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Digital Maturity Insight

How to create a digital strategy

by Redweb, 24 June 2020

Read Time: 5 minutes

Imagine getting in the car to go on a journey, and only deciding which way to go at the point you reach a junction. Your choices will be influenced by a mixture of past experience, second-hand knowledge and gut instinct.

Why is a digital strategy necessary?

Imagine getting in the car to go on a journey, and only deciding which way to go at the point you reach a junction. Your choices will be influenced by a mixture of past experience, second-hand knowledge and gut instinct.

The result of this adventure could be a series of unexpected surprises (good and bad), an uneventful waste of time, or somewhere in between.

But if you use this technique to reach a specific destination, you will almost certainly find yourself anywhere but where you wanted to go, especially if it requires the use of something other than a car.

Comparing a digital transformation strategy to a journey is appropriate because:

  1. It is always a multi-step process.
  2. It is far easier to get lost than reach your goal.
  3. The more ambitious the destination, the greater the need to plan.
  4. Unexpected detours are the rule, rather than the exception.

The relationship between digital strategy, business strategy and digital transformation Sometimes the terms ‘digital strategy’ and ‘digital transformation’ are used interchangeably, but they are not entirely the same thing.

While digital strategy tackles specific challenges (more on that later), digital transformation is about how your organisation changes and adapts its operations and culture to embrace the demands and rewards of digital.

However, where a digital strategy is closely aligned with a well-defined business strategy, transformation follows.

Why? Because with this alignment you stand a much stronger chance of getting the financial, organisational and cultural backing to see your digital strategy through to success. It also opens the door for digital to create a feedback loop into the business, where data, insight and technology become indispensable in shaping your long term business model.

It usually takes time, money and effort to convert a traditional organisation to a more digital-first stance. The best way to overcome the inertia is to demonstrate digital’s ability to drive business success.

Without alignment with the business, your digital strategy will be isolated, your transformation roadmap will have a dubious direction, and will lack the support of stakeholders with the power to kill it.

Diagnosis, policy and action

In his book Good Strategy, Bad Strategy, Richard Rumelt defines a good strategy as having three parts:

  1. Diagnosis
  2. Policy
  3. Action

A good example of this is a visit to your doctor. You wouldn’t make an appointment if you didn’t have a problem, and were at least able to describe it.

So, say you hurt your knee playing football. Not only is it painful, but you are having difficulty walking, let alone finding the back of the net.

Once you’ve explained this to the doctor, they will make a diagnosis; for example, in their expert opinion your painful knee is caused by a torn cartilage. They may only be able to reach this conclusion by understanding more about when the symptoms started, and what you were doing at the time.

While you might be prescribed painkillers, and advise you on how not to aggravate the injury, they will probably refer you to a specialist for treatment. This is the policy.

The knee specialist will then review your case, inspect you themselves and do more tests to learn about the exact nature of the injury. Finally, the Doctor will create a plan of action to alleviate the pain, fix the injury itself, and return you to match fitness through the right kinds of exercise.

Employing tactics to deliver a strategy

In the example of the injured knee, it is quite clear what the goal is: to be free of pain and be able to start playing football again.

The knee specialist’s course of action (surgery, recovery, physiotherapy and exercise) will contain individual steps sequenced in the right order to achieve the desired outcome.

Each action is a tactic, and the sequence is a roadmap. Each is designed contribute to the long-term outcome, or strategy, without any unhelpful steps slowing things down or doing more harm than good.

This highlights the importance of the diagnosis, policy and actions. Without actions, nothing is achieved. Without an appropriate diagnosis and policy, how do you know which actions are right?

Tactics that are mistaken for strategy ignore the true challenges, and lead to actions that may not be for the best. A doctor’s strategy will revolve around their patient’s health, not prescribing the latest techniques in keyhole surgery.

In digital terms, this could mean avoiding the temptation to use the latest technologies without first identifying where they would bring the greatest benefits, if they are indeed suitable at all.

Establishing a vision

If you were asked to name your business’s biggest challenge, you may struggle to narrow it down. Listing all its challenges may be easier.

But what about the most important challenges? How can we tell the difference between the ones that need attention, and the ones that just seem to shout loudest?

And how do we define “important” anyway? We need a way to help us focus.

This is where having a long-term vision comes in.

