Placing your bet on digital disruption doesn’t have to be like playing the lottery. There is a systemic way to approach this in order to dramatically improve your chances of winning big.
Those “herd marketing” messages to CEO’s on digital strategy do have an element of truth in them. Your business needs a digital strategy now, and it has some potential pitfalls. But a digital strategy is not rocket science either. A Digital Strategy involves work related to creating the best fit strategy (Commit and Choose) and work related to its effective execution (Chase). There is a method to approaching this effectively. To draw an analogy regarding approach – ensuring that your business takes off on an effective Digital Strategy is somewhat similar to ensuring an effective airplane takeoff. There is a structured sequence of steps to get you to your digital takeoff point. I call this getting to the “digital takeoff point”.
In aviation, the takeoff point is the speed by which a pilot must takeoff (or abort if the plane is to stop safely on the runway). This isn’t just a standard number. It varies, depending on the runway length, obstacles, temperature, runway slope and the weight of the airplane. In the world of Digital strategy, each organization has a Digital Takeoff Commitment Point. It isn’t the same for all organizations, or for each takeoff. But it can be done successfully by following a sequence of steps.
First, let’s get one thing clear. Your Corporate Digital Strategy is 10 times bigger than your Digital Marketing or eBusiness strategy. It is about creating new internal and external business models based on digital technologies. It could set your enterprise up for success for decades to come. It’s a real big deal and needs to be treated as such. Here are the 7 key decision areas.
- Ownership of strategy at the highest levels: An effective digital strategy must be fully owned by the CEO and the Board. Those TV ads about GE becoming a software company aren’t coming from some mid-level executive. They are a statement of commitment to this path.
- Empowerment of the Change Leaders: This goes well beyond staffing and funding. To drive true digital disruption, you and your leadership team will need to put personal skin in the game. You need to be seen as a part of the disruption team. Jeff Bezos is known to personally participate in most of the Amazon disruptions.
- Leverage points : Your businesses leverage points differ from those in other industries and may differ from those of your competitors. Your Digital Strategy choices are your Corporate Business Strategy choices. Where are you going to place your bets – digital retail? (Amazon), big data? (healthcare), user centricity? (Zappos). These relate to your external business model. You also need to define your internal business model to support this. Where are you going to place your bets on internal capabilities – highly efficient logistics? (Amazon), product R&D? (Intel), Inventory turns (McDonald’s).
- Sufficiency : What per cent of your innovation investment are you putting on Digitization? The common mistake is to expect that your IT Functional innovation budgets need to cover all of this, as opposed to looking at digital as part of the embedded business unit and all-function budgets. You also need to test for sufficiency of the scope of work; and ensure you plan for both external Business Models as well as internal Business process execution. And finally, check for culture related plans.
- Change Model : You need to be deliberate about choosing your strategy to drive change. Your choice will depend on whether you have a “burning platform” issue or not, how quickly you need to drive change and on whether your organization already has a highly innovative culture. You will need to choose between organic change (top down led change leaders, setting up internal disruption groups, setting and measuring goals), and inorganic change (acquisitions or creating disconnected skunk-work structures).
- Iteration : Unlike traditional big bet models, digital disruption critically depends on speed and iteration. “Innovation velocity” is a key metric. You will need to quickly iterate through many different ideas and kill most of them, in order to get to the nuggets. X (Google X) prides itself on being an idea killing machine; starting with large numbers of ideas and then killing most of them rapidly based on actual iteration.
- Culture : How do you plan to drive the culture transformation? You need someone on point to drive communication, new reward systems for driving new desired behaviors and training.
This frames the key decisions needed for Digital Takeoff. This sequence of steps will help take your enterprise to its digital takeoff commitment point. As with an airplane though, the first two important pre-requisites are to get “onto the runway” and ensure you have a good pilot.
What’s your experience here? Do you agree with these steps?