With a sigh in his voice, Forrester VP and Principal Analyst James McQuivey explained how disappointed he is to hear an executive bring up ROI. “When an executive comes to me with a question about that, we’ve already lost half the battle.”
McQuivey is the author of Digital Disruption
Unleashing the Next Wave of Innovation, a book about the rapidly evolving threats and opportunities facing just about any industry and organization with the rise of digital technology. The term “digital disruption” has hit ubiquity, but McQuivey more or less coined it, and he now travels around the country speaking to other companies about the need to innovate, adapt or die (perhaps not in such dire terms).
What he is trying to encourage in his visits and talks is risk taking and daring, and when someone asks him about ROI, it’s just the sign of a guy looking in all the wrong places. “ROI is exactly the wrong term to evaluate the future,” McQuivey said on our show “Preparing Your Company for Digital Disruption.”
Creating a new customer relationship is something that can’t be quantified in terms of ROI, he explained, but in the long term, it’s invaluable, especially when you consider McQuivey’s stakes. “Think of your digital customer relationship. How deep is it, how many minutes of engagement does it generate, and how many opportunities for expanding your product or portfolio does that relationship give you,” McQuivey asks.
“It’s not just about an ROI for that investment, it’s about even still being in business five years from now if you don’t invest in that relationship.” This idea of thinking of things in the long term is something that’s come up before on this blog and something that the business space as a whole tends to struggle with.
We talked about it in a CSR context, where the need to accumulate short term earnings for investors and look only at the quantifiable dollars on ROI has stopped companies from taking part in long term socially responsible initiatives that would change their reputation, their customer experience and stave off similar threats from competitors.
In Digital Disruption, the problem is the same. Why build a digital experience if the market isn’t there or if there’s not a proper “channel” to distribute it? But through digital and the next wave of innovative thinking, this is an opportunity that doesn’t even exist yet, and your competitors and those companies not even in your industry might be interested in grabbing that customer experience.
“The first question that you should have if you are anywhere near that industry is who is going to build that experience,” McQuivey asks. Don’t wait to find that company, he says, and aim to partner with them so that you can deepen that digital customer experience. But business isn’t always the best at seeing outside of the box or around the next corner. “We’re finding that many companies, despite the spirit being willing, the flesh is pretty weak,” McQuivey said.
ROI is the enabler for why business can’t look ahead, but at the end of the day the mindset has to be changed. Digital is changing not just the market place but the way in which business should think and operate, because even for the products that have nothing to do with digital, the experience itself needs to be approached with a 21st Century mindset. “Regardless of the industry you are in, we find in digital disruption that you have to learn to rethink the value you provide. What is the value or the benefits that you are tasked to provide,” McQuivey asked. Then we’ll talk about ROI.
Hear more from McQuivey by listening to our show “Preparing Your Company for Digital Disruption.”