The “Digital Haves” (often startups) are eating companies who think “IT” is only about automating past activities to save costs. For more on “Digital Haves”, find free on the net: McKinsey Global Institute’s report: “Digital America: A Tale of the Haves and Have-Mores” (published 12/15).
Amazon v. Traditional Distributors and Retailers
Amazon’s (AMZ) digital-invention already threatens all players in physical product channels. Via “digitization”, AMZ has the best and lowest cost web interface, warehouse cost/pick, and 1-hour local delivery-cost per mile. AMZ will underprice most popular, profitable SKUs and deliver them faster.
But, less visibly, AMZ is teaching next generation buyers to:
- Do product learning and buying 24/7 on their mobile devices.
- And, to avoid interacting with both inside and outside sales reps between 9 and 5.
Who is Your “Digital-Have Strategy” Champion?
Go to “Google Images” and search for “digital strategy”. Who on your team is addressing the opportunities these “images” outline?
Don’t just copy “best, digital-capability practices”, however. The costs will be high for unfocused benefits in the minds of your most profitable customers. Instead: enlist your most profitable, progressive customers to co-create specific web interface services that they value and will reward the most. (And, what digital, order-entry system and service/price terms will you create to convert unprofitable, small-customers with their small, gross-margin-dollar orders to profitability?)
Do you know who your most profitable and unprofitable customers and customer segments are? If not, then first get best, customer-profitability analytics. The new, revealed opportunities overwhelm most distributors’ current in-house skills.
CIOs have a three-step challenge:
- Get and master customer profitability analytics to then
- Digitally reinvent value for most-profitable customer segments and reduce service costs for un-profitable segments.
- And, finally consider new digital-value beyond Profit-Core Renewal.
Finding Your New CIO
Promoting from within or hiring from outside at a wage that fits your operating expense budget may not get enough talent. Get someone with a track record of digital innovation or renewal. If their cost is “high”, see the premium as a forward investment. But, give your champion goals that justify your upfront investment in them.
Further Inform CIO Questions By: