Building conviction
While every business is different, Ganapathy emphasizes several core principles for digital business building. The first is to build conviction across the enterprise. While strategy leaders like to focus on big ideas, Ganapathy cautions that they also must spend time and effort building their stakeholders’ confidence to implement said ideas.
Start-ups and founders have experience with tough, lean operating environments in their early years. Conviction got them through, enabling them to overcome threats, fight fires, and lead teams through uncertain waters. That gives them a resilience that guides them through later challenges or reforms.
Business leaders in incumbent or well-established companies, by contrast, may lack that visceral experience. As a result, they may also lack the conviction to drive through a transformation agenda that brings risks, disruptions, and opposition, whether from shareholders, staff, or customers.
One way to build conviction in these types of businesses, Ganapathy says, is to focus on a company’s endowments. To be sure, traditional businesses have some disadvantages when compared to start-ups or digital natives: they may have to contend with legacy infrastructure, more defensive cultural mindsets, and a digital skills gap. But they also have assets of their own that they can take confidence from.
Incumbents and established companies may, for instance, already have a broad and established customer base, resulting in lower customer acquisition and engagement costs. They likely have established channels to reach their customers. They do not have to “buy” growth in the way that many start-ups do, a strategy facing a reckoning in the current recessionary environment.
These companies might have troves of valuable data that newcomers or outsiders lack. Incumbent businesses might, for example, have significant amounts of relationship data about their customers and their customers’ customers. When working with a company with that advantage, says Ganapathy, “the business we design will leverage that very quickly, very early on,” he says. “It takes out a lot of friction and time it would otherwise require to do this. We focus on using the endowment and not building everything from scratch.”
Driving P&L impact
Leaders can also build conviction by articulating a clear and immediate link to the profit-and-loss (P&L) statement. “We need to make digital initiatives significant in terms of the numbers so there is enough motivation and senior leadership energy behind them,” says Ganapathy. EY-Parthenon teams craft journeys that can be completed in 18 to 24 months, to show clients a quick and clear route to cash neutrality.
Leaders should also identify key performance indicators (KPIs) for digital initiatives that are interlinked and real-time, with a time-bound P&L impact. Not all KPIs need to be reinvented, but they should be revisited in light of the opportunities and challenges posed by digital change. For example, salespeople who might previously have been penalized for missing targets can now have those targets adjusted based on a digitally enabled view of what is available in the supply chain.