Digitalization Scorecard - the Lighthouse

The goal: Create a new scorecard that guides the organization on its journey.

The leadership discussion question: “What new measures are required to demonstrate digitalization value?”

The leadership challenge: To be “Future Ready”, leaders need to put in place new measures that track the performance of the digitalization transformation and aligns the whole organization.

If your digital vision can be referred to as the “new world” then your digital scorecard is your lighthouse. It ensures every department is moving in the right direction, while avoiding obstacles and taking corrective action when necessary. Two important elements must be in place to accompany the journey:

1.   Demonstrate the value of digitalization to shareholders

2.   Create the digital scorecard

1.          Demonstrate the value of digitalization to shareholders

Shareholders are not concerned, for example, with the number of social media “likes” or the amount of fully digitalized processes. These are common tactical measures from an input perspective.

Internal and external stakeholders are not always concerned with the number of social media “likes” or the amount of fully digitalized processes. These are measures of progress but not, as yet, measures of impact

When the implementation is working, an organization is driving higher revenue at less cost through digital customers (ie those doing more than 50% of their business through digital means with you).

The challenge for leaders is to demonstrate the value add as an outcome. For example, comparing those customers embracing digital to engage with your products and services versus those who are not. Demonstrating the difference to employees, shareholders and other stakeholders is a first, important step on the journey to ROD – Return on Digital.

DBS Bank in Singapore was the first bank in the world to show the value of digital customers to analysts on their Balance Sheet. They discovered that digital customers bring in twice the income when compared to traditional customers.

An interview with Piyush, CEO of DBS Bank, found in McKinsey’s ‘Quarterly’ online magazine, uncovered that this increase in return is not just based on existing products and services that are digitalized, but supplemented by newer, more innovative solutions that become possible ONLY when adopting digital:

Piyush explains:

‘…Second, when you are completely digitized, you can create products that you couldn’t have done previously. A couple of years ago, for example, we created a set of money-transfer products around Asia, which enabled us to transfer money in just three seconds. Our cross-border remittances are up some five or six times, and we make $75 million more of incremental revenues. Our bancassurance market share in our home market, meanwhile, has doubled in the last two years, from about 17 percent to 35 percent, largely because we reimagined the bancassurance journey and process. Intelligent use of data is another factor, not just in risk management, but because it allows you to create differentiated, income-generating opportunities.’ 

2.          Create the digital scorecard

Adopting digitalization is a new initiative for most organizations and their current scorecard is typically not “fit for purpose”. A new strategy requires new measures, particularly, as with DBS Bank, when creating products, services and solutions that have not existed before and are created and delivered through digital transformation. 

The digital vision is the future state of the organization. The mission is the core purpose. The values are the guiding principles. The strategy is the detailed plan on how you differentiate yourself from your competitors and how you will achieve the digital vision. Your strategy objectives. From that flows the definition of the new operational measures that support digital implementation.

Every strategy objective has at least one measure. Every measure has an identified baseline and target attached to at least one action on how the organization will achieve the targets. Individuals are then held accountable for the actions they own. These actions are constantly reviewed to ensure the organization is on the right path toward the vision and delivering expected performance.

The additional challenge when creating your digitalization scorecard is that most of the digital measures are new; in that your organization has never used them before. This demands leaders asking themselves and the organization a new set of questions to establish the most appropriate measurements for digital value add.

For example, key questions for leaders to consider could include:

•  How many new customers onboarded purely digitally?
• How much do digital customers transact?
• What is the value from digital customers against traditional customers?
• What is the revenue generated through connected, efficient ecosystems?
• How has digital impacted productivity across your organization and with your customers?
• What beneficial new behaviors have been evident as the business adopts digitalization?

It is critical that the organization takes time to ensure the new scorecard is driving the right actions across the organization and that everyone is intimate with the strategy, operational objectives and new measures used to track progress and business impact.

When the right measures have been selected, then each part of the business knows what is expected of them and can better align and coordinates initiatives across functions and with customers.

This ensures that everyone is moving in the same direction, focused on the same objectives and moving forward as one. As this embeds, the organization will see a reduction in the inter-departmental conflicts that may have been more commonplace in the past.

If you don’t have the right measures in place to track your progress, you won’t know where you are along your implementation journey and which direction to head. Losing sight of your lighthouse could mean being shipwrecked on the rocks.

Keeping your direction true and tracking progress as a constant will help to avoid some of the common pitfalls which could drive slow progress or, worse, failure; such as;

• People become confused if they’re told one thing but measured against something else. When this occurs, they will continue to take actions based on achieving the old measures, not the new ones.
• Without the appropriate measures in place, you won’t know how your execution is performing and therefore can’t take corrective action if required.

In implementing any strategy, identifying and tracking the right measures is one of the toughest challenges. In adopting digitalization, it is even tougher because so many areas are new. Once you have the right scorecard it will act as your lighthouse to guide the organization through the difficult path ahead to the new world. 

Call to Action:

 To receive support in adopting digitalization for your organization, consider either of these:

1.    Virtual Keynote - Strategy Execution in a Digital World – It’s not about having a digital strategy but a strategy in a digital world. With 84% of digital transformations failing, this virtual two-hour presentation explains how to adopt digital and communicates what leaders need to think and do differently.

2.    Virtual Course. Build Your Digital Business - This course singular focus is to assist leaders in transforming their business to strategically leverage digitalization. The course is six, two-hour modules over six weeks and includes the framework the Ticking Clock? model, our newly published university case study on how DBS Bank became the best bank in the world and best practices from around the world.  

Email the Ticking Clock? Guys with Your Questions:

·      Jeremy [email protected]

·      Robin [email protected]

 Jeremy Blain and Robin Speculand collaborate as the Ticking Clock? Guys to show organizations how to go digital. They run their own business consultancies in Europe and Asia respectively while sharing a passion for supporting organizations to adopt digitalization.

This is the tenth video introduction and article from the Ticking Clock? Guys, in which we continue our leadership journey to strategically leverage digitalization. To read the others: