Digitally Outsmart the Competition During the Recession


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The economic downturn has been impacting companies' results for several years now. In this study, Magenta Advisory took a look at how digital business can help companies to get ahead of their competitors before the economy starts its rise again.

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Digitally Outsmart the Competition During the Recession

  1. 1. M ag e n ta a dv i s ory p u b l i c at i o n 11 / 2012M AG EN TA A DV I SO RY R E S E A RC HDigitally Outsmart The CompetitionDuring The Recession
  2. 2. Partner in your digital transformationMagenta Advisory helps clients create competitive advantagedigitally. Our unique approach to management consultingcombines business driven analytical problem solving with adeep understanding of the digital ecosystem. We help bothglobal and local top brands in their digital transformation.
  3. 3. 03 e x ec u tive s u mmary Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research i INTRODUCTION Staples opens Despite the recession Macy’s is heavily a new e-commerce occuring throughout investing in innovation center Europe, Marks & Spencer is e-commerce and with aims to triple spending $400 million will add 725 the size of staff for on relaunching its positions in the e-retail site, offering Wi-Fi to support its next two years in stores and outfitting online sites january 27, 2012 store staff with iPads. january 4, 2011 september 7, 2012 in this paper, we shed light on how companies can I Digital capability building embrace and grow their digital business during an during an organizational economic downturn. We have picked three typical cost-cutting period corporate reactions to recessions and highlight the While the economy is down, companies tend important role digital plays in not only helping your to slash costs across all departments and current business, but also in laying the foundation increasingly take a short-term perspective for future growth. on investments. Taking advantage of lean In this paper, we outline how your company can development methods and digital solutions benefit by investing in digital business today to out- such as Software as a Service helps in tackling play the competition tomorrow. We recommend these issues. companies build their digital and multichannel ca- pabilities during the economic downturn by cutting II Digital business model costs wisely, generating new revenue streams and/or explor ation to combat growing internal competences. diminishing consumer spending Applicable to most industries, whether B2C or B2B, customers tend to spend and buy less when the economy is down. New digital business models provide innovative means that cater to price conscious customers and expand market footprint. III Digital competence building in an er a when digital talent is laid off In turbulent times, companies are often forced to cut costs, leading to lay-offs. Recently these have also included digital professionals – a scarcity in Finland. Companies willing to invest should seize the opportunity to recruit digital talent now when the supply is high and demand temporarily low. Before looking at each of these areas in more detail, let’s first look at why it really matters how you play the game during a recessions.
  4. 4. 04 introd u ction Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research What do the winners of recessions company’s business today but its importance both in have in common? absolute figures as well as indirectly as a part of an As we enter 2013, the global economic outlook re- omnichannel customer experience is growing all the mains covered in dark clouds. While most associate time. This is well visible in Figure 3, which compares recessions with losing, every downturn also has its us retailers’ same store sales and online sales. Since winners. This was also the case in the 1930’s Great the dip in 2008, nearly all of us retailers’ absolute Depression. Although many companies lost fortunes sales growth has come from digital business ($16bn and went bankrupt, companies such as Procter & vs. $1bn). Even more, the growth of online sales has Gamble, Camel and Chevrolet emerged as winners. far exceeded that of same store sales for several years. Whilst there are underlying variables and differ- In order to see if companies that focus on ecom- ent theories to why this was, merce have really succeeded one thing is generally agreed better than others, we com- upon: These companies dared A good hockey player pared the stock price develop- to invest in the future. These plays where the puck is. ment of the top 20 publicly companies placed significant A great hockey player listed online retailers to that sums of money into market- plays where the puck of s&p 500 From Figure 4 we ing and product development is going to be. can easily see that companies when everyone else cut back wayne gretzky with large online sales have on spending. survived the recession better. When looking at more re- By mid August 2012, the Top cent research, similarities can be found from com- 20 online retailers’ shares were 20 % more expensive panies that survive recessions better. A study by than the respective investment in s&p 500 in the Harvard Business School (2010) studied 4,700 public beginning of 2008. companies’ performance during the past three glob- The same development is also happening in al recessions. The results suggest that companies, Europe as can be seen from Figures 5 and 6. First, as which either cut costs fast and deep or invest reck- Figure 5 illustrates, online share of media spending lessly during a downturn, have a lower probability to is growing rapidly and online is quickly becoming beat competitors when times get better (see Figure the dominant advertising channel. This is mostly 2). According to the study, the most probable post due to the fact that online commerce has been also recession winners are companies that are able to cut growing rapidly despite the recession, as Figure 6 costs selectively and focus on operational efficiency, illustrates. but at the same time invest in the future by spend- Another interesting point is how Finland ranks ing more on marketing, r&d and new assets. in these comparisons. Finns rank among the most As we will present later in this paper, digital busi- frequent online shoppers, but online share of media ness provides a cost-effective means to invest into spend is still relatively small. This could imply that new assets and market development. However, let’s Finnish retailers are losing a major share of their first look at why digital is our solution for surviving sales abroad because of a lack of investment in digi- the recession. tal business. This is a good example of how the business envi- Why can digital business ronment has changed dramatically during the last help survive the downturn? decade. Online pure players and foreign retailers Sooner or later, every downturn is followed by an have entered the game and are here to stay. upturn. Companies that have prepared for econom- To generalize, we explain the success of digital- ic recovery by wisely divesting and investing into focused companies through three different factors. the future, are way ahead of their competitors when First, digital-focused companies are able to get a the economy picks up. Yet it is not enough to simply better return on their investments in the short term. invest - companies need to know where to invest. Second, digital business enables new business mod- “A good hockey player plays where the puck is. els and expanding sales to new customer segments A great hockey player plays where the puck is and geographical areas with relatively small costs. going to be.” — Wayne Gretzky Third, companies that have dared to invest in digital Although comparing ice hockey to running a operations during the downturn have been able to business might be far fetched, the ability to think cherry-pick the best talents from the market. In the strategically about your next move is just as applica- next three chapters we will go through each of these ble to both. Digital business might be a fraction of a areas in detail.
  5. 5. 05 introd u ction Digitally Outsmar t The Competition During The Recession | Magenta Advisory ResearchFIGURE 2:Strategic options forcompanies duringrecession Promotion-focused moves Market Asset Both development investment Employee +3.3% -5.2% Prevention-focused moves reduction Sales growth EBITDA growth Operational +13% +12.2% efficiency Sales growth EBITDA growth Both Source: Adapted from Harvard Business Review 2010FIGURE 3:US retailers’same store salesvs. online sales Source: Internet Retailer 2012
  6. 6. 06 introd u ction Digitally Outsmar t The Competition During The Recession | Magenta Advisory ResearchFIGURE 4: Top 20 US publicly listed e-tailers vs. S&P 500 Change in %Stock price Top 20 e-tailers:performance ofTop 20 US e-tailers 45 %vs. S&P 500 index Digital monetization gap 30 % TOP 20 E-TAILERS 15 % 0% -15 % -30 % S&P 500 -45 % 2008 2009 2010 2011 2012 All the companies in the Top 20 index are equally weighted on 2nd January 2008 Source: Google Finance, Internet Retailer’s Top 500 list 2012FIGURE 5: (left) Online share of all media ad spend 2011 Growth People with last online purchase in the last 3 monthsOnline share of 70 %all media ad spend UK 35,9 % +14 %and growth Denmark 27,9 % +15 % UK 60 % Netherlands 27,9 % +13 % SWEDENFIGURE 6: (right)People with last Norway 24,9 % +6 % 50 %online purchase Sweden 23,4 % +14 %in the last3 months Europe average 21,7 % +15 % 40 % FINLAND Germany 21,4 % +11 % 30 % France 20,6 % +9 % EU-27 Poland 16,2 % +23 % 20 % Russia 15,9 % +56 % ITALY Finland 15,9 % +8 % 10 % Italy 15,2 % +16 % 0% 2005 2006 2007 2008 2009 2010 2011 Source: IAB Europe, Adex Benchmark 2011 Source: Eurostat 2012
  7. 7. 07 case st u dy I – nordstrom Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research Founded in 1901, Nordstrom is an upscale department store operatingCase I 234 brick-and-mortar stores in the us and with online sales to several coun- tries worldwide, including Finland. Nordstrom has been able to weather the recession better than most of its competitors by making a series of smart investments to sustain growth. In 2005, Nordstrom’s online sales constituted 5.7 % of overall revenue and the company stated that 10 % would be a tough figure to get beyond. During the economic turmoil in 2008, the company’s overall sales declined 4.3 % whereas online sales kept growing at double-digit figures.This was the point when the company decided to start investing heavily in e-commerce. Nordstrom’s success in recent years hasn’t come by coincidence. First, the company invested in integrating inventories between warehouses and stores. In practice this means that when one orders a product from the online store in San Francisco, it can be dispatched from a department store in Manhattan. This buy anywhere, fulfill anywhere mentality enables Nordstrom to sell products from stores that have excess inventory, mini- mizing the need to mark down items at the end of the season. The integra- tion has resulted in record setting warehouse turnaround times (from 4.8 in 2005 to 5.6 in 2011). Second, to increase sales when consumers are cutting on spending, Nordstrom acquired flash sales site HauteLook for $180 million. Whereas other department stores have tried to build their own flash sales sites with minimal success, Nordstrom minimized risks by acquiring an already estab- lished business. Third, Nordstrom has invested heavily in its e-commerce platform. During the next five years, the company plans to use one-third of its capital expen- ditures, in other words $1 billion, in e-commerce. With these investments, Nordstrom has been able to get ahead of its competitors in otherwise difficult times. Today, online sales already make nearly 10 % of the company’s revenue and are growing 30 % a year. In 2012, the company is expected to make over $1 billion online. The double-digit growth in online business and stock value hitting new heights is showing that Nordstrom is on the right track.
  8. 8. 08 D igita l ca pabi l ity b u i l ding d u ring an organi z ationa l cost- c u tting p eriod Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research I Digital capability building during an organizational cost-cutting period during times of economic struggle, companies are business: Start utilizing lean thinking and leverage often put under intense pressure to cut costs across opportunities provided by digital outsourcing such the board and somehow maintain profitable opera- as Software as a Service (SaaS). tions to keep shareholders happy. It is undeniable Lean development should not only be seen as a that costs often do need to be cut, but these cuts method for software development, but more of a should be made in the correct places. Bearing in mindset. In brief, lean development involves devel- mind the importance of digital capabilities in the fu- oping and deploying a simple version of a business ture, cutting back in this area would be questionable. solution as fast as possible before developing it fur- In addition to having to cut costs, companies are ther or developing a new feature. Therefore, com- often pressured to change their investment focus. panies that don’t have a lot of capital to invest can In times of downturn, investment behavior is often still continue their product development efforts by focused on short-term portfolios with quick return- starting small and expanding them later on. on-investment, while more unknown areas such as Companies that have used this technique in the digital are perceived as too risky. past include Groupon, Twitter, Facebook, Instagram We offer two pieces of advice for cash-strapped and Dropbox. A more detailed description of a typi- companies that are looking to keep costs minimal cal lean process can be seen in Figure 7. and obtain a short-term focus for their investments, Using lean development provides two main ad- while still taking into account the role of digital vantages that are especially worthwhile in difficultFIGURE 7:Example oflean business MINIMUM VIABLE CAPABILITY ITERATIVE PRODUCT PLANNING CONCEPT PRODUCT DEVELOPMENT SCALINGdevelopment DEVELOPMENT • Defining product • As little functionalities • Continuous • Developing scalable IT vision as possible development of system with lean • Defining KPI metrics • Only provided for operating model and methods and objectives limited number of functionalities on basis • Defining scalable customers of KPIs operating model • Minimum viable • Monthly iterative product definition for • Developed with lean version releases • Broad usage across testing idea methodology developed iteratively organizations • Business unit involved • Business unit involved • End user training on daily basis on daily basis • Product scaling • Maximum 6 months decision made when development time KPI objectives met = Milestone Source: Eric Reis, Magenta Advisory Analysis
  9. 9. 09 digita l ca pabi l ity b u i l ding d u ring organi z ationa l cost- c u tting p eriod Digitally Outsmar t The Competition During The Recession | Magenta Advisory ResearchFIGURE 8:How companies • Silicon Valley based airline Virgin America moved their corpo-achieve cost-savingsby utilizing SaaS? rate e-mail into the cloud in 2010 by utilizing Google Apps • Migration will cut e-mail system costs by approximately half on an annual basis • Long-term storage benefits of move into cloud will save them over 18 terabytes of space • Multi-national transaction facilitator Global Blue implemented Amazon Web Services due to capacity issues caused by rapid growth in online refund issuing business • Move resulted in cost savings of 800,000 USD in CAPEX and 78,000 USD in OPEX • Other realized advantages include increased speed and capacity • Location-based social network Foursquare implemented Amazon web services to perform analytics across 5 million + daily check-ins • Implementation resulted in cost savings of 53% compared to self-hosting, while still maintaining scalability needs • Other advantages include decreased data processing time without having to develop new applications or add risk Source: Amazon Web Services, Google Apps times. First, lean development enables faster time SaaS is a third party hosted software that a com- to market, as beta versions of a product can be re- pany can use and pay only for the amount of actual leased a long time before the actual version is ready usage. From a company perspective this means that for release. Early adopters are likely to start using a investments needed to start a venture are small. If product that is in its early stage even if it still isn’t a the investment doesn’t prove viable, the service can perfected product. be terminated on a short notice with minimal in- Second, lean product development decreases both vestments having to be made. In turn, if the project capital and operational expenditures. This is because proves that there is profit to be made, the service lean development doesn’t require committing to can be easily scaled up or even insourced. The risks large investments with long timelines, but empha- and investment levels remain small compared to the sizes cutting down product development to smaller opportunity that is present. In Figure 7, we can see pieces. After each step decisions can be made about how large global companies have started using SaaS the next steps based on whether they deliver enough to save costs. return on investment or not. In addition, waste is By utilizing SaaS, companies are able to decrease eliminated in project work because features are typi- their capital expenditures (capex) and move these cally not developed until it is absolutely necessary. costs into operational expenditures (opex) at the Having looked at how to provide short-term rate at which the software is used. In times when wins with more efficient development techniques, both investments and risk-taking is low, this pro- let’s now look at how costs can further be decreased vides an opportunity to develop digital capabilities concretely by utilizing digital outsourcing. We have otherwise seen as too risky. picked SaaS as an example.
  10. 10. 10 case st u dy I I – gi lt gro u p e / airbnb Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research Gilt Groupe was launched during the economic turmoil of 2007.Case II The timing couldn’t have been better, as the founders predicted correctly that during a recession consumers would be intrigued by the idea of buying high-end branded products for 50-70 % cheaper prices. The business model utilized by Gilt, also known as flash sales, was originally introduced by a French company called Vente- Privee. It is based on buying a large quantity of products and selling them within a limited time frame (in Gilt’s case, 48 hours). In times of decreasing demand, many manufacturers are will- ing to get rid of their extra stock even if it has to be sold at a lower margin. Gilt, in turn, is able to sell those products with a lower price tag than other retailers, therefore attracting a large audience. Gilt Groupe originally launched only for women, but as the concept proved successful, the company quickly expanded to menswear and home furnishing. In 2011, Gilt Groupe’s rev- enues were estimated at $500 million and the company was valued at $1 billion.
