The Power of an Effective Digital Strategy: How to Win in the Digital Landscape

As we witness the digital era in full effect, we see an increasing convergence towards greater technological homogenization within businesses as they begin to compete on the proposition of integrating superior technologies within traditional operational paradigms. However, as new market entrants arrive, long-standing firms witness a radical shift in their profit margins and revenue pools as disruptors begin competing on technologically advanced business models that cater to consumer demand. Unless firms are able to host exceedingly malleable IT infrastructures that can be altered in almost real-time, navigating the digital era without an effective digital strategy proves almost impossible. Why? Because the rate of digital evolution is far too radical for businesses to respond.

The Importance of a Digital Strategy

With companies participating in aggressive digital transformation, the ability to successfully rethink business operations through digitization goes beyond the act of technological realization. Rather, success relies on the development of a “clear digital strategy supported by leaders who foster a culture able to change and invent the new[1].  This is because digital transformation has little to do with the actual technology. Instead, the power lies in how the technologies are integrated to transform the landscape of operational processes.

With this being said, it is no surprise that as digital penetration becomes increasingly realized through the rise of digitally native incumbents, the key differentiator separating firms who experience profit growth and firms who do not is the existence of an integrated digital strategy.

In developing a digital strategy, firms enhance their capacity to perceive digital threats and opportunities, they better understand the economic, organizational and cultural scope of new technological investments, and they experience greater planning and coordination between activities across the functional areas and business units.

How to Become a Digital Winner

As we enter an era of digital disruption, companies are persistently looking for innovative ways to assume stronger market positions. While some firms are struggling to navigate the technological revolution, other firms are capturing more value than ever.

So, apart from creating effective digital strategies, what else are these businesses doing?

1. Investing in supportive leaders

While business leaders understand the opportunity of digital transformation, they often fail in their endeavors by underinvesting in the necessary changes that enable successful integration; that is, the business model and the organizational culture. With 80% of companies that sustain strong work cultures experiencing performance breakthroughs[2], the importance of investing in leaders who are able to contribute to the ethos of the organization is highly critical. Given its significance, it is not uncommon to see digitally-advanced firms being guided by leaders who acknowledge and appreciate the strategic significance of digital transformation and cultivate a culture that is in support of change.

2. Revising existing models and strategies

As previously mentioned, being a digital firm goes beyond just having digitally-fueled products, services, solutions and engagements. Instead, it means finding innovative ways to drive primary operations via technology and simulating new operational paradigms in support of these practices. Often, engaging in transformation means rethinking entire structures, embedding and functioning on new operating principles. Therefore, businesses looking for transformation success should shift towards “rapid incrementalism[3], finding every opportunity to better refine their business model and corporate strategy.

3. Creating digital initiatives that are highly integrated

Digital initiatives often serve as a catalyst for change, helping digital leaders understand the enablers of transformation. Although organizational goals can be realized, executives often engage in delivering isolated initiatives that focus on distinct process areas rather than creating an integrated strategy that provides a holistic picture of the business goal and organizational landscape. As a result, we see business leaders disillusioned by the promise of ‘going digital’. It is therefore imperative that those seeking to lead the digital movement focus on becoming more adept in scaling the initiative across the enterprise, aligning it closely with both the strategy, capabilities and culture of the organization.

References:

[1] G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Strategy, Not Technology, Drives Digital Transformation” MIT Sloan Management Review and Deloitte University Press, July 2015.

[2] J. Hemerling, J. Kilmann, M. Danoesastro, L. Stutts and C. Ahern, “It’s Not a Digital Transformation Without a Digital Culture” Boston Consulting Group, 13 April 2018.

[3] “Your Roadmap for a Digital-First Business (Transformation at Microsoft)” Microsoft, July 2016.