Introduction

The middle market has faced unprecedented challenges over the past several quarters, and the COVID-19 pandemic has significantly impacted businesses of all sizes. The National Center for the Middle Market (NCMM) has been monitoring the performance and sentiments of companies with annual revenues between $10 million and $1 billion since 2012. While average revenue growth for middle-market companies has increased in 2021, there is a clear divide in the recovery. While 45% of companies reported revenue growth of 10% or more, another 34% experienced flat or declining revenue.

The Split Recovery and Ongoing Challenges

The recovery has been uneven, with many companies still facing ongoing challenges. According to the NCMM, 51% of middle-market leaders cite employee communications, engagement, and productivity as the most difficult aspects of running their businesses in the current environment. Additionally, 45% reported issues with customer engagement. These challenges vary by industry, with healthcare companies struggling with employee engagement and construction companies finding it difficult to engage customers in new and beneficial ways.

The Importance of a Digital Vision for Middle Market Companies

Middle-market companies need a clear digital vision to thrive in the face of an uneven recovery and ongoing challenges. According to data from the NCMM, companies with a clear, comprehensive digital vision that guides strategic decisions grow 75% faster on average than their less digitally sophisticated peers. However, only 46% of middle-market companies have a digital roadmap built into their strategy.

The pandemic has accelerated investment in various technologies to address operational areas such as cybersecurity, customer engagement, and communications. However, executives’ perceptions of their own businesses’ digital maturity do not necessarily align with the investments made. While 52% of leaders consider digitization important or extremely important, only 35% consider themselves advanced or ahead of their peers.

A Framework for Digital Transformation for Middle Market Companies

To help middle-market companies navigate the process of digital transformation, the NCMM has developed a framework that focuses on five interconnected activities: 

• What We Sell: Product and service offerings
• How We Produce It: Supply chain, manufacturing, operations
• How We Sell It: Customer experience, channels, marketing
• Our IT Backbone: Infrastructure, security
• Our Workforce: Talent, digital skills

This framework provides a guide for companies to assess and improve their digital maturity across these five fronts.

Let’s look at a couple of the biggest challenges faced by the middle market and how focusing on “how we sell it (customer engagement)” and “our workforce (employee engagement)” helps address them.

Customer Engagement across the Customer Journey

Regarding customer engagement, customer experience, lead generation, and marketing tools are top priorities for middle-market companies. To progress in these areas, companies should prioritize integrated multichannel marketing and sales, develop functional websites that connect customers with employees, increase online interaction through various digital touchpoints, and use technologies that support the sales force, such as CRM systems and social media. The goal is to create an omni-channel, end-to-end digital experience on all platforms and channels.

Employee Engagement

Middle-market companies face a challenge in accessing, attracting, and retaining talent with the right digital skills. To address this, companies should invest in people with specific digital expertise, adopt the latest technology and digital processes, take a strategic approach to realigning the workforce by contracting activities to outside specialists, and provide career training and development with clear career paths. Investing in employees with digital skills and empowering them with the right tools and processes is crucial for successful digital transformation.

Overcoming Obstacles

Resource constraints, budget issues, lack of time, and internal resources are common obstacles middle-market companies face when it comes to digital transformation. IT spending is often focused on daily operations and cybersecurity, leaving limited resources for digital transformation initiatives. Companies need to address these obstacles by prioritizing investments in digital technologies, allocating budgets and resources, and adopting a strategic approach to implementation.

Conclusion

Middle-market companies face unique challenges in the digital transformation journey. The key to thriving in an uneven recovery and overcoming ongoing challenges is to have a clear digital vision that guides strategic decisions. By focusing on customer and employee engagement, investing in the right digital technologies, and adopting a comprehensive framework for digital transformation, middle-market companies can position themselves for growth and success in the digital age.

This post is inspired by a similar topic in Harvard Business Review.

The post The 5 Digital Transformation Pillars for Middle Market Enterprises. appeared first on [x]cube LABS.

