 600 executives from the U.S., Europe and China. They discuss key trends in transformation, including where leading companies are expanding their digital capabilities, what investments they are making and common roadblocks they encounter along the way.

If you’d like to learn more about Prophet’s approach to digital transformation, get in touch today.

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Unlock Growth with Digital Convergence

Businesses that embrace convergence use digital to work differently, solve problems and find growth.

Digital transformation is nothing new. Companies we talk to every day have been trudging along on digital transformation journeys for close to 20 years. Despite spending trillions to add newer, more sophisticated digital initiatives to their agendas (with more projected over the next five years), few have been able to grow the way they hoped. A recent survey from the Harvard Business Review reports that only 20% of executives believe their transformation efforts have been effective in any way.

It’s not that all the steps they’ve taken have been misguided. Far from it. Many companies have made significant strides to optimize their existing businesses by using new digital tools and operations, cutting costs and launching new products along the way. But, as business environments change and customers along with them, what we’re finding is that simply adding new tech capabilities, data sets or rich omnichannel experiences without changing the way the business works will limit your company’s growth potential.

Moving Past the “Add-On” Digital Transformation Approach

The evidence we’ve collected by observing clients and conducting field research shows that growth must be an intentional goal of transformation, and achieving it requires businesses to move beyond the “add-on” approach of digital transformation. The add-on approach is a consequence of being overly preoccupied with a typical metric of many digital transformations – digital maturity. Digital maturity is measured by the number of tactics used to optimize the existing business and misses the point: long-term growth.  Digital maturity alone will not unlock what Prophet calls “uncommon growth”– the type of growth that is purposeful, transformational and sustainable over time.

“Digital maturity alone will not unlock what Prophet calls ‘uncommon growth’– the type of growth that is purposeful, transformational and sustainable over time.”

To unlock growth with digital transformation, firms must build on digital maturity to achieve convergence. Convergence is the approach of orchestrating digital transformation efforts around a singular purpose that has been reimagined for today’s customers and employees. Businesses that embrace convergence don’t just add new digital capabilities to solve existing problems, they use existing digital capabilities to work differently, solve new problems and deliver growth.

The progress of individual workstreams, specific digital projects and initiatives, and the building of shiny new capabilities is a known challenge. The more intractable part is getting people in your business to embrace a renewed purpose with digital tools, infuse new rituals into the DNA of the company –and then structure the workstreams that serve customers and unlock growth.  Successful transformations necessitate holistic, if more complicated point of view.

Without converging on a customer-and employee-led purpose, digital transformations are doomed. A business’ purpose must be central to this transformation because it defines the role the business plays in customers’ lives, the meaning of the work that its employees do and the impact that it has on society. As environments change, the purpose of the business needs to be continually re-examined to ensure its continued relevance. Global digital acceleration, sparked by mobile and boosted by the pandemic, is rapidly changing the expectations and behaviors of customers and employees – now the purpose needs to change along with it.

Convergent enterprises are the companies that understand the power of ongoing transformation. They have adopted a mindset that allows them to look beyond the add-on approach to digital maturity and pursue initiatives converged on a renewed purpose that incorporates customer and employee capabilities.

As a first step towards digital convergence, organizations must embrace the challenge of defining a renewed purpose. It doesn’t mean losing your authentic brand and value proposition. Rather it demands reimagining the business through a new lens, integrating digital capabilities throughout, and scaling the outcomes. And that must be done with creativity, empathy and action, not panic or cynicism.

How Best Buy is Rewiring Itself to Go Beyond Retail for Growth

Let’s take Best Buy, a Prophet client, as an example. Over 10 years ago, Best Buy and other big-box retailers began their digital transformation journeys with a determined focus on omnichannel retailing and effective e-commerce. As it moved toward streamlined online experiences, so did all its competitors. Instead of just pressing the “more digital commerce” button, Best Buy leadership realized that to find uncommon growth, they would need to start with a renewed purpose and converge digital capabilities around it. Reinvention had to be based not on how consumers wanted to shop at Best Buy but on why they were there in the first place.

That meant questioning everything from brand purpose to organizational structure to customer experience. By re-centering itself around helping customers make all of their technology work together – not just sell them more stuff – they located an addressable problem that was way bigger than the market they originally sought to capture. They extended their subscription services, installation packages and extended warrantee offerings to the consumer while reimagining their square footage as experiential media opportunities for their manufacturer partners.

By expanding the borders of its value proposition and building a moat around proprietary digital tools, Best Buy continues to build a convergent enterprise limited only by its imagination and poised for sustainable growth. The results so far are astonishing. In its latest quarterly results, revenues have steadily increased 24% over the last five years.

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Increasingly, leaders are thinking more like Best Buy, recognizing that convergence means committing to a purpose that serves the whole customer, even if that means challenging strategic direction and corporate priorities. They know success is as dependent on human-centered elements, such as organization design, culture, leadership, and operating models, as it is on technology initiatives. In fact, 90% say COVID-19 has forced them to re-evaluate the human component of digital. We think that’s just the beginning.

Ready to learn how to become a convergent enterprise? Read this blog post.  

Prophet is a convergence accelerator and purpose-led transformation consultancy that will help you reimagine your firm, integrate and scale digital investments, and drive real, defensible growth. We believe that to accelerate convergence we take your existing assets – such as data, brand, culture, business models – reimagine them for today’s customers and employees and look for new ways to integrate capabilities and talent with a reimagined sense of purpose. Then, we drive towards scale.

Get in touch today if you’d like to learn how to bring digital convergence moves to grow your organization.

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