AUGUST 19, 2018


Fix Your Funding Model Before You Think About Innovating

Ross Mitchell


We recently encountered a company traditionally focused on sales, above all else, trying to transform itself into a deliverer of high-quality customer experience. The intentions may be sincere, but accomplishing this in practice, especially for very large, established companies, requires a significant change in mindset AND process.

Often considered too late in a transformation process are funding mechanisms. While this particular company determined, rightly, that customer expectations were shifting rapidly and that they would need to evolve to a higher level of service to meet them, they failed to adequately consider all of the internal processes that would need to shift to make this happen, especially as it relates to internal project funding.

Focused on sales for so long, funding priority was heavily weighted in favor of sales projects. That is, the legacy process dictated that all projects had to make back an internal rate of return (IRR) of 15% in one year. While this may be no problem for a sales program, for a more long-term transformation focused on experience, this is an unnecessarily, even impossible, and quite often counterproductive bar to set. 

Instead, WHOA would recommend to this and other companies going through a similar transformational process to rethink metrics completely to get them more properly aligned with the new company vision. In this case, new metrics should be developed that consider things like the value added to long term brand metrics such as brand trust, brand loyalty, and customer service ratings.