A digital strategy is a key component of strategic management. Digital is driving new sources of competitive advantage, growth, and value creation. The impact and opportunities of digital will vary by industry and by function.
It focuses on using technology to improve business performance, whether that means creating new products or re-imagining current processes. It considers making wise investment choices. This is to maximize competitive advantage, growth, profit, and value. And then implementing it with discipline.
There is a need to look at three pillars: people, process and technology. It is all about strengthening the core and building for the future.
Some key statistics gathered based on an article in Forbes:
72% of companies bring tech risk into projects only after the fact, once issues arise.
50% are using stale IT risk data collected ad hoc, through conversation, anecdotes, etc., rather than real-time, normalized data from systems of record.
47% have adopted mobile apps and devices without including them in risk assessments.
87% do not consistently use data analytics to develop Key Risk Indicators.
49% of CEOs question the integrity of the data they base decisions on (according to KPMG’s recent CEO Outlook survey)
1) Align transformation with business goals
A digital strategy is most of the time part of an overall strategy typically involving AI, big data and predictive analytics technology. A 'plug and play' approach can be adopted, where actions attack specific areas of the value chain. It is a myth that the entire system needs to be revamped for a digital strategy to be successful.
The journey starts by defining what ‘success’ means to your business and establish the tools and the metrics by which it will track it. It is the creation of concrete plan or roadmap on using technology to reach business goals.
A digital strategy can also include digital services, that is revenue generating activities. Digital services, often data driven, can radically enhance differentiation and lock in customers. Examples of digital services include parking app that offers real-time personalised recommendations based on location or apps that make its user experience fun for ordering of goods and services.
2) Identify the skill mix required in IT
It is important to know who are the people your company needs and what are the skill sets your company needs to develop to support implementing the digital strategy. It is incredibly important to only identify not just capabilities but competencies.
It is crucial to develop forward looking capabilities required by looking at the strategy. Usually the first step is to develop focus on data mastery and infrastructure, as well as developing talent for that purpose.
Data mastery is about aggregating, activating and monetizing data that is still often siloed and underutilized in order to generate better products, services and business operations that will drive business success.
3) Prepare for culture change
Cultural change is about building new muscles to deliver and is important to support the implementation of a digital strategy. The most successful digital transformation and strategy is grounded in cultural change. It is about driving the organisation for a digital mindset.
BCG assessed roughly 40 digital transformations and found that the proportion of companies reporting breakthrough or strong financial performance was five times greater (90%) among those that focused on culture than it was among those that neglected culture (17%).
Cultural change can sometimes be nerve wrecking. It is akin to changing the engine of the plane when it is flying. First it will go down, and that's a scary thought, before it starts going up again.
4) Make experimenting with digital technology easy
It is important to take the time to run proof-of-concept and pilots before moving forward with any solid plan. This is especially when the technology you’re deploying is new to your company, and therefore, it is always more difficult to anticipate how things will work.
Be realistic up-front and build many stakeholder checkpoints into the plan to ensure transparent progress is being made. This will help ensure your stakeholders are actually ready for the journey, while your organisation, team, and partners are learning how to implement effectively and successfully.
5) Manage technological risk
Digital risk will vary depending on how your company incorporate technology into the core business model. Technological risk is defined as the potential for technology shortfalls to result in losses.
Thinking 'business first' is important to manage technological risk. Digital solutions need not trade-off security with business needs. It is important that companies simultaneously make digital tools easier to use while making it more secure. It requires hands-on experience and critical thinking.
Digital is fundamentally shifting the competitive landscape. You should embrace the full range of strategic possibilities and risks that digital brings. Digital strategies fail more often because of too little ambition rather than too much. Therefore, it is important to consider your digital roadmap and how to prepare your company for the future.
What do you think are the most important aspects when developing a digital strategy? A digital strategy is never a one size fits all. Share with us by leaving us a comment. If you require more information or assistance on developing your digital strategy, contact us. Subscribe to our newsletter for regular feeds.
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BCG, The Five Rules of Digital Strategy, https://www.bcg.com/publications/2019/five-rules-digital-strategy.aspx, published 29 May 2019
Forbes, How to Manage Tech Risk Proactively, https://www.forbes.com/sites/forbesinsights/2018/02/23/how-to-manage-tech-risk-proactively/#5bb9718e2b22, published 23 February 2018