Digital Myth No. 4 — Your Company Needs A Digital Strategy
When your CEO asks you for your digital strategy, you could go away and huddle up with your team for a month and produce some voluminous document full of TLAs, only to have it sit on the shelf for the next two years. Instead, simply give your CEO a copy of your business strategy. After all, if your business strategy doesn’t already have future digital capabilities at its core, it’s unlikely to be a viable strategy.
The Truth Is That Your Company Doesn’t Need A Digital Strategy
What every company needs is a solid business strategy built around tomorrow’s digital capabilities.
Ground Your Business Strategy In Customer Value
Because technology is evolving so quickly, the ability of companies like yours to create value for customers is also changing fast. Disruptive companies create new sources of value for customers by applying emerging technology to deliver customer outcomes in new ways. Uber did this. So did Netflix. And Apple. And Amazon. In fact, our research is full of examples of B2C and B2B companies doing this every day. What all these companies have in common is their obsession with enabling better customer outcomes using their technology capabilities.
Identify Your Strategic Business Capabilities
You could spend the next five years digitizing your entire business. Many tech vendors will fall over themselves helping you to do just that if you let them. Don’t!
First, be very clear about why customers buy from you and not your competitors. Identify the business capabilities that differentiate your business in the minds of your customers. These are your strategic business capabilities. Double-down on these. Become world-class in these. And simplify as much as possible everything else in your business. Your aim in simplifying is to create a more flexible, more agile business that’s able to respond to the evolving expectations of customers much faster than today’s business with its highly tailored process. Ninety percent of your business is simply not that unique — stop pretending that it is.
Invest In Your Future Strategic Capabilities
How do you know which capabilities will drive tomorrow’s revenue? Which will create disruptive waves in your markets? The answer to these questions lies in being able to see your customer’s future through the lens of emerging technology. There are tools and techniques to help you — I shared one earlier this year (see graphic). Many technology vendors have consulting arms looking to help you shape and formulate this essential element of your business strategy. (I’ll be sharing a stream of research on a number of these in the coming weeks and months.)
Disruptive companies create new sources of value for customers by applying emerging technology to deliver customer outcomes in new ways.
Build A Road Map To Move From Today To Tomorrow
To bring your vision of your future business to life, you’re going to need to invest. Your business strategy must deal with what digital capabilities you’re going to develop to sustain the business in the future. It must also address what you’re going to stop doing today so you can focus on building tomorrow. And you have to address the expected impact on today’s business P&Ls as you pivot to the future.
Plan On Making The Change Stick
Don’t forget that one of the most essential elements of your strategy will be how you are going to change your organization. Your business culture will almost certainly need to evolve. Changing culture and changing people is hard. You must overcome organizational inertia. Be prepared to put in the effort needed to make your changes stick.
Create A Plan That Evolves
Whatever you do, don’t write a five-year business strategy and think you’re done. You’re not. Your business strategy must constantly evolve, just like your business. Think of your strategy as a minimum viable business plan (MVBP). Once you have it, test it and evolve it. Test assumptions continuously. Check it against customer expectations. Check that you’re investing where the need is greatest. Never let your plan sit idle.
Transform Your Business Continuously
Be prepared to keep changing your business. So long as enabling technologies change, so must your business. If your business strategy isn’t setting your business up for continuous evolution, you risk setting your business on a path to extinction.
Suggested Action Steps For Forrester Clients:
- Request an inquiry to discuss your business strategy.
- Schedule an executive offsite to bring everyone together around a vision of the future business.
- Select a partner to help accelerate your transformation.
Suggested Action Steps For Non-Clients:
- Attend an upcoming Forrester Forum.
- Subscribe to Forrester’s What It Means podcast series.
- Become a client and discuss your business challenges with our analysts. (I like to think we’re like business therapists, just more effective.)
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