THE NEW DIGITAL IMPERATIVE

All businesses today are faced with a digital imperative – this stresses the need to adapt the business’s operational core to the new digital environment that is shaping our world. Digital is no longer an optional activity to improve productivity and impress customers or peers.

Being able to successfully implement digital transformation is becoming business critical if companies are to ensure their long-term success. Business leaders are increasingly coming to realise the vital role of product leadership in bringing about that transformation. For the purposes of this report, when we discuss product leadership, we are exploring it largely through the prism of digitisation.

Undertaking a digital transition presents new and emerging challenges which require businesses to adopt innovative solutions. This involves the development of new digital platforms, processes and services. It also means attracting the right skills and talent to help transform the business. We can see that this new digital imperative is being driven by the rapid changes taking place throughout the economy and wider society as we all learn to adapt to new technology, lifestyles and working patterns, as well as new ways of accessing and consuming goods and services.

The digital imperative has been reinvigorated over the last two years. The global pandemic has helped to accelerate the adoption of new technology as companies look for new ways to reach and serve their customers, as well as attempting to find more efficient and effective ways of operating. It is estimated that Covid-19 accelerated digital transformation by seven years,¹ while over half of consumers agree that the way they consume goods and services has changed forever as a result of the pandemic.²

Which of these is most important to developing the value of your organisation?

Enhancing product offerings
Improving overall business resilience
Improving employee satisfaction

Against this backdrop, customers typically expect more from companies, putting pressure on businesses to improve their responsiveness, convenience and – during a cost-of-living crisis – the ability to maintain low prices. The cost of living is significantly and increasingly weighing on people’s minds, with 84% of consumers worried about it in May 2022, up from 52% in February 2022.³

With customer satisfaction being a significant key performance indicator (KPI) for most businesses, our research shows that business leaders are naturally looking at ways to improve their products and services (47%) and their customer experience (47%). Ultimately, business leaders recognise the importance of product leadership when it comes to greater customer satisfaction (49%) and increasing revenue (47%).

Within that broader context, business leaders are increasingly adopting the concept of product leadership to help them carve out a competitive edge in what is an uncertain and ever-changing business environment. For many of the key challenges currently facing businesses in terms of client retention and business growth, product leadership forms an important part of the potential solution.

_{^{1 Consultancy.uk,}}_{^{Covid-19 has accelerated digital transformation by seven years}}_{^{, December 2020
2 Gate One,}}_{^{Keeping customers close: Customer-centricity in a rapidly changing world}}_{^{, November 2021
3 Gate One,}}_{^{Sustainable Shopping Habits}}_{^{, July 2022}}

Core priorities emphasise efficiency, resilience and product innovation

Over the last decade there has been a seismic shift in the way people and businesses interact with digital products and software. Digital experiences have matured exponentially, and customers in both B2C and B2B markets have come to expect, rather than be excited by, seamless digital interactions with the products they consume online. For this reason, it’s not surprising that enhancing product offerings, including technological innovation (55%), tops the list of business-critical issues.

Watch now: The importance of product leadership in meeting customer expectations

At a time when the wider economic environment looks uncertain, businesses are also striving to stay ahead of the curve, remain competitive and ultimately remain resilient. Improving overall business resilience (51%) and developing operational and cost efficiencies (49%) are among the top three focus points that business leaders feel are critical to their organisation.

...CUSTOMERS IN BOTH B2C AND B2B MARKETS HAVE COME TO EXPECT, RATHER THAN BE EXCITED BY, SEAMLESS DIGITAL INTERACTIONS WITH THE PRODUCTS THEY CONSUME ONLINE.

ESG still a low-level business priority – but could be set to change rapidly

While there is a flurry of corporate communications surrounding environmental, social and governance (ESG) activity undertaken by businesses, these are far less likely to be seen as business critical. Even though resilience is highlighted as a business priority, this is not equated with ESG sustainability issues. For example, only one-third (33%) viewed implementing net-zero-emissions plans as a business imperative.

In the next two to three years, we are likely to see a rapid step-change in the prominence given to ESG factors. As businesses put in place zero-emissions strategies – reflecting the wider national zero-emissions strategies in those countries where they operate – we can expect to see ESG featuring higher up the business agenda, especially as the failure to adapt business operations will introduce new business risks including litigation, regulatory fines and reputational damage.

This ESG challenge will potentially create a new emphasis on product leadership. Companies are likely to look for system changes to help them better capture ESG data within the business, to better identify and mitigate ESG risks, as well as support their ambition to provide customers with genuinely sustainable goods and services.

This additional new ‘green imperative’ suggests businesses are also more likely to look towards product leadership in future years. Given the strategic nature of ESG risks, it seems natural that senior business leaders should look towards the adoption of a new strategic product leadership approach which gives product managers the autonomy, bandwidth and resources to fully address these new and emerging challenges on a collaborative, enterprise-wide basis.

the business agenda, especially as the failure to adapt business operations will introduce new business risks including litigation, regulatory fines and reputational damage.

Best-in-class product-led growth

Below are our top three picks for organisations that have effectively deployed a product-led growth strategy, made possible through leadership that embedded product into the heart of the organisation’s purpose.

Slack: The strategic advantage of necessity One of the fastest-growing SaaS companies, Slack’s success was built on a simple concept. Its founders originally created the software as an internal tool to help them cope with messy, seemingly unmanageable workflows. This meant Slack was a product first and a business idea second. From the start, Slack prioritised smooth adoption and low costs to overcome the difficulties of selling to teams as opposed to individual users. The power of Slack was that its founders knew exactly what audiences needed and they focused on selling a positive product experience. By creating something genuinely useful, the business was propelled forward by the product itself, without Slack having to spend massive amounts on marketing and advertising.

Spotify: With a chart-topping product, sales will be driven by customers With its freemium-based pricing model, Spotify allows users to get a glimpse into the experience their product offers in the hope that it gets them hooked. Their strategy is based on the idea that if users enjoy the simplicity of streaming music and want to get rid of the limitations of the free version, they will buy a subscription. Spotify built sales elements into the product by adding options to create collaborative playlists and music sharing, driving users to get their friends to use the service. Its agile organisation design has also been an important element of its success. Spotify’s mini-teams or ‘squads’ are each dedicated to one feature area, ensuring that product experience is fine-tuned to users’ needs.

DocuSign: Demand for frictionless digital experiences sealed and deliveredDocuSign’s story is a classic example of product-led growth. Addressing a real pain point of remote working, sales of its eSignature product took off during the pandemic. Early on, DocuSign started to leverage not only demographic, but also technographic data on its current and prospective customers. Understanding the technology its prospects use enabled DocuSign to not only predict who is likely to become a paying customer, but also respond to users’ specific needs according to their unique day-to- day digital experiences. The company also used a natural network effect. With businesses using the eSignature product to sign contracts with clients, DocuSign’s existing customer base actively exposes new prospects to the product experience.

Where do you feel your business is in its product journey?

Not started it - unlikely to do so
Not started it - on the agenda
Early stages – developing plans and resources
Intermediate - product leader with a strategic plan
Fully developed - product leader delivering benefits