The best piece of advice ever doled out to me that I remember above all others was: “If you have a plan, you can win.” And I never forgot that – it bolstered what I thought I knew and gave me the courage to always ask people as to where we were headed. My earliest lessons in this were learnt during a treasure hunt at a birthday party I think, but this principle, of course, applies to businesses as much as to individuals. The importance of starting with a clear, defined, business strategy cannot be overstated, and the process of implementing the strategy successfully involves asking some key questions, and being aware of the purpose each day, prioritizing and adjusting along the way.

The biggest challenge that many leaders think they face is preparing for the future. The common question in this line of thinking is: How can we anticipate what is coming up next and be prepared? The question has become harder to answer, as the pace of change accelerates due to the widening impact of digital technologies. The solution, of course, is to adopt digital technologies and embrace the future, and this is something a large number of enterprises are attempting already. However, most enterprises find very soon–and yet often too late–that there is more to digital transformation than just adopting a set of technologies.

Where exactly are they going wrong? The answer, we’ve discovered repeatedly in our interactions with business leaders from a wide variety of industries, is that businesses that rush headlong into digital transformation (as they understand it) are far more likely to fail. On the other hand, businesses that pause to ask some key, fundamental questions, and then rush headlong into digital transformation tend to have far better chances of succeeding.

You read that right, yes. The ‘rushing headlong’ part doesn’t really change. After all, pace of innovation is a key ingredient in digital transformation. Still, there are some critical questions leaders in an enterprise must ask before they begin the digital transformation journey. Let’s take a look at these key questions fundamental to formulating your digital strategy.

Whatever you’re going after– is the successful launch of a new product or growing an existing service at a rapid pace, a robust digital transformation strategy will help you see where you are going and help you get there.

To start creating a robust digital strategy, ask yourself these three critical questions:

What data do I have and what insights can I gain from that data? How can I increase the data that am collecting? And how can I contextualize it all in terms of services and personalization?

OK, so first off, I cheated. When I said three questions, I actually meant five. Or maybe nine? I haven’t counted yet, but let’s move on.

Thoughtfully done analytics or business intelligence solutions invariably unlock a tidal wave of insights for digital business strategy. While many companies struggle to justify their data and create value with their big data spend, the promise of actionable insights is critical. Forrester reports that 74% of firms say they want to be “data-driven,” but only 29% are actually successful at connecting analytics to action. Clearly, actionable insights are the missing link for companies that want considerable business outcomes from their data signaling a digital transformation.

The universe of data modeling has vastly changed over the years, leading to a change in the way the volume of information is interpreted and providing opportunities to gather more. So how does a company fully exploit the data and analytics to get a working model? This requires three mutually supportive capabilities. First, they need to identify, combine, and manage multiple sources of data. Second, they need to develop the capability to build advanced-analytics models for predicting and optimizing outcomes. Third, and the most critical–management must have the muscle to transform the organization so that the data and models actually produce better decisions. Two important features support these competencies: a clear digital business strategy on how to use data & analytics to compete with the distribution of the right technology architecture and capabilities.

Knowing what you want to accomplish through your digital strategy is important since the speed of doing business has increased by quantum leaps. Businesses move forward when the technology enables them to be closer to their ultimate strategy and achieve what they aspire to be. It starts with an initial framework of the company’s desired goals keeping in context the conventional business strategy to get the desired outcome.

By the end of 2019, spending on digital transformation will reach $1.7 trillion worldwide. -IDC
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What is the ecosystem that I’m playing in? How can I leverage a clear understanding of internal capabilities and external factors to fine-tune my digital strategy?

While there are multiple layers of models that are put to use in a business set up to achieve the goals, the very first layer of digital strategy is the basic business model. A business’s use of digital can’t be analyzed in a separate petri dish. A digital strategy needs to be integrated into the organic whole of how a company runs, as well as what they aspire to be. Therefore, in order to build upwards from the basic business model, we need to look at:

People: A digital strategy relies on the skills of your entire team. It doesn’t start out in the cloud; rather, it is inseparable from the efforts of the developers, designers, marketers, strategists, content writers and so on.

