I was asked to give a talk at last week's Future Of Digital Marketing conference in London. When we talk or think about a topic like this we often focus on the shiny new technologies, so for this talk I chose to talk about another, different aspect which I think is at least as critical – the importance of culture, philosophy and strategy.
Some context for my talk was provided by a recent Cap Gemini and MIT longterm study of around 400 companies into digital maturity and organisational transformation (shown on Slide 2). They mapped digital maturity on two scales. 'Digital intensity' related to investment in technology-enabled initiatives that can change how the company operates. 'Transformation management intensity' related to the leadership capabilities necessary to drive digital transformation. The study found that the companies that focused on developing capabilities in both areas (the so-called 'Digirati') were 26% more profitable than the average across those 400 companies. But they also found that those who pursued technology without the foundation of good strategy, processes and structures (the 'fashionistas') actually damaged their business and were 11% less profitable than average. You can't have one, without the other.
Some further context comes from GAFA (Google, Apple, Facebook, Amazon – four companies that could not be more important to digital marketers right now) and a subject I have touched on before – the vertical stack. My own version of what this looks like features 7 layers at which GAFA are building out a presence and increasingly clashing, but the wider point is about each of them developing an ecosystem that have users at the centre, that deliver value through data and access, and that enhance through the application of context. The incorporation of Google+ data into search is just one example of extracting value from one layer of the stack (context) and reapplying it at another (access). In fact it's wrong to think of Google+ as a social network. It never has been. It is, as Ben Evans puts it, a "unified Google identity to tie all of your search and indeed internet use together", a social layer over other Google services.
These companies are also great at what I call distributed and destination thinking. Traditional destination thinking is all about bringing people to your domain since you have to be on our property for us to monetise the relationship. Newer distributed thinking means that you weave your presence (as The Guardian once described) into the 'fabric' of the web so that you might create value or monetise anywhere (e.g. search boxes in browsers, YouTube embed functionality and so on). One is not better than the other, but GAFA are great at doing both. Similarly ASOS Marketplace is a great example of a brand creating a property that is brilliant at both.
So applying the vertical stack idea to brands, a key challenge is joining stuff up, reapplying value gained through one touchpoint to benefit the experience at other touchpoints, and to make that holistic experience as seamless as possible. APIs (internal as well as external) are key tools in this process, and also in developing marketing and content agility.
I mentioned here the great talk from Harper Reed (CTO of the Obama campaign) that I saw at Next Berlin a couple of months ago (Slide 11). Despite the fact that 'politicians don't hire engineers', the Obama campaign invested heavily in tech talent (in 2008 they had 4 engineers, in 2012 they had 40). Harper talked about how an API had enabled them to act quickly and at scale, rapidly executing and shipping over 200 products in a short space of time, and how they were not afraid to use technology built by other people. Metrics drove execution ("Groundhog Day is a movie about multivariate testing”), and smart thinking enaled them to use the power of conversation within small groups (600,000 people using one of their apps on Facebook to encourage their friends to get out and vote). During the post-talk Q & A, Harper was asked about whether the technologies they built should be open-sourced and made available to others (including the Republicans) to use. He made the point that the platform they developed can only offer a competitive advantage for a relatively short period of time without the right people to develop it, which says a lot I think for the idea of advantage coming from agility, talent and approaches rather than secrecy and perfection.
Meanwhile back in the UK, the Government Digital Service are bringing a new found level of agility to what has to be the least agile, most rigid and complex of environments. The 7 GDS digital principles, and their 10 design principles, could be the foundation for a sound digital philosophy for any business: starting with user needs, if someone else is doing it link to it, using and providing APIs, learning from real-world behaviour, iterative working, making stuff simple to use, designing for people rather than a screen, and so-on. The point is that GDS are not simply applying the processes of agile, they are living the philosophy and mindset that surrounds it. Agile thinking, needs to be (and in some cases already is) applied beyond the tech team, into the teams that regularly interface with tech and beyond that so that it exists throughout the whole organisation (as an example, Hugo Rodger Brown made a great point just last week about the need for CFOs to reclassify web development as Opex rather than Capex).
Building on this, it's instructive to think about the cultures, structures and working practices at the two interesting (but interelated) extremes in our industry right now: creative and engineering/science. Pixar is a great example of a creatively driven technology culture that uses an 'ideas from anywhere' approach. Facebook's engineering teams utilise one of the classic technicques of agile practice, self-organising teams, as a way to combine bottom-up engineering input with top-down strategic direction. Amazon use 'two pizza teams' as a way of remaining agile as they scale. New roles like growth hacking cross the divide between traditional marketing techniques and product development, using metrics and skills from both to solve problems in a truly three-dimensional (rather than one-sided) way.
So the point is that the principles of agile and lean are applicable not just to startups but to every company, but unless they are embedded into organisational structures and practices, it becomes very difficult to realise the real benefit that they can bring. I've talked a lot about 70,20,10 models (70% on banker strategies, 20% on optimising off what works in the 70%, 10% on completely new or the experimental) that has a wide range of applications from resourcing (Google), to L & D, to content planning and strategy, and budgeting.
One of the reasons that 70,20,10 is so broadly applicable as a model is because new things rarely kill old things, we need to embed dgitally native practices like optimisation and amplification into our businesses, but we also need to leave room for continuous innovation. The three horizons model enables a portfolio approach to innovation, mixing incremental with the radical. Horizon 1 focuses on innovations
improve your current operations, or focus on existing markets or technology, and so are incremental. 70% of resource might be applied here. Horizon 2 concentrates on extending your
current competencies into related markets, or existing technologies and markets that you don't currently serve/use. This might be your 20%. Horizon 3 is about innovations that will change the nature of your industry, or seed options for the future. This is the 10%.
A great example of the application of this kind of thinking is accounting software business Intuit (a '30 year old startup', a company of
entrepreneurs making new things through constant iteration). Martin's great presentation on themes from SXSW 2013 has a slide that shows how Intuit use a 70,20,10 approach for the application of resource, relating both objectives and KPIs back to this idea. 70% is the 'rowing team', 20% are the 'white water rafters', 10% are 'diving for sunken treasure'.
It's very easy to focus simply on shiny new technology. But it's only half the story. The companies that will win will be those that understand the need to also fundamentally change the behaviours, practices and culture that surrounds that technology.