  11. 11. 11 case st u dy I I – gi lt gro u p e / airbnb Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research Airbnb, launched in 2007, is an online service that matches peo- ple looking for accommodation with those for rooms to rent. Due to increased price sensitivity, consumers have quickly found the service as an alternative to staying at hotels. Airbnb’s business model is an adaptation of eBay’s popular consumer-to-consumer marketplace. The company has simply translated eBay’s business model to the travel industry by offer- ing accommodation from people to people. Airbnb’s role is to act as the marketplace, providing a platform for secure reserva- tions and transactions. In addition to general C2C sites such as Craigslist, Airbnb provides a money-back guarantee for guests and an insurance of up to 700,000 € for hosts. Currently, Airbnb gets 43,000 nights booked every day, out of which ¾ are first time bookers. The company made an estimat- ed $52.8 million in revenue in 2011 and is valued at $1.3 billion.
  12. 12. 12 D igita l b u siness mode l e x p loration to combat diminishing cons u mer s p ending Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research II Digital business model exploration to combat diminishing consumer spending during economic downturns, customer spending Since directly imitating a business model from an tends to decrease and customers tend to become online pure player might not always be the best more price sensitive and start opting for cheaper al- strategy, companies can also make use of business ternatives. This decreases the demand for more up- models in other ways. First, companies can local- scale products and services. ize an existing concept to their own market where When the market isn’t growing, companies must it isn’t present. A good example of this is Sanoma either increase existing customers’ share of wallet Group’s owned Offerium, which is a localized ver- or expand to new market segments. Digital busi- sion of Groupon. Second, companies can apply an ness provides two different solutions. First, com- existing concept to other industries. This is what, for panies can incorporate new digital business mod- example, Airbnb has done by introducing the c2c els into their business. Second, companies can marketplace to booking accommodation. use cost-effective market entry models enabled by digital services. How to use digital as a platform for international growth? How to cater to Digital offers companies the possibility to utilize the more price-sav v y consumers? cost-effective market-entry models. For example, First, increasing existing customers’ share of wallet companies who are not yet selling their products can be a strenuous task when consumer spending is globally can utilize e-commerceto expand their going down. As Case 2 illustrates, digital provides reach abroad. While far from a “walk in the park”, new innovative business models, such as flash sales, selling abroad through an online store is a smaller consumer-to-consumer marketplaces and group investment compared to opening new brick and sales, to overcome this challenge. mortar stores in several countries. Although originally introduced by online pure Some companies have decided to outsource players, traditional retailers are also able to utilize e-commerce back-end operations when expand- these models in their business. For example, Gilt ing to multiple markets to decrease risk. Investing Groupe created a new flash sales online business in customer care, logistics and finance can be ex- model to enable high-end brand manufacturers tremely heavy with localized customer prefer- to sell products to price-conscious consumers that ences and legal constraints. Case 3 goes through would be otherwise left to stock. Traditional us re- how William-Sonoma outsourced its e-commerce tailer Saks Fifth Avenue followed in 2011 by intro- back-end operations. ducing its own flash sales site Saks FASHIONfix.
  13. 13. 13 case st u dy I I I – wi l l iams - sonoma Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research M USD 4500 100 % 3945 4000 3721 90 % 3504 3500 3361 80 % S 3103Company revenue 70 % 3000 hare 60 % of 2500 50 % onl 2000 38 % 34 % 40 % 31 % 30 % ine 1500 28 % 30 % sa l es 1000 20 % 500 10 % 0 0% 2007 2008 2009 2010 2011 Williams-Sonoma is an American high-end retailer of home furnishing and Case III kitchenware founded in 1956. It operates 576 brick-and-mortar stores around the us and owns brands such as Pottery Barn and West Elm. By 2007, Williams-Sonoma had mainly grown by investing in new brick- and-mortar stores and acquiring some of its competitors, such as Pottery Barn in 1986. In 2008, when the stock market crashed, the company re- corded comparable store sales of -17 %, being one of the worst years in the company’s history. In the same year, sales in the online channel were down only -6 %, generating more than $1 billion of the total revenue. Marketing In 2009, the company made a strategic shift to use brick-and-mortar stores mainly as showrooms and make its online store the primary sales channel. This Merchandizing enables the company to save on property costs, as fewer square feet are needed as well as to decrease Site Content Management & inventory levels. This was also the first year that the Operations company started closing down its brick-and-mortar stores. Order Management & During this time, Williams-Sonoma has closed Finance down several brick-and-mortar stores and online Outsourced now accounts for nearly 40 % of all revenue. Logistics With the help of online commerce, Williams- Sonoma was able to star t selling its prod- ucts internationally in 2011. To minimize the Product Management investment and risks, it buys ser vices from FiftyOne, a company specialized in international expansion of e-commerce. FiftyOne takes care of currency conversions, duties, returns and postal regulations in dif- ferent countries. Now Williams-Sonoma is selling its products to over 100 countries.
