Digital Strategy Untangled

Brief

A digital strategy is a set of plans and directions used to reach a business objective by tapping into the digital realm.
Organizations that fail to create and successfully implement their digital strategy are likely to fall behind their peers in areas such as data driven decision, customer outreach/satisfaction and productivity.
Cost overruns, overinflated expectations, and limited organization flexibility are just a few of the challenges an entity faces when looking into creating and implement a digital strategy.
Institutions should take a holistic approach to the creation and implementation of a digital strategy.

What is Digital Strategy?

A digital strategy is the analysis, development and implementation of an entity’s digital framework aimed to drive growth and optimization through technology. It looks at the organization’s assets (people, tools, infrastructure, among others) concerning external drivers such as competition and technological advances to define strategic goals and clear steps to accomplish the entity’s desired goals.

Why is it Important?

For Customers – At the beginning of 2019, it was estimated that there were 5.1 billion unique mobile users (Source: Hootsuite & We Are Social) and this number continues to grow at a steady rate. The digital world is becoming increasingly prominent across the globe, which creates a unique opportunity for organizations to reach out to audiences at a scale never seen before. A strong digital strategy can create the right environment to maximize the benefit of a connected world.

For Employees – Happy, productive employees are considered an extremely valuable commodity to organizations. Happy employees have been shown to boost productivity by 20% in the short-term(Source: SMF). This happiness is often derived from a good work-life-balance, interesting work, learning & career development opportunities, among other areas. The right digital strategy can help organizations implement digital initiatives that decrease laborious tasks (via automation for example), improves written communication (grammar & spellchecking tool), expands customer experience (CRM excel tool or Salesforce) and provides learning opportunities (for example, online classes from institutions such as Coursera). Engaged employees with the right tools to support their operations can help ensure a productive and successful enterprise.

For Making Sense of Data – According to DOMO, 2.5 M Terabytes (2.5 quintillion bytes) of data are created every day and this number continues to grow at a rapid pace. Organizations have the potential to find a lot of insights that can be derived from data, however, without the proper tools & know-how to help generate, process and make sense of it, data is just a bunch of 0s and 1s. Digital strategy can help businesses create the right framework to use data analytics solutions and tools to help make sense of the data and drive decisions.

For Better Investment Opportunities – There is a limitless number of opportunities that can be invested in. At the same time, companies have a limited amount of resource and not all opportunities have the desired return on investment (ROI) it may be looking for. The digital strategy creates the framework to help connect business objectives to a variety of potential digital initiatives which can help guide the implementation of projects with the highest ROI.

For Better Organizational Support – There are a variety of digital tools used by businesses to support their operations. Some are “generic” such as Microsoft Office while others are niche tools to cover a certain business or department need. Now suppose that the Finance department may have hit a roadblock with MS Excel after their 10th file reached 2GB and it is taking 2 hours just to open it. Now, there are hundreds of digital solutions available in the market that can solve this specific problem, however, knowing when to use a generic solution (think Microsoft Office) and when to use a niche one is a process that can be resolved with digital strategy.

Key Challenges to an Organization's Digital Strategy

Internal Factors

Stakeholders – A lack of stakeholder management can overinflate expectations tied to digital strategy and initiatives leading to disenfranchised stakeholders with a diminished interest in future digital initiatives.
Employees – Changes to employee operations caused by digital strategy initiatives can often be a source of contention and dissatisfaction if the strategy fails to account for awareness, training, and others.

External Factors

Customer – Customer digital strategy may be poorly implemented due to an absence of relevant market research, user testing solutions (E.g. A/B testing) and others. To ensure a successful digital strategy, well researched initiatives need to be methodically implemented in association with the right tools.
Competitors – It is important to be aware of adversarial digital strategies that may influence the market and impact the outcomes of your strategy potentially yielding less favorable results.
Disruptors – Technologically inclined disruptors looking to utilize innovative digital strategies and initiatives to change the status quo of a group, segment or market may become a source of distress, however, it is important to properly analyze the situation from a positive and negative perspective and see how that impacts digital strategy.

The Triple Constraint

Cost – Does the organization have the available resources to create a strong digital strategy? Does the strategy consider resource availability or potential future availability?
Scope – Have all the key requirements being considered before endeavoring into constructing a digital strategy? Does the strategy itself take into account the key requirements needed for a successful initiative?
Time – Is there enough time available to complete the digital strategy? Does the strategy account for the time needed to implement the initiatives?
Quality – How will cost, scope & time impact the overall quality of the digital strategy & initiative(s)? Based on the assessments, would it still be viable to move forward with it?

Organizational Culture

Beliefs and ideals are considered an essential part of an organization’s core structure. To ensure that a digital strategy is successful, certain initiatives should be looked at throughout the process, which includes the implementation of digital initiatives at a later stage. A lack of consideration in this area can lead to suboptimal gains, employee resistance, dissatisfied customers, among other issues. Inspiring a culture of agility within the organization should be a part of the digital strategy and the broader overall business strategy. This in turn helps permeate a culture that has the flexibility to pivot to success at a faster pace than its competitors, an essential competitive advantage given the age of disruption society is currently in.

Data Analytics Practice

Data analytics is the process of looking at data and deriving outcomes that can support organizational decisions and improve performance (For more information about data analytics, visit our article “Data Analytics Explained”). A strong digital strategy must consider whether moving the organization towards a culture of analytics will drive sustainable competitive advantage or not, in such decisions, the use of data is essential for optimal result. It is worth noting that without the personnel with the right know-hows regarding data analytics, costly mistakes and less than optimal results may follow.

One Size Fits All Mentality

Some businesses may want to try to address business needs by utilizing a one size fits all digital strategy to cut costs or time. This can lead to a less than optimal customer experience in client related digital transformations. It can also lead to internal challenges risen by departments with diverse needs. Digital strategy should aim to navigate the needs of different stakeholders to strive for a solution that best suits diverse needs while also considering the increased cost of attempting to cover the needs of all.

Lower Barrier of Entry Driven By Technological Advances

The democratization of technology led by increased accessibility to electronics and the Internet has been a key driver in the growth of technological disruptors. For example, decades ago, small general stores were the go-to places to provide goods & services to the local community. Then, major department stores (e.g. Walmart) started to appear everywhere, driving small shops out of business. Today, technological advances are driving consumers to online e-commerce sites such as Amazon forcing competitors to re-think their overall business and digital strategy to match these new forces. Technological advances can be a two-edged sword: it can serve as a competitive advantage for forward looking, digitally inclined businesses, but also allows competitors to scale at levels never seen before. Creating a digital strategy that considers these opportunities and threats can be challenging in today’s environment.

Stuck in Yesterday's Business Model

According to McKinsey, 8% of business leaders believe that their current model will remain viable in the face of digitization. Although what worked yesterday may have achieved the desired results, understanding current and potential future environments are essential to ensure that the organization has the right digital strategy and initiatives to optimize short to long term success.

Should all Organizations and Departments have a Digital Strategy?

The answer in most cases is yes and no. It is beneficial to have, at the very least, a broad understanding of direction in which the department/organization should go while considering the following elements:

Time needed to research and implement the digital strategy, train employees among other areas.
Assets currently owned or licensed by the organization concerning other available solutions.
Budget available for digital strategy and initiatives.
Cultural impact of such initiatives as some organization’s culture may be more rigid to technological and digital changes.
Stakeholder Risk Profile must be considered with various available digital strategies.
Regulations need to be studied to ensure initiatives do not run counter to current regulatory bodies in your jurisdiction.
Know-how – Will the currently available knowledge by employee staff is sufficient to successfully implement the digital strategy? Will the organization need external resources (e.g. consultants) to help supplement current skillset, even if for a short amount of time (delivering workshops and teaching current personnel)?
Quality – Is there enough resources available to ensure that the digital strategy reaches the level of quality that satisfy stakeholder expectations?
Scope – How in-depth and complete does the digital strategy has to be for this type/size of organization?

Regardless of the breadth and scope, there are a few other questions raised by Ken Favaro of act2 under HBR’s “Don’t Draft a Digital Strategy Just Because Everyone Else Is” that is also worth considering:

Does digital technology change the businesses you should be in?
How could digital technology improve the way you add value to the businesses you are in?
Could digital technology change your target customer?
Does digital technology affect the value proposition to your target customer?
How can digital technology enhance the enterprise capabilities that differentiate you from your competition?

How can a basic Digital Strategy Framework be achieved?

Several factors need to be assessed and studied to ensure a successful digital strategy. Among several aspects, here are a few:

Disruptors Assessment – Assess the actions, technologies and solutions that disruptors are utilizing. For example, a wave of new disruptive FinTech (Financial Technology) companies entered the financial services industry, forcing traditional organizations to pivot resources to compete with the new threat.
Tool Availability and Assessments – Understand available digital tools in the market and how they may tie to the organization’s needs by assessing its functionalities and its impact on the bottom-line.
Roadmap – Create roadmaps to the key goals and initiatives the organization intends to partake in, to help guide in future implementation processes.
Consultants – Hire a consultant team to ensure that all areas of importance are covered.
Resource Hiring and Consultants– Hire the relevant professionals to augment your knowledge base and obtain the required skills to ensure the successful implementation of a digital initiative with a seamless and continuous operation.
The Market – Understand the targeted market segment and how digital solutions help to augment the business and customer experience.
Culture Shifts – Assess the company’s current culture and consider a culture shift depending on the assessment and the company’s digital strategy and goals. An agility driven mindset can help facilitate future transformations and face disruption more effectively.
Competitors – Assess the actions, technologies and solutions that competitors/peers are utilizing to gain a better grasp of the industry and its shortcomings.

Digital Strategy Untangled

Brief

What is Digital Strategy?

Why is it Important?

Key Challenges to an Organization's Digital Strategy

Internal Factors

External Factors

The Triple Constraint

Organizational Culture

Data Analytics Practice

One Size Fits All Mentality

Lower Barrier of Entry Driven By Technological Advances

Stuck in Yesterday's Business Model

Should all Organizations and Departments have a Digital Strategy?

How can a basic Digital Strategy Framework be achieved?

How Can GPetrium Help?

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