Why the right digital strategy is essential for growing business turnover.
Why the right digital strategy is essential for growing business turnover.
The source of wealth (and intrinsically the basis of competitive advantage) of organizations and people have evolved progressively over time. In the past, land ownership held great promises for riches and value extraction either in the form of crops and/or mineral resources. The industrial revolution brought about a shift towards ownership of capital as providing organizations with a position of strength over their rivals. Access to better education and the rise of the world wide web created a new shakeout across several industries as the battlefield shifted towards a race for knowledge and innovation. Today however, the most successful organizations are math driven entities that secure their wealth by having access not only to the right data, but also to the right algorithms that are able to make sense of the world around us and make predictions for the future.
Think about the greatest organizations that hit the headlines globally. These include Google, Netflix, Amazon, eBay and Expedia. What do they have in common? Simple, they have uncovered an unrivaled algorithm that unlocks the code for understanding the environment around them and the customers they are serving. That is why in today’s data driven world, having the right digital strategy is vital in ensuring that any business keeps growing.
WHY IS A DIGITAL ROADMAP IMPORTANT IF THE WORLD AROUND US IS CHANGING ALL THE TIME?
We live in an uncertain world. Change happens all the time and unpredictably so. War, pandemics and environmental disasters have shaken several industries to the core. Technological disruption has become the order of the day. Have you ever got the feeling that the latest management report and accounts presented to you by your team were reminiscent of a long distant history that did not resonate at all with the reality of today? You are not alone. From my experience, senior managers around the world are becoming increasingly concerned about the rapid pace of change around us making any form of planning seemingly a pointless exercise. Developing a digital strategy and roadmap present even greater challenges as technology has become one of the key business disruptors in recent history.
Rest assured that despite an ever-changing world, there is tremendous value in shaping the right digital strategy for your organization. This is largely because the very process of developing a digital strategy builds a proper foundation for embracing the required digital mindfulness to know what is important within your organization, what is changing around you and how this will impact your organization. To quote my favorite motto I learnt during my Scouting days, “Be Prepared”. Indeed, being prepared to respond (as opposed to react) to unpredictable changes around you is the greatest value a digital strategy will bring to your business. This can be known as ‘Agile Digital Leadership’.
Agile Digital Leadership ensures proper synchronization between your digital strategy, business strategy and value created to your customers. Such a balancing act optimizes your potential for creating growth for your business. In practice, I have found several cases of misalignment between the business strategy and digital strategy. In simple terms, a business strategy develops a vision aimed at creating value to your customer and other stakeholders. In most cases, an organization’s business strategy builds value through a blend of several focal areas. I categorize these into four main perspectives, including: an innovation focus (flexibility and agility), an operational focus (cost and efficiency), market focus (customer experience and differentiation) and a community focus (customer, employee and stakeholder orientation). All focal areas have their merits. The best business strategies seek to create the right mix and emphasis of focal areas that best contribute to the growth of their business.
The digital strategy provides a critical roadmap on how the value defined by the business strategy of an organization could be created. This would eventually translate into higher turnover and profitability. In my view, value may be created through your digital strategy across eight different strategic levers. These include (i) customer experience, (ii) brand leadership, (iii) network development, (iv)
digital products, (v) agile and responsive change, (vi) the knowledge organization (vii) green digital solutions and (viii) lean digital strategies. These levers are not mutually exclusive. In fact, you will need to use several of these with a differentiated emphasis in your quest to align your digital strategy to your business strategy.
EVOLUTION OR REVOLUTION? WHAT IS THE BEST APPROACH FOR IMPLEMENTING A DIGITAL TRANSFORMATION ROADMAP?
Having a proper digital strategy and roadmap in place means that you can still stay ahead of your competition through progressive evolution rather than intermittent revolution. Throughout my experience in successfully implementing digital transformation projects, I always found that it was better to introduce small changes consistently along the way rather than creating a massive shakeout all at one go. The latter strategy carries with it tremendous risks and almost always creates significant casualties along the way.
As they embark on their progressive digital transformation process, organizations can use a Digital Transformation Maturity Pathway (DTMP) to support and guide them along the way. A DTMP assesses the robustness and maturity achieved by an organization on three critical components needed to make up a successful digital transformation pathway. These include processes, technology and culture. The main premise of this framework is that digital success is not achieved by having the best resources but by creating a balance between the right processes, systems and people. The impact of your digital solution is as effective as the weakest link in your chain. That is why achieving balance and coordination across these three dimensions is so important.
Once an assessment of these three variables is carried out, the digital transformation roadmap can take a business across four different maturity stages:
“Experiment as a start” to build momentum and awareness if the concept of digitalisation is still alien to your organization. By focusing on a pilot project having low hanging fruit, you will build credibility for your programme. Having gone through this stage, you wish to proceed to “Concentrate to Master a competence”. This entails prioritizing a competence that builds on your competitive advantage and dissecting it into separate core processes. Build systems and the right culture across these processes to generate the highest impact on the effectiveness of your competence.
Once such competence is mastered, you can then proceed in “spreading to consolidate the whole”. This effectively means that you will need to repeat the process across a whole range of competencies making up your competitive advantage. The completion of this stage will bring your organization to the top of its maturity. Further progress may only be achieved by “Leading through Chaos.” This pathway will require the organization to reinvent itself and use technology to disrupt the business model of its own industry thereby creating an unrivaled position. As an organization, you can decide to plan your digital strategy or not. The choice is yours. Irrespectively, your organization will change as its external environment is changing all the time. By not planning, your organization will effectively drift in a direction chosen by your environment which may lead to a precipice. Through planning, however, your organization will push its way on a course to strike gold.
