In today’s dynamic markets, companies can build a lasting competitive advantage by valuing and monitoring digital investments.
Million dollar black hole
While some digital technologies like mobile and social have been around for years, there is little precedent for valuing the impact of newer technologies like artificial intelligence (AI), virtual reality or blockchain. Plus, the rapid advance of digital makes managing the uncharted a constant struggle. Companies end up making assumptions that are not fact-based or using random valuation methods. What results are apples-to-oranges comparisons at best and inaccurate valuations at worst.
Zeroing out the silos
Measuring digital value from a zero base helps companies break through organizational silos. It’s the best way to get an enterprise view of digital investments, link them to the overall digital strategy, and embed ROI into a zero-based plan. It’s about starting with a proverbial clean sheet to understand the full breadth of a company’s digital investment without any blind spots. What does the company want to achieve? Where should it invest? Which investments are working? Which ones should be halted?
Setting a high bar
Investing wisely in digital from strategic, portfolio and ROI perspectives can increase digital value. Yet, to sustain it over time, companies must become what we identify in our research as “digital high performers.” These companies combine digital acumen and financial performance. This sets them apart from “business leaders” that perform well but do not prioritize digital. In fact, digital high performers outpace business leaders on key financial performance indicators such as future appeal, which measures how investors expect a company to grow.
Four types of performers: digital vs. financial performance
Stop investing in vain
Leading companies cannot set themselves apart in digital without measuring digital value. Here’s how to get started:
Experiment for a higher purpose: Experimentation is good, but it must be done in support of a business case and the broader corporate strategy.
Keep your eyes on ROI: Companies should account for value that includes measures of growth, profitability, sustainability and trust.
Never just set it and forget it: Maximizing benefits means measuring digital value captured against targeted outcomes and adjusting as needed.