April 23, 2020
Growth

How IBM accelerated their digital transformation

This article was contributed while Nancy Hensley was Chief Digital Officer of IBM Data & AI. Nancy is now Chief Product and Marketing Officer at Stats Perform, a sports data and analytics company. 


Question: Can a 109-year-old company not only take advantage of the latest paradigm shift in growth strategy, but become a poster child for growth innovation?

Answer: Absolutely. 

IBM was founded in 1911, more than 100 year ago. I haven’t been with the company quite that long, but over the last 20 years I have seen a lot of major changes. In the last year alone, we have seen game-changing developments around how people buy software. The traditional enterprise model may not yet be a thing of the past, but there has been a pronounced shift toward a market that is driven more directly by individuals within those enterprise organizations.

The bottom line: companies need to adapt if they want to survive. 

My own role has undergone a transformation in response to this evolution. When I started with IBM, I was in core product management, but today I’m the Chief Digital Officer of Data and AI. Over the last 12 months, my team has doubled in size to take on the ever-expanding challenge of figuring out and optimizing the consumability and experience of our digital products. 

Our team’s job is to see how the market is changing—how  people consume, shop for, trial, and buy software—and evolve IBM’s strategies so we can succeed in this new world. 

Following the examples set by an 86-year-old spirits company and a very early experience pioneer hailing from the turn of the 19th century, our team embarked on an experiment to determine if we could create growth by changing the experience instead of the product. 

The results were irrefutable. 

Taking a product-led (PLG) approach that focused on improving consumability by reducing friction at key stages of the experience, we were able to create a more effective discovery and engagement path that drove impressive improvements in conversion. 

The historical inspiration for IBM’s modern innovation

People laugh, but my original inspiration for how to improve the consumability of IBM products came from the story of how an 86-year-old spirits company changed their game by changing how people consume their product. 

Jägermeister was founded way back in 1934. Some 60 years after their initial entry onto the scene, sales were flagging. Instead of changing their product (which is extremely complex to make, involving 56 herbs, blossoms, roots and fruits and a year-long maturation process), they created a new way for people to consume it: the Jäger Bomb. Almost overnight, their product went from collecting dust on barroom shelves to capturing 40% of the UK shot market. 

After slogging through the same old growth case studies about unicorn startups like Uber and Airbnb, I was delighted to finally have found a story about an established brand that was able to create substantial incremental growth by changing the experience around its product rather than the product itself. 

This story greatly influenced how my team approached our primary challenge: improving trial-to-paid conversion. No small task. The Jäegermeister story was particularly relevant because the product we chose to use in our experiment is a 50-year-old product called SPSS (Statistical Packaging for the Social Sciences). Used mostly by students and academics (the majority of whom are under the age of 25), SPSS is a solid product with a lot of name recognition. Its challenge, we discovered via NPS comments, was that it wasn’t easily consumable. Feedback from users told us that SPSS was:

Hard to find — When we started the experiment, we had about 60 different sites, which meant that a Google search for “SPSS Statistics” sent people in a million different directions, many of which dead ended. This was clearly a terrible experience. 

Hard to try — Even when people did find the product, finding the trial was like climbing Mount Everest. And even when someone had the stamina to locate the trial, there was a good chance the download would fail. Again, terrible experience. 

Hard to buy — Finally, we learned that not everyone wanted to talk to an IBM salesperson in order to buy the product or related software updates. The rest of the world had been moving toward a subscription model for some time, and the people who were interested in SPSS were also interested in subscribing. 

In our initial run of the experiment, we tackled a lot of big changes. We:

  • Improved discoverability
  • Made the trial more accessible and easier to use
  • Created a subscription version of the product

What we didn’t do was change anything in the product itself.

The results were clear within a few short months:

  • We saw a substantial decline in the number of people going through the traditional buying process to purchase SPSS Statistics. 
  • At the same time, we say 2X growth in the number of subscription clients. 
  • At first, we thought this was simply a shift from one buying method to another, but then we saw that we had 93% net new clients on the subscription side. This was clearly incremental conversion.

By improving various aspects of the experience and reducing friction at key points in the customer journey, we were able to reduce the amount of time it took to buy the product by 70%. 

And that’s not even the end of the story. Based on data collected from our initial experiment, we were able to reevaluate our roadmap and develop very effective new strategies for updates in onboarding and UI. Now that we have achieved success on the experience side of things, we’re ready to start reinventing the product.

Behind the scenes – the team and the guiding tenets

Accomplishing what we did required two things: a holistically organized cross-functional team and shared dedication to a single goal, neither of which occur naturally in many enterprise organizations.

