Digital Directions: The Third Rail
• Compensation: The business model for digital offerings often represents a departure from the past. For example, publishers in the education market have long struggled with the issue of sales compensation for digital offerings, sometimes with drastic strategic consequences. If a sales force is compensated on physical book sales, the digital ancillaries get bundled in “for free” when the book is adopted. A sale is made, but the revenue contribution for the digital component is hidden. The long-term strategic impact is a lack of digital innovation, since a business case cannot be made without revenue recognition. Alternatively, sales plans and goals can be modified to drive the sale of digital offerings to support moving toward electronic delivery. Digital strategy must be supported by organizational behavior, which in turn needs to be reinforced by compensation plans. Those organizations that get this right will realize a larger share of the digital market.