Gartner Inc.

05/25/2022 | Press release | Distributed by Public on 05/25/2022 10:09

Why Avoiding Martech Risk Won’t Drive Your Success

In 1738, the Swiss scientist Daniel Bernoulli made the observation that most people dislike risk, and if they are offered a choice between a gamble and an amount equal to its expected value, they will pick the sure thing. However, as Nobel Prize in Economic Sciences winner Daniel Kahneman points out in "Thinking Fast and Slow" Bernoulli's model lacks the idea of a reference point from which individuals consider their options. Kahneman goes on to point out that in "mixed gambles where both a gain and loss are possible, loss aversion causes extremely risk averse choices. In bad choices, where a sure loss is compared to a larger loss that is merely probable, diminishing sensitivity causes risk seeking."

How does this relate to the ongoing decisions we have to make when deciding on what goes in our MarTech stack or not? I often hear from clients in the midst of their own risk/reward scenario: is it better to go all-in on a single vendor's suite of applications, or take on the burden of assembling individual best of breed tools? Unfortunately, popular IT and vendor myths may distort your judgment.

In my first research note published at Gartner, entitled "How to Choose Between a 'best of breed' and 'Integrated Suite' MarTech strategy" (Gartner subscription required), I help suggest a method by which you can reevaluate your decision making processes and provide a framework for assessing whether your assumptions are realistic or need adjustment.

By taking a holistic approach when evaluating the vendors that are in the 'consideration set', one can more easily assess key facts that are critical for making an informed decision.

A holistic approach involves "looking back" and conducting an audit of your current MarTech stack, as well as activities such as interviewing a vendor's customers to glean insights about their successes, pain points and areas in need of improvement. Gartner provides a toolkit for performing an audit of your MarTech stack (Gartner subscription required). Look forward by starting with a future vision and focus on a very specific end state that will help you achieve your business outcomes.

You can reverse engineer the trajectory for delivering your business outcomes by first creating visual timelines for each of the alternate scenarios, thus, allowing you to map out what you hope to achieve within a certain timeframe. In the case of deciding between a 'best of breed' vs 'integrated suite approach', you can pressure test the assumptions implicit in your planning by first identifying your "must haves" vs "nice to have" functions and integrations and then plotting them. You may have 2 or more visual timelines based on a myriad of variables you incorporate into your assessment, each representing a different potential reality.

By plotting everything out on a timeline, you can challenge your own hypotheses about whether your deployment schedule is overly ambitious or reflects the skills and organizational readiness of your company to embrace a high level of change.

In the research note, I help decision makers evaluate vendors' roadmaps, cultural and corporate fit, and things such as your team's current level of competency. You may find that you too are too risk averse, out of fear of making a bad investment decision. Alternatively, you may find yourself challenging long held beliefs about particular vendors and end up tweaking your timeline and making a different decision. Either way, by being cognizant of the assumptions going into your model and writing them down, you will be provided more opportunities to challenge that which may be pre or subconscious.