While balancing the development of in-house capabilities as well as M&A, CVC and partnership investments, survey respondents are more likely to say digital M&A exceeded expectations (52%) than any other investment vehicle. (Partnerships come in second place, with 45% saying they exceeded expectations.)
Executives need to be aligned on investment strategy
Digital M&A may be more likely to exceed expectations for some, but the risk of failure is high. A lack of executive calibration may doom digital M&A initiatives from the start. Executives who report that digital M&A investments met or were below expectations cite misaligned sources of value as the top reason (64%).
That misalignment is concerning. With more than half of executives planning to use digital M&A or partnerships to accelerate digital initiatives, it is essential to make sure the goals and values of an organization and those of acquired or partner firms are coordinated. Internal alignment is also challenging — just 43% of executives agree that digital leaders from functional groups are fully aligned on their organization’s digital M&A strategy.
Alignment and collaboration pay off. Executives who reported that partnerships and digital M&A met or exceeded expectations were significantly more likely to say that they were implemented by multiple executives (e.g., a combination of CFO, CIO and others).
In order to create an investment strategy that meets goals across the organization and adds value, executives need to be aligned on the mix of investment vehicles used by the organization — and continue that collaboration when it comes to taking ownership and directing those investments. Breaking down organizational silos and playing to executives’ individual strengths (e.g., relying on chief digital officers to develop in-house capabilities, while tapping CEOs to lead on M&A) are the best ways to develop a successful investment strategy.