As more and more attention turns to digital technology (mobile, big data, social, cloud) the greater the temptation to invest in a ‘digital’ strategy. The idea sounds clear, simple and intuitive. Digital technology is complex both in terms of the technology itself and the relationships between the business and technology. That complexity and the relative unknown nature of the technology point to the need for something ‘strategic’. Consulting and vendors are feeding this need by publishing frameworks, strategies and credentials that give you the confidence to buy a digital strategy.
We have seen this before. eCommerce strategies, the ancestor of today’s digital strategies, promised the world but all too often delivered mostly an investment plans for an online channel.
The tragedy is amount of time executives and organizations spent chasing ‘rubber hits the sky’ eCommerce strategies only to create hype, misunderstanding and broken promises. In many ways IT is still digging itself out of past eCommerce strategies initiated both in IT and in other parts of the business.
It is likely that the past will repeat itself at many organizations as they fail to differentiate between what is possible, what is probable and finally what is profitable. Working through the difference between the three is the work of strategy, but it is poorly structured to fit the realities of digital technology as it concentrates on narrowing the view, creating mini-tragedies at each step of the process.
- The tragedy of the possible. Digital strategy is multi-dimensional encompassing mobile, big data, social, cloud, analytics, etc. This means that just about anything is possible making it easy to justify investments based on technology with little real business rational. Look at your first few mobile apps, were they created to prove what they could do or were they directly initiated from a business issue?
- The tragedy of the probable. Digital strategy is so new that there are few ‘standard’ solutions. The standard solutions that do exist have limited strategic or business potential as they often represent digital copies of old PC based screens and solutions.
- The tragedy of the profitable. Most digital strategies being discussed today revolve around digital substitution – replacing paper with iPads, PC’s with smart phones etc. Creating a clear connection between digital solutions, accessible customer value and addressable company revenue is tenuous in a strategic context.
Digital strategy in this context becomes a process of narrowing options and just another form of governance and control. It focuses on time outlining what is possible, force fitting that into what is probable and fundable, and then come up with an answer that is not profitable. The figure below illustrates this type of ‘technology first’ techno- business strategy in the form of an opportunities funnel.
It is all wasted effort when you start with what the technology can do and work backwards to the good business reason for applying that technology. The tragedy is that at the time it all feels terribly important and worthwhile at the time, but really becomes more about activities rather than creating results.
What do you suggest we do?
Instead of a digital strategy that starts with digital technology go small. Start with identifying a clear business outcome, goal or problem that exists in the enterprise, with customers, suppliers or associates. What needs to be tangibly different? What persistent need exists? What do customers or associated really want to do?
Finding a business goal or outcome starts the definition in an actionable and practical way that leads to customer value and company revenue. That is what we found in researching digital leaders for the recent book “The Digital Edge”. Each of the case studies we found did not have a digital strategy, per se, instead they started with a clear and specific business goal and built that goal into a digital edge definition that embodies:
- A specific a business goal, issue or objective, for example eliminating information as a source of harm to patients in a hospital, or creating a self actualizing customer experience.
- A digital capability based on a combination of digital and physical resources as digital technology along too often renders today’s creative solutions into tomorrow’s commodity applications. For example, treating the electronic patient medical record as the source of truth for patient care rather than another form of medical ERP.
- A capability that resolves an apparent or assumed contradiction to achieve the goal. For example providing high touch service in a low margin business, or giving customers greater control in order for you to deliver greater value.
- A capability that understands how customers access value to see beyond the limitations of ‘free’ or advertising based business models.
- A customer value that turns into addressable results or revenue in ways where customer behavior drives company results.
Working from the business goal, issue or objective forward not only creates clear criteria for business value and focus; but also embraces the accretive nature of digital technology solutions. This is not so much a digital strategy as an approach that roots digital technology into the business. It is an approach that allows digital capabilities to build on one another, creating an expanding set of digital abilities. The initial digital solution becomes part of a platform for other digital solutions that expand digital value potential, shown in the figure below, rather than a convergent strategy approach that narrows down the possible and probable to get to something profitable.
The figure above looks akward, but it illustrates the accretive nature of digital solutions as one solution builds on another. Here is an example. A hospital moves to electronic medical records, equipping staff with iPads to access and update information including patient ‘shift’ notes – a summary status of each patient one clinician provides to another. At the start these notes captured as text, the same way they were in the old system. But wait, a Clinician points out that the tablet has a camera and rather than composing and typing notes its possible to shoot a short few second video that does the trick. That is an example of an accretive solution.
Strategy and Tragedy
Digital strategy becomes digital tragedy when the strategy process and delvierables fail to reflect the context of the business or the capabilities of the technology. The result is not ‘bad’ per se, but it does take time, limit options and reduce the opportunity to build an expanding digital capability. Consider your eCommerce capabilities, if those investments largely resulted in new sales and marketing channels when it could have done so much more, then you know what I mean.