If the new business model is addressing an entirely new set of customers, they will expect a certain way of doing business. For example, they might require a more flexible set of pricing options that can be changed in a dynamic fashion. The new customers might need to be engaged slightly differently (e.g., self-service as opposed to direct engagement). Understanding the nuances of these new customer segments will be critical to the ultimate success of this specific business model shift in the context of the broader digital transformation journey.
"Our CEO is the driver for our digital transformation. He has given us the mandate to become a digital organization."
This communications and media company was going after a new set of clients through new distribution models for content and services (with different scale and volume requirements) to diversify future revenue streams. Its goal was to have its traditional advertising business move from 65% to 35% of total revenue. To bridge the gap, the company is making new acquisitions in completely new areas. For example, it has bought sports arenas, a video game publisher/developer, and a production company to produce its own captive content.
Develop a clear approach to the way that revenues are recognized, allocated, and reported across business units (and to shareholders) based on the new business model compared with your traditional business. This will help to improve existing business processes and systems that may be ill-adapted for new businesses with different scale that require greater levels of automation for the customer engagement and revenue management processes.
Ensure that the digital business unit is working on a project to track new digital revenues and margins, separating them from traditional media businesses. This needs to be surfaced to senior executives to track performance of the digital business over time.
For each underlying digital project, identify the person responsible and the KPIs that they will use to track progress and success from the start.