Process: Articulating precisely what a business human capital will do and how you will blend your work with one another to create a fully synergized strategy comes next.

Platform: Only after the goals, people and processes are in place do we consider the platforms they’ll need. Again, technology is the means, not the driver. Platforms depend on individual company goals; they can include cloud servers, content management systems, data analytic systems, mixed reality, artificial intelligence, geo-based apps and more..

Products: Once platforms have been classified, then the individual products that make up your digital strategy are identified. These could possibly include apps, wearables, responsive websites, IoT smart products, augmented reality experiences and more.

Channels: Once you have your digital products, then the question is how you’ll connect those products with all concerned. Which channels work adequately as delivery conduits in your digital business strategy? Which include in-person shopping experiences, email, social media, workplace networking, intranet, websites, IoT remote connections and so on.

Experience: It’s critical to pursue and retain a clear sense of user experience. Are your brand’s visual cues consistent and addictive? Does it evoke a sense of ease and delight as people interact?

Customers: Right at the top of the digital strategy framework, it’s all about people and not just the customers who purchase the products or services — although they are extremely important. An effective digital strategy which is followed by transformation enhances the experience of all the parties involved like employees, vendors, suppliers, partners, and stakeholders etc.

By 2020, 60% of all enterprises will have fully articulated an organization-wide digital platform strategy and will be in the process of implementing it. -IDC
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Do I have the innovation chops and people skills scalability?

A key reason why digital strategy needs to be agile is that it involves constantly trying to strike a balance between two opposing forces of innovation and acceptance. Willingness of the agents to change is important, as they need to feel inspired to give their best and perform at the highest level. As goals don’t change, however, the methods of achieving those goals, and the tools that underlie those methods evolve so swiftly that keeping up with them has become a profession of its own. So how do we reconcile these opposing forces? By building teams who collaborate across functions is how it begins- because it touches across many functions in a company.

Digital leaders are quick to spot this and place a premium on collaboration. They allow the creation of processes, form cross-functional teams who share the best practices and develop expertise. To gain momentum, cross-functional teams need support from the top and a clear mandate which provides enough resources to build out a program. Therefore effective teams need real business responsibility, coupled with the authority to break through functional silos, and a passion to lead.

By the end of 2018, at least 40% of organizations will have a fully-staffed digital leadership team. -IDC
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Per IDC- “Digital transformation (DX) is at the center of modern organizational strategies, and estimates the economic value of DX to almost $19 trillion or more than 20% of global GDP. Advances in 3rd Platform technologies and associated accelerators are transforming whole industries and represent the largest driver of technology investment for the foreseeable future”

Well-informed, designed, and activated business strategies are necessary for the digital era. As digitization modifies the behaviors of customers, the type of business and competition changes at greater speed and scale. To achieve the highest standard of business performance, executives must reinvent their enterprise through digital strategies and innovative capabilities that constantly generate and sustain brand, product, and operational advantages. Digital strategy consulting and agency services consequently play a vital role in helping build enterprise leadership, vision, goals, business structure, and organizational forms, with necessary talent requirements, and data and technology. Therefore, in the enterprise context, it is crucial to communicate a sense of long-term direction to employees and other stakeholders, explain the detailed steps the company needs to take in the near future, and at the same time allow for adaptability to evolving along the way.

For enterprises that have already experienced disruption or are facing competition from new digital entrants, the goal is to identify how digital business strategy changes and refines your understanding from broad to specific points which form the core of your digital strategy foundation. Therefore digital strategy should be agile and deliver iterative value to the business on a frequent basis. Agility enables the strategy to change as the organization continues to evolve taking input and suggestions from all levels of the organization. By starting with a clear understanding of a company’s purpose, one can avoid wasting time and resources implementing technology that doesn’t enable new competitive advantage.

The post 3 Fundamental Questions That you Need to Ask Yourself Before you Build a Robust Digital Strategy appeared first on [x]cube LABS.