Before we really started formally focusing on creating alignment around the concept of consumability, we had a pretty traditional structure in which marketing focused on the top-of-funnel experience and product focused on the in-product experience. There was really no connective tissue between the two to ensure that the entire experience flowed seamlessly from prospect to user. 

Our team’s job—and the thing we were exploring with that initial experiment with the SPSS Statistics product—was to analyze and optimize the flow, cohesiveness, and consistency of the overall experience. We needed to really dig in and understand how easy it is to find the product, how engaging is our content, how easily does content convert to a trial, what’s the trial experience like, what’s the buying experience, how easy is it to get support, what’s the post-support experience like, and so on. 

It’s a lot of territory to cover and a lot of questions to answer. To manage all those moving parts, we built out a team that could provide perspective from all angles:

  • Marketing provided top-of-funnel and SEO expertise
  • Product helped us understand pricing and packaging strategies
  • Design was key in user research and heuristic studies
  • Customer Support and Customer Success gave us insight into user needs and perceptions
  • Technical specialists create the environment and functionality of the digital experience

Using this cross-functional approach, we organize individual contributors into squads that run across design, development, product, marketing, and every other area. Once they are established, there are 5 keys to ensuring a squad’s success:

1. Stay focused on the experience: They say it’s all about the customer, but what that really means is it’s all about the customer experience. If you focus on getting the customer experience right, you can’t help but create positive results. Good experience = happy customers = better business outcomes.

2. Always start with the data: When you really focus on the data, and it shows you how things are changing, you suddenly have a lot more clarity and certainty about what you’re doing. People “get it.” It’s easier to get everyone on board because they can see the facts in the black-and-white numbers. 

3. Have a centralized, common goal: Whether it’s a higher NPS score or a better conversion rate, you need to rally your entire team behind a single mission. Once you’ve identified what that goal is, then you can start to break down how each team and person can contribute in a coordinated way to reaching that goal.

4. Use the same metric to measure everyone: Since everyone is working toward the same goal, it makes sense to measure everyone using the same KPI. For our team, NPS is our North Star. 

5. Make sure everyone is able to contribute: Since squads are a collaboration between many different functions, there’s likely to be some “healthy” discussion along the way. That’s fine. Everyone’s opinion and expertise is valuable and should be heard. And those in-depth discussions are instrumental in helping us collectively see things differently so we can recognize opportunities. It’s helpful to note, however, that if you hit an impasse, data makes an excellent tie breaker. It will always tell you, without bias, who’s right and who’s wrong. 

The importance of consumability and customer experience in a PLG world

Transformation is always painful. Getting everyone in a large, traditional organization to work together in new and different ways is a challenge that comes with plenty of speed bumps. But the ultimate result is definitely worth the effort and it gets easier over time as your teams—like our squads—achieve wins together. They start to believe in the process and in themselves.

At the end of the day, everyone realizes that you’re all in it together. If you believe in the importance of leading—of being change makers who bring about positive transformation—you will be inspired to do what needs to be done, as a team.

In a recent all-hands call, I shared a story with my team to help them understand the importance of the work they are doing around experience. Harry Gordon Selfridge was an American innovator who founded Selfridges department store in London. His claim to fame is the invention of a new way of shopping, a new kind of shopping experience. Back in his day, Londoners shopped at places called haberdasheries where you were not allowed to touch or interact with the merchandise in any way. Not only that, but if a customer lingered too long without making a purchase, they were thrown out of the store. Harry thought this was crazy, and he decided to reinvent the shopping experience from the ground up. 

Selfridges department store not only invited customers to come in and touch the merchandise, it was also the first establishment to house a public bathroom for women. Harry also invented semi-annual sales and the concept of putting cologne and makeup on the first floor. He changed so much about the experience, that even though he was selling the same products as those outmoded haberdasheries, he was able to completely change the game. 

This is exactly what we’re doing at IBM. We’re changing the experience of consuming IBM software, and that is making all the difference.

Today, our team is separate from other functions to ensure a total focus of our efforts and resources, but I think that in the not-too-distant future the work we’re doing will become so ingrained in the fabric of our company that we won’t need to have a special office of consumability. It will just be a fully integrated part of how people consume IBM software and how everyone at IBM thinks about and executes on delivering that software. 

It’s like Harry said, “The customer is always right.” If you listen to your customer and use what you learn to transform the customer experience, the sky’s the limit.

Nancy Hensley is currently the Chief Product & Marketing Officer at Stats Perform. Previously, she was the Chief Digital Officer of Data and AI at IBM. Nancy has brought a passion for growth through innovation to all of her roles over the last 20 years and is a multifaceted leader with experience across many roles including product management, development, marketing, and sales.

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