How doing digital right can increase your margins

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With so many companies still not taking full advantage of the digital revolution, interim executive John Lindup argues that data and technological integration are key to strengthening existing relationships, increasing margins and future-proofing your business.

Everyone’s talking about digital – in fact they have been for more than a decade. “I think many companies are suffering from digital fatigue,” says John. They’ve seen competitors spend huge sums speculating on apps and systems with little quantifiable benefit. Others have cautiously circled the issue, unsure how to integrate it and make it work for them.

John believes the wariness is understandable; a commitment to digital can seem like a risky leap of faith. It doesn’t have to be. Having the right approach, the right level of buy-in and risk management processes will vastly increase the chances of a successful digital transformation.

It’s all about the data
“It’s not about sticking a pin in a map of digital products and seeing what fits,” he continues. “It’s about looking at your core business: what data do you collect, how does it interact, how do you gain value from it, are there gaps? I’ve seen a lot of companies see digital as just a bigger, better ERP system. It’s not.

you can measure value and ROI, and have decision gates at all stages

“Through data you can learn things you didn’t know about your own business and organisational persona, about the customer and about market behaviour. That insight is the key to helping you become more customer focused. It’ll help you design better products and services, open up new opportunities and future proof your business.”

And customers want those digital interactions. John points to an example of creating a business case for digital to improve outcomes in social healthcare. “We spoke to men aged 60 to 80 and assumed they wouldn’t want to interact with technology or smart phone apps. We were completely wrong. It’s easy to make these assumptions, but they saw the benefit and it created a substantial market.”

John argues that a digital approach is simpler to take from concept to market than many think. “It doesn’t cost a lot to find out what you don’t know and to understand your market. It’s then about applying normal business practices: taking a cradle-to-grave cost-orientated approach. Capture and measure all your investments so you can measure value and ROI, and have decision gates at all stages.”

Management minimises risk of failure
“Even though you’re looking at something new and innovative, it actually becomes very standard in terms of risk management, programme management and how you build it out. The key is to know how and when to apply these skills. With the board engaged at every stage, you’ll have robust challengers, which makes it difficult to fail.”

The value extracted from data can be truly transformative; even at low volumes it can be a substantial proportionate EBIT contributor. “There’s an investment in how you manage data, which grows incrementally as it’s stored and maintained. But these days cloud storage is a small proportion of the cost to serve.

“Once you understand data and how it can be used to solve your customers’ problems, you can start including value-based pricing models that allow an increase in margins regardless of your own costs.”

It can also open up new opportunities to better support your clients. “It’s very rare that a single product or service you provide will be the panacea to all of a client’s problems. But if you’re digitally integrated with them and you’ve got a data-oriented approach, you can really get under the skin of what they need, which opens up new opportunities you can exploit.”

Time to take advantage
John says he sees a lot of companies sideline digital projects because they’re not deemed core business; as a result they’re easily knocked from boardroom agendas or even shut down if costs need cutting. “When digital works well it’s because it’s integrated within the core business,” he says. “It has commitment at board level and heads of functions are signed up.

“Although some of your more traditional competitors may still be unsure about digital, there will be smaller, more agile businesses out there that can emulate larger ones by using technology well. As a result you can’t sit back; there’s a real market advantage to exploit here. So don’t just do digital, do it correctly and in a way that creates benefit for your customers and for you.”

Summary

  • Understanding your customers through digital integration can increase your margins.
  • Traditional risk and project management practices can be applied to new technology.
  • There’s a market advantage to be gained from doing digital well.
John Lindup
is a versatile senior interim executive and entrepreneur with skills in operations management and technology commercialisation. He’s worked extensively across a number of sectors, including healthcare, mining, energy, communications and mobility and has spent the last decade building digital applications and propositions to help businesses move with the market.   

Williams Bain
supplies ‘outside of IR35’ and ‘insurance backed’ Executive Interim Managers and Independent Consultants to organisations experiencing planned or forced change.