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Digital Business KPIs: Defining and Measuring Success

| Charlie Ranalli

It’s time for enterprise CEOs, chief digital officers and CIOs to move beyond the transformation stage and set metrics and goals that lay out the digital business journey. This report describes the key performance indicators necessary to do so.

Digital business key performance indicators (KPIs) are designed to assess the degree of progress in becoming a digital business — which in turn leads to a change in performance that is reflected in the KPIs of the enterprise.

A first set of KPIs is required to assess the progress in digitalizing the current business model. It is possible for many areas such as sales, marketing, operations, supply chain, product/services and customer service to have digitalization goals and KPIs.

A second set of KPIs is required to assess the progress and opportunity of pursuing new digital business models. Growth, revenue, market share and margin metrics must clearly differentiate new revenue sources from nondigital ones

Digital Business KPIs: Defining and Measuring Success (Requires Subscription)
Analyst(s): Hung LeHong
03 March 2016

Why Software Is Eating the World

| Charlie Ranalli

Technology entrepreneur and Venture Investor Marc Andreessen masterful piece was published by the Wall Street Journal in 2011 and a decade later still feels fresh.
He made a compelling case that entire industries – from banking to agriculture – to are being upended by increasingly affordable cloud technology, broadband internet, the popularity of mobile devices, and smart software.

Why Software Is Eating the World
by Marc Andreessen
Cofounder and General Partner, Andreessen Horowitz

What’s Really Disrupting Business? It’s Not Technology

| Charlie Ranalli

Technology isn’t the main force hobbling many companies today—it’s changing customer needs and expectations.

Supporting and illustrating one of the two principles originating this blog that digital transformation is not about technology, marketing professor Thales Teixeira argues that successful disruptors are quicker to detect and cater to emerging customer needs than larger competitors, often with access to similar technologies and similar amounts of technology.

Mr. Teixeira discusses several cases of newcomers entering mature markets, and how incumbents reacted or adapted.

What’s Really Disrupting Business? It’s Not Technology
by Danielle Kost
Harvard Business School Working Knowledge, February 2019

See also: Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

Unlocking Success in Digital Transformations

| Charlie Ranalli

Digital transformations are even more difficult than traditional change efforts to pull off. But the results from the most effective transformations point to five factors for success.

In a new McKinsey Global Survey on digital transformations, more than eight in ten respondents say their organizations have undertaken such efforts in the past five years.

The results from respondents who report success point to 21 best practices, all of which make a digital transformation more likely to succeed. These characteristics fall into five categories: leadership, capability building, empowering workers, upgrading tools, and communication.

Unlocking success in digital transformations
McKinsey & Company
October 29, 2018

Leading With Next-Generation Key Performance Indicators

| Charlie Ranalli

Michael Schrage, a research fellow at the MIT Sloan School’s Initiative on the Digital Economy and David Kiron, the executive editor of MIT Sloan Management Review, partnered with Google to run a survey of more than 3,200 senior executives and interviews with 18 executives and thought leaders, them to explain how they and their organizations are using KPIs in the digital era.

Then they went a step further and published a self-assessment tool to help leaders and their teams evaluate how they measure-up against those best practices.

Article
M. Schrage and D. Kiron, “Leading With Next-Generation Key Performance Indicators”
MIT Sloan Management Review, June 2018

Self-Assessment Tool
Measure Your KPI Alignment
MIT Sloan Management Review, June 2018

The Nine Elements of Digital Transformation

| Charlie Ranalli

Based on the research behind their pioneering paper The Digital Advantage: How digital leaders outperform their peers in every industry, George Westerman, Didier Bonnet, and Andrew McAfee of the MIT Center for Digital Business, identify the nine characteristics that differentiate digital leaders.

“The best companies — those we call Digirati — combine digital activity with strong leadership to turn technology into transformation. This is what we call Digital Maturity. Companies vary in their digital maturity, and those that are more mature outperform those that are not.”

Consistent with other research, leaders are digitally transforming three key areas of their business: customer experience, operational processes and business models, and each of the three pillars has three elements that are changing.

The Nine Elements of Digital Transformation
By George Westerman, Didier Bonnet, and Andrew McAfee
MIT Sloan Management Review, January 2014

The Digital Advantage: How digital leaders outperform their peers in every industry

| Charlie Ranalli

The researchers developed a digital maturity model to show how different companies are reacting to technological opportunity, and cleverly analyzed how business invest in Technology, but more importantly, how the true leaders create the leadership and change management capabilities necessary to drive change, which they called transformation management intensity.

They proved that transformation is as – or more – important than the technology itself in the quest to be a digital leader.

The Digital Advantage: How digital leaders outperform their peers in every industry
By
George Westerman
Research Scientist, MIT Center for Digital Business
Andrew McAfee
Associate Director, MIT Center for Digital Business
Brief
Paper