Going back to our journey analogy, having a vision of what we want out of our trip can help us decide what our destination should be. Would you even consider New York if you wanted a skiing holiday, or the Swiss Alps if you wanted to relax by the beach? Both are great destinations, but only for specific types of break.

An excellent place to start your digital strategy framework is with your business strategy.

Most, if not all, business strategies take a long term view—sometimes as long as 5-10 years. Because of the pace and unpredictability of change in technology, looking this far ahead for a digital strategy is extremely difficult (unless you can see into the future).

But how might digital be supporting your business strategy in 2 years time? What do you think your operations and customer-facing touch points will look like then?

Plotting a strategy based on this vision allows us to:

  • identify the challenges that will get in the way of that vision
  • filter out the challenges that don’t relate to that vision, and may get in the way
  • factor in the changes to the sector, competitor and digital landscape that will have an impact on our success
  • broaden our thinking to encompass areas and ideas that we hadn’t considered before

Also, this vision acts as a North Star as we put our strategy into action.

Just like a sailing boat having to tack and jibe to make progress upwind, it’s rare that our digital roadmap will be able to take us directly to our intended destination. Budgets, resource constraints, and dependencies mean that how we get from A to B may not be a simple straight line.

Furthermore, the day-to-day life of any business is full of unforeseen hold-ups and roadblocks that can force a detour.

A visible and fixed North Star allows us to understand the impact of these detours, and helps us perform the necessary course corrections to remain heading in the right direction.

Assessing capabilities and challenges

If our long-term vision helps us understand which challenges to tackle, we still need to figure out how to tackle them.

The best place to start is almost always with your audience—the people you are trying to serve and/or derive value (financial or otherwise) from. No business can survive without its customers, so they probably form the foundation of your business strategy.

But do you even really understand them? In the context of your organisation, what do they feel and how do they behave?

Also, where in their own lives do you and your digital footprint fit? Why might they be interested in doing business with you? How have they found you? Who else have they researched or spoken to? A common mistake is to assume that everything begins and ends with your website.

Real peoples’ customer journeys are rarely, if ever, conducted entirely in the digital space . They speak to people, consume traditional media and draw upon past experiences. They may complete their task in one sitting, or spend months considering. They may be able to complete their tasks entirely online, or not.

While your instinct may be to dismiss some of the seemingly more esoteric aspects of how people think, experience shows that digital serves people best when it seems more human. But we can only ever hope to cater for their hopes, fears, drivers and blockers if we understand them in the first place. Finally, you cannot and must not ignore the needs of your business. Being completely customer-centric would be like running a shop and letting everybody walk away with whatever they like for free.

Just as your audience has needs we have to serve, so does your organisation. Identifying and tackling challenges that affect both is the sweet spot.

Identifying opportunities

It’s easy to visualise a Venn diagram, with customer needs on one side, and business needs on the other. Inside those circles we can plot where certain challenges lie, with those relating to both sitting nicely in the overlap.

Does this neatly give us all the answers? Maybe, but probably not. While it’s great to be able to figuratively kill two birds with one stone, you shouldn’t rule out the long-term benefits of fixing a business-specific challenge on your customers and vice versa.

For example, making a customer-focused change that costs more money than it returns in the short term, might engender greater trust, satisfaction, loyalty and word-of-mouth that will bring dividends later on. For example, Netflix started off as a mail order alternative to brick-and-mortar DVD rental outlets such as Blockbuster. Although the ability to order a DVD online was seen as an advantage, the time taken to receive the disc, and the effort required to post it back were not.

So Netflix looked for ways to beat Blockbuster at its own game, and gain traction in a competitive market. Their answer was to abolish late fees—a move that would have cost them in the short-term, but undoubtedly helped them see of the competition to become the globally renowned company it is today.

Also, many small changes can bring about big change on both sides of the equation, so there is no straightforward answer.

Fostering a culture of success

Marketing and management pioneer Peter Drucker said “Culture eats strategy for breakfast”, meaning that the greatest strategy in the world is doomed unless the organisation is prepared for it, and the people are bought in to the process.

Of course, aligning your digital strategy with your business strategy is a great start, but this only gets you top-down approval.

True cultural shift needs to be people-focused, both inside your organisation and out. In the next article, we look at how to use customer insights to create a digital first strategy.

Photo by Diego PH on Unsplash

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