By Stijn Viaene
In this article, Prof. Stijn Viaene continues to shed light on the realities that executives and business leaders must face in the digital era. In an era where customers are moving at the speed of the Internet, how does a digital leader catch them?
Digital leaders understand that being relevant once is not enough. They must remain relevant and appealing, at the speed of the Internet – the speed at which their customers are moving. They do this by deploying data capabilities broadly, effectively stapling themselves to their customer’s digital self. They bank on digital technologies to continuously monitor the environment, sense customer needs and track behaviour in real-time, and systematically run experiments to see what works and what doesn’t. They treat current value propositions as a set of critical assumptions to be continuously tested.
For such digitally attuned companies, the adoption of business analytics for decision-making comes naturally. Business analytics refers to the use of digital data technologies to enable applied analytical disciplines to drive data-driven business experimentation, business insights or decision-making. Analytics capabilities allow businesses to move from being product-oriented to being able to offer a continuation of valuable customer experiences. They enable digital frontrunners to be effective at treating customers as the moving targets that they are. Will you be a frontrunner?1
Targetting Reach and Richness
Thanks to modern business analytics, we finally seem to be able to blow up the trade-off between reach (i.e. convincing more customers with a particular information-based proposition) and richness (i.e. reigning in customers with a more complex, customised or personalised information-based proposition).
For a long time, the belief has been that you could not have both with information technology: the greater the reach, the less rich the information offering and customer engagement, and vice-versa. Thus, digital channels targetting a mass audience were restricted to providing simple products, with standard transactions, requiring “low-touch” engagement. More complex customised or personalised transactions, on the other hand, required face-to-face channels and decision-making based primarily on human engagement, possibly supported by customer relationship management tools.
Those days are over. Leading companies seek their competitive edge by using advanced analytics to break the trade-off between richness and reach.
For example, ING Bank has been profiling itself as a frontrunner in digital innovation in the financial sector. “When we launched ING Direct in 1997, we changed the banking landscape. We were the disruptive challengers then and we need to disrupt again today”, as per ING.2 With its Think Forward strategy – launched in 2014 – the bank wants to excel with a promise to be clear and easy, help customers make smart financial decisions anytime-anywhere, empower them, and keep getting better for customers. ING’s grand plan is to move its diverse set of country banking models into a single leading digital model that provides the best customer experience in each country.
Figure 1 illustrates how the ING Group intends to morph its two traditional banking model clusters in Europe – i.e. the branch-based models for high cross-buy (richness) and the direct models for simpler products and transactions only (reach) – into a single Direct First model with high cross-buy, effectively using digital to break the reach-richness trade-off.
ING bets big on using advanced business analytics to win based on propositions that combine richness and reach. This includes, for example, intensifying its use of robo-advisers in several countries.
About the Author
Stijn Viaene is a Full Professor and Partner at Vlerick Business School in Belgium. He is the Director of the school’s Digital Transformation strategic focus area. He is also a Professor in the Decision Sciences and Information Management Department at KU Leuven.
1. Understanding the four realities driving competition in the digital age was considered a mandatory starting point for any successful digital transformation in Viaene, S. (2017). Rethinking Strategy for the Digital Age: An Executive Primer. The European Business Review, July-August. In this article we elaborate on the second reality: customers are moving targets.
2. ING Group (2014). Annual Report ING Group N.V.. Source: https://www.ing.com/About-us/Annual-reporting-suite/Annual-Reports-archive.htm
3. Haemers, R. (2016). Accelerating Think Forward (ING Group Investor Day). October 3, Amsterdam (The Netherlands).
4. Davenport, T.H. & Patil, D.J. (2012). Data Scientist: The Sexiest Job of the 21st Century. Harvard Business Review, October.
5. Kart, L., Linden, A. & Schulte, W.R. (2013). Extend Your Portfolio of Analytics Capabilities. Gartner (ID: G00254653). September 23.
6. World Federation of Exchanges (2013). Understanding High Frequency Trading. May 29.
7. See, for example, Stylianou, N. et al. (2015). Will a Robot Take Your Job? BBC News – Technology. September 11. Source: http://www.bbc.com/news/technology-34066941
8. See Viaene, S. (2017). Rethinking Strategy for the Digital Age: An Executive Primer. The European Business Review, July-August.
9. Boucher Fergusson, R. (2012). It’s All About the Platform: What Walmart and Google Have in Common. MIT Sloan Management Review. December 5.
10. Viaene, S. (2013). Data Scientists Aren’t Domain Experts. IEEE IT Professional. 15(6).
11. Viaene, S. (2017). Digital Reality No1: Customer Experience is Value. The European Business Review, September-October.
12. Based on Viaene, S. & Van den Bunder, A. (2011). Secrets to Managing Business Analytics Projects. MIT Sloan Management Review. 53(1)