When It Comes to Long-Term Value, Incumbents Should Think Like Digital Disruptors

While measuring EBIDTA (earnings before interest, taxes, depreciation and amortization) may be the gold standard for valuing traditional companies, it is not how digital companies think. Successful digital disruptors focus on creating long-term value through two distinct measures: customer lifetime value (CLV)/customer acquisition costs and end-to-end customer experience. Digital disruptors are pioneers in this approach, but in fact incumbents are often in a better position to capitalize on this “digital growth engine” because they have one thing startups lack: customers. For companies to fire up their own digital growth engine, they must 1) align their customer experience goals with financial goals and operational realities, 2) optimize their customer data strategy, 3) differentiate engineering for experience, data & AI, and enterprise, 4) develop an “electronic brain” powered by predictive AI models (with feedback loops), 5) launch a data- and AI-powered omnichannel customer outreach program, and 6) transform their KPIs, structures, and incentives.