  14. 14. 14 D igita l com p etence b u i l ding in an era when digita l ta l ent is l aid off Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research III Digital competence building in an era when digital talent is laid off Facebook acquires WalMart plans hiring mobile bookmarking 200 developers for WalmartLabs service Spool in Bangalore by 2012 – april 17, 2012 the social networking giant is paying for the company’s five employees, Marissa Mayer is the new not its technology CEO of Yahoo july 12, 2012 july 16, 2012 be it through company acquisitions, headhunting or because digital investments are technology focused. direct steals, global companies fight for digital tal- The underlying assumption is usually that digital ent because they know it is a scarcity. Digital talent business runs itself. Top management should always is as hard to find for cxo-level positions as it is for remember to align sales targets with headcount operational smes. allocations as Figure 9 illustrates. Alike any other “…there is a war for talent. This industry is one business, digital business requires competent people hot industry…We want to attract the best and the to maximize performance. brightest.” — Peter Sachse (chairman of until February 2012) If finding the best and brightest digital talent is How do we know what talent difficult in the us – it’s even harder in Finland. The we are looking for? current recession however provides a unique time to Organizing digital operations to deliver digital grab talent other companies have laid-off. strategy is a fundamental starting point in digital transformation. There is no single way to organize, but what is important is that you select a model, Why is finding and retaining digital which suits your selected strategy, targets and cur- talent so important? rent organization the best. In Figure 10 we present Translating your digital strategy into efficient digital three typical structures to organize digital business operations requires not only the underlying tech- in organizations. nology but also processes and people to run the day- Companies should also bear in mind that suit- to-day business. Thus, how you recruit and retain ability of different organization models change as talent to build your company’s digital dna is vital digital maturity evolves. For example, a company in how you succeed in your chosen digital strategy. may choose to have digital talent scattered across While new competences are needed for digital the organization at first, then decide to create a organizations, companies often hesitate to allocate digital center of excellence and finally, implement a budgets to its headcount. More often than not, hub and spoke model. digital organizations are severely understaffed
  15. 15. 15 D igita l com p etence b u i l ding in an era when digita l ta l ent is l aid off Digitally Outsmar t The Competition During The Recession | Magenta Advisory ResearchFIGURE 9: (on left) 78 people DecentralizedAverage e-commerce Average eCommerceteam headcount team headcount whenbased on company’s online revenue $10 Monline revenue – $150 M annuallyFIGURE 10: (on right)Different ways Digital Digital Digital Digitalto organizedigital operations Centralized 23 people Average eCommerce Digital team headcount when online revenue under $10M annually Shared service Digital Source: Adapted from Forrester Research 2012 Source: Forrester Research 2009 How do I build a digital organization, our company’s Digital DNA? I Assess and select which digital III Decide what roles are required might want to outsource its online organizational model is suitable for within each team, how many em- content production – for a branded your digital business. Consider digi- ployees are required, what will be consumer goods company content tal objectives, analyze these against their responsibility areas and what marketing and high quality content various organizational models and type of capabilities are required. production may be a top priority select the one with best fit. for internalization. IV Decide which roles you want to II Plan organizational teams and their keep in-house and which to out- V Recruit and retain digital talent! As ways of working. Consider what source. As in any business, consider always, recessions lead to lay-offs teams are needed, their responsibil- what should be at the core of your throughout organizations. This can ity areas, deliverables, interfaces to competitive advantage and keep be also seen as an opportunity as others in the organization and how that inside your company, outsourc- it means that there are plenty of tal- they will be measured. ing non-core roles. As an example, a ented people on the market. Now retailer will definitely keep its pur- is therefore a unique time to build chasers inside the organization but digital competences.
