I had the great privilege of attending and speaking at Fortune Global Forum this week, which gathers business leaders to discuss the most pressing challenges we face and to set the global business agenda. The theme of this year’s conference was “winning in the disruptive century” and focused on how businesses must operate in order to stay competitive in this environment. One common concept fueling discussions around the disruptive market we’re navigating was connectivity. CEOs across industries – manufacturing, technology, healthcare, finance and so on – are recognizing the need to not only digitize, but to reinvent themselves to stay ahead. As I reflect on the conversations I had at the Fortune Global Forum, here are some of the points that really resonated with me:
Businesses are poised to lead on digitization if we make it our priority.
Current forecasts around the number of connected devices are too conservative. By 2030, I believe that there will be closer to 500 billion connected devices. With digitization every aspect of day to day business will change, from supply chain to customer interface to productivity, every company will become digital. However, according to The Global Center for Digital Business Transformation, only 25 percent of executives have a proactive plan to address digitization. Leaders at Fortune Global Forum agreed that value is created by not just connecting things, but by how you use these new connections to make an impact on not only business, but also on governments and society.
I’ve met with government leaders in France, Israel, UK, Germany and India who not only understand the impact of digitization, but they’re moving quickly to bring it to life for their countries. I think we have something to learn from these leaders. First, that digitization should be a priority on our national agenda here in the U.S., as technology strategy will play a critical role in our success as a country in the digital world. Second, that digitization should also be at the top of the corporate agenda. If governments are moving on digitization with this type if tremendous speed, our businesses have to move even faster and be even more dynamic to realize the full potential of this opportunity.
Your company is defined by much more than just your core products.
Most companies today make 90 percent of their revenue from two or three products that have been in their portfolio for some time. To stay competitive in today’s disruptive environment, you can’t stay doing the same thing for too long. Business leaders must have the courage to expand into new emerging areas ahead of market transitions. This takes courage!
An overwhelming majority of leaders at the Fortune Global Forum noted that this challenge keeps them up at night, and that it’s made even more pressing by the increasing number of connected devices that are coming online. For instance, with the rise of mobile, my fellow panelist BT CEO Gavin Patterson saw an opportunity to make a foray into a new market and had the courage to expand his business beyond voice. This was just one of countless examples of how BT reinvented itself over its hundred-year history. This theme of reinvention rang true for others too, including Wells Fargo. To be successful in the digital world, leaders must find new profit streams and tie everything back to customers’ expectations.
Your competition today may not be your competition tomorrow.
Forty percent of market leaders will be displaced or eliminated by digital disruptors in the next 10 years. In my opinion the average time to disruption (meaning a “substantial change” in market share among incumbents) is now about 3 years, a dramatic escalation in the rate of competitive change versus historical levels. These disruptors offer differentiated products and services and better value than incumbents. This creates a hyper-competitive landscape driven by digital disruption, where lines between industries are blurring and markets are changing exponentially.
Companies that fail to keep up with the accelerating pace of innovation in this environment will be left behind as new competitors grab hold of market share. We saw this type of disruption occur with cloud and mobile, for instance, and we must always be thinking about the next transition. It’s important to remember that the disruptors of today look much different than they have in the past. If we don’t pay attention to this next generation of competition, we risk being left behind entirely.
The Fortune Global Forum agenda has made it clear: business leaders recognize the tremendous sense of urgency around our digital future. We are in the midst of one of the most revolutionary changes in technology we have ever seen which will have 5 to 10 times the impact of the Internet to date and will impact all industries – manufacturing, telecommunications, financial services, healthcare, and others. To win in this new age, businesses must make digitization a top priority.
I’m an entrepreneur at heart, and I love coming up with wildly innovative ways to solve problems and create business value. This entrepreneurial mindset is a requirement in today’s digital age—as technology changes business landscapes and rules.
If you read the media, you associate entrepreneurs with start ups and small companies. But as technology rapidly disrupts every industry, the challenge for every enterprise—small and large—is to rethink their business models and enable their entrepreneurs to drive their digital strategy. I can tell you first hand that there is amazing entrepreneurial talent hidden in large enterprises like Cisco. This hidden talent can help identify new revenue streams, increase productivity, or even transform an entire industry.
That is why I am so excited about my mission as Cisco’s Chief Digital Officer. I have license to rewrite the competitive and operational playbooks for Cisco—to unleash the capability and innovation across the company. And I have the opportunity to do it for every one of our customers, in every industry, who wants to rewrite their playbooks with digitization at the core.
We’re well on our way to making Cisco the best example of a digital company. It’s a journey for every aspect of our business—from our systems and tools, to our engineering, to our people, and I am thrilled by the partnership, energy and commitment across the company.
As I talk with customers about what we’re doing and what they want to do, the conversation always goes to “Where do we start?” I thought I would share a few critical observations and conclusions I’ve drawn:
Driving a digital transformation is not automating existing workflows or layering new tools and technologies on top of traditional processes. It isn’t an IT strategy trying to catch up with a business strategy. It isn’t cloud, collaboration, systems or applications. And it isn’t just a technology issue.
As organizations move toward digital transformation, they are embracing the benefits of delivering timely, personalized information to customers, citizens, and patients. Connecting people with information and services when, where, and how they want, is a pivotal point in the way organizations process, apply data and deliver that information.
Given my busy schedule, I appreciate a shopping experience that is hassle-free and fast. I also want the information I need about a product or service to be easy to find. And for that matter, I expect that a retailer knows what I am looking for and provides relevant promotions and discounts. These rising expectations have been born out of leading digital retailers and now that the bar has been set – anything that falls short feels like a disappointment.
Today’s shoppers are looking for efficiency, ease in problem-solving, and faster time to purchase. They want to take advantage of savings through discounts and promotional offers and they want to be engaged when learning about new items, entertainment, and product options. To address these growing expectations, Cisco and Panasonic are partnering to transform the shopping experience through their Powershelf solution. The solution enables brick and mortar retailers to automate inventory tracking and pricing data, helping them optimize their supply chain and better manage demand. In addition, real-time product information can be delivered to a customer’s mobile device.
The future involves much more than improving customer engagement. Cities are challenged with delivering enhanced citizen services and information on a limited budget. In the face of inclement weather and emergencies, it is critical that cities link dispatch, first responders and the community with timely, accurate information. For example, the City of Mississauga is leveraging sensors and wireless connectivity to make these connections, analyze trends and share information between citizen services, public communications, and operations.
As more and more citizens prefer to receive information and updates via their mobile devices, this integrated public service system will allow cities to put a request into action quickly and efficiently and provide real-time updates. Now, the City of Mississauga can deploy operations teams and emergency services faster, enable new services without recognizing an increase in IT budget and improve public safety with immediate, actionable information.
You might know that many companies run “tests” in their web and mobile experiences, where they’ll pit one design, layout, or content set against another. It’s a way to see quickly which one works best. For instance, you might have one page with a slick graphic at the top, vs another one with text and a form at the top, to see which one gets the best interaction and form completion. At Cisco, we’ve been doing this at a component level for a while, and have begun to do these kinds of test with whole pages on Cisco.com. These tests help us understand which of two experiences is the easiest and most straightforward to use, and then we can apply that knowledge to our page designs in general.
But, it’s easy to over-complicate testing, which can lead sometimes to results that are hard to interpret or that generate too much data that can’t be readily analyzed. So, I asked our team on the Digital Support Experience to give us their best practices for how to plan page vs page tests the right way. Here are some great tips from the teams:
Identify your success metrics (“Overall Evaluation Criteria,” see below) at the beginning of your planning, so you can make clear the #1 thing your are optimizing for.
Establish Baseline performance for the KPIs/success metrics before you start the test. (understand where you’re starting from — how were things performing before the test?)
Before the experiment starts, state what will happen if the test a) succeeds, b) is inconclusive, c) fails.
Don’t do two new competing designs for A and B. A better model is to use the current design as “A” and a new design as “B” so you have a good control group.
Limit the number of variables that differ between the two versions.
Let the experiment run long enough to get a volume of data on the key items that will yield statistical confidence in the result.
Validate setup with an “A/A” test. The purpose of this is to check that your “system” for branching the users isn’t itself adding in a bias. (If you do a split of incoming users and you are directing them to pages that are exactly the same and you don’t get equal results, then your A/B branching system is adding bias itself.)
Overall Evaluation Criteria
“Overall Evaluation Criterion (OEC) forces you to ask the question: “what are you optimizing for?”
To do it right, only one OEC (think KPI) should be specified for your test. The reason for just one criterion is that multiple criteria can lead to muddy results. Version A improved KPI #1 but version B improved KPI #2 so which one was better? Therefore, it’s crucial to to specify one and only one KPI and optimize for that.
And, an Ultra-Tip
Perhaps the top tip of all is to improve your designs, content, and journeys based on the tests that you run. And, if you don’t understand why a particular experience is performing in a certain way, it’s probably time to supplement your A/B testing with some observational usability tests, so you can watch users interact with (and comment on) the experience they’re having. Test similar experiences on other sites, too, and you’ll a fuller picture.
What Do You Think?
Have you been running A/B and other kinds of tests on your digital experiences? What tips would you offer to your colleagues?
“Bankers’ hours” started disappearing with the advent of ATMs in the 1970s and 1980s. Today, online and mobile access has made the transactional side of banking a 24/7, anytime, any place proposition. And that’s just the beginning. Innovative financial institutions and startups are also bringing disruptive new business models to deliver higher value banking interactions, such as financial advice and wealth management. The drive to the branch has been replaced by the drive to digital.
How can financial institutions stay ahead of this wave of disruption? I hope you’ll join me @pdjameson on the upcoming #CiscoChat to tackle that question next Tuesday, November 3rd at 1:00 PM EST / 10:00 AM PST. Together, we’ll consider such questions as:
In an age of commoditized transactions, how can banks differentiate themselves?
Where should banks focus as they seek to evolve their current business models?
What kinds of on-demand services do customers want?
What’s the key to winning wallet share of the digital customer?