When faced with Digital disruption, many organisations’ Digital Strategy is to set up a dedicated Digital Innovation business tasked with developing completely new, unprecedented propositions which will launch them into a whole new business model. This becomes the strategic imperative, and all Digital investment is aligned with the goal of disruptive innovation.
This is understandable. However, organisations can’t just pivot away from their existing business. They must also digitise their current operations, achieving efficiency and economies of scale, as well as explore innovative new operating models.
Which Digital Strategy is best for you?
The balance of emphasis between disruptive innovation and digitisation of current operations will depend on each company’s circumstances. Those organisation already facing disruption must concentrate on creating disruptive propositions themselves. While digitising and improving the existing business will provide some defence, the market is likely to have moved on and there will be little benefit from better operating a product or service which is no longer relevant. In contrast, organisations in markets where digitsation is leading to optimisation rather than disruption will place more of an emphasis in achieving greater optimisation of their core business, leading to lower cost, higher agility and greatest operational efficiency, maximising the impact of their Digital investment in customer satisfaction, retention and, ultimately, profitability. These profits can, in turn, be invested in a program of disruptive Digital Innovation, ensuring long-term leadership as the character of the market inevitably turns from Digital Optimisation to Digital Disruption.
External strategic focus or internal transformation?
Beyond the duality of the purpose of your Digital Transformation, organisations face another choice that appears also to have a dual nature. Should businesses prioritise a Digital Strategy, one aimed at identifying new Digital products and services to launch to the market? Or should they look at Digital Transformation, the process of transforming their core operations through the introduction of Digital technology and ways of working?
In my view, this is a false choice. Businesses must ensure they give equal emphasis to both. Digital Strategy and Transformation must be delivered in tandem, following the Digital delivery model: short, frequent iterations leading to tremendous compound change.
New Strategy, Same Strategy
Some things don’t change: the cornerstone of your strategy remains the same, namely choosing Where and How to Compete. However, the tools by which your strategy is shaped and executed have changed completely. Every one of your people, even your customers, are now active participants in shaping and delivering your strategy. Your strategy is now fluid, reactive and adaptive. While your direction of travel and principles are set, your delivery will always be changing. You’ll operate in the mode of Agile Leadership.
What is the best Digital Strategy for your organisation? Are you going to be a Disruptor, an Optimiser, or something altogether different?