  16. 16. 16 case st u dy I V – S anoma Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research Sanoma is a European media group with a portfolio of digital, learning,Case IV news, magazine and tv activities. With 11,000 people in some 20 countries, it is one of the leading companies in its industry. As many media companies with a long history in printed press, Sanoma long held the belief that traditional media won’t lose its share to digital media. In 2011, however, with declining revenues from its printed products, Sanoma placed digital as one of its strategic focus areas. This has meant several changes in the organization. First, the company decided to change its organization structure so that in addition to seven business units, there are two horizontal units, digital op- erations and customer market operations. This change was done to ensure that digital business expertise could be utilized throughout the organization. Second, they started to build their digital center of excellence by aggres- sively recruiting digital talent from an array of industries. The company also appointed its first ever Chief Digital Officer, reporting directly to the ceo. The results of the shift in strategy are already starting to show. In the first half of 2012, Sanoma’s online sales (excluding TV and radio) grew by 20.9% to €115.8 million, accounting for 9.7% of the group’s net sales. Sample of digital positions Sanoma has been recruiting in 2011/2012 Director Consumer Marketing & Sales Feb 2012 Graphic designer April 2012 Digital Marketing planner May 2012 Digital planner May 2012 Head of Online Analytics and Insights Feb 2012 IT Manager Nov 2011
  17. 17. 17 H ow M agenta A dvisory can he l p yo u r organi z ation ? Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research How Magenta Advisory can help your organization? CAPABILITY BUSINESS STRATEGY CONCEPT CONCEPT CAPABILITIES EXCELLENCE DEVELOPMENT Vision and mission Business concept Vendor selection Management for hire definition definition Program management Key performance Strategy definition Customer value Program audits indicator definition Target setting proposition design Business performance Use case definition Strategy roadmap Best practice analysis benchmarks Operating process creation creation Performance Business model Business requirements management definition Organization design establishment definition and ramp-up Business case creation Detailed business case Development creation Training & change roadmapping Competitor analysis management Program planning Magenta Advisory helps both top management and operative teams cre- Figure 11: ate competitive advantage digitally. Be it strategy creation or continuous Sample of Magenta Advisory services optimization of digital business operations, we commit to helping our clients become digital leaders. Magenta Advisory can help your company in its’ digital transformation to outperform the competition. In Figure 11 we have selected a sample of services we offer across a clients digital transformation. We believe in building long-term relationships with our clients to work with them throughout their digital transformation. Our clients choose us and stay with us because: • We are leading experts in digital and multichannel business • We understand digital channels should be business and facts driven • We have a track record of helping our clients succeed • We understand both multinational and local brands • We deliver results
  18. 18. 18 abo u t the a u thors Digitally Outsmar t The Competition During The Recession | Magenta Advisory Research About the authors Mia Folkesson is a Partner at Magenta Contact information Advisory. Mia is a leading expert in digital business transformation, digital capability Magenta Advisory building and operational excellence. Mia has a background in successfully driving Bulevardi 6 A 12 complex international digital business 00120 Helsinki transformations. Finland +358 400 377 170 Juho Ullakonoja is a Consultant at Magenta Advisory. Juho is a business development specialist focusing on digital marketing and sales with industry experience covering re- tail, telecom and consumer goods industries. +358 40 757 1001 Eemeli Metsäntähti is a Consultant at Magenta Advisory. Eemeli is a business development expert focusing on digital business transformation with a background in business technology. +358 50 346 2920
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