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March 03, 2015
What is a digital strategy?
By: Mark McDonald

This question re-emerges as organizations complete their initial investments in digital technology. Much of that investment concentrated on applying new technologies to existing products, practices and processes. In that sense digital strategy was much like IT strategy – a process of selecting which technologies you will invest in and where those investments would go. This approach to strategy results in a plan or in the digital world a roadmap. Digital strategy is not IT strategy, and requires a different approach.

Going mobile, adding analytics, or extending the online experience begs the question what’s next? These investments often changed the form of interaction, with limited change to the function. Transforming the business with digital, particularly in the marketing area, makes sense in the face of changing consumer expectations, options and information. As organizations near the end of their first digital journey and complete their initial roadmap, the question of digital strategy re-joins the executive agenda.

The next round of digital strategy setting

What should be different in digital strategy? This is the first question to ask when revisiting this topic. Repeating the past is no guarantee of success, so understanding the directions for digital strategy is important. At the highest level there are two options available.

The first option calls for extending digitization by repeating the current digital playbook to cover new functions and processes. That is the path IT took as it automated and integrated functions across the organization. Starting with ERP, the strategy repeated itself for customer relationship management, supply chain, sales force, product development and other functions. Digitizing HR, Financial Management and other functions provide examples of strategies based on applying new technology to existing activity.

Transforming activity, and therefore the business, is the second option for digital strategy. This was an initial promise of first generation digital strategies but one that often fell back into prior IT transformation habits in the face of organizational, governance, and other legacy roadblocks. Taking this path recognizes the work that has been done but asks the question – should digital strategy be more of the same or can it be different? It is an important distinction and a question that requires a thoughtful response.

Refining the definition of digital and strategy

Experience changes understanding. Organizations have been on a power curve gaining experience concerning digital, with their understanding evolving at an exponential rate, revising the common understanding of digital.

Digital is more than a set of technologies you buy. It is the abilities those technologies create. That results in a rather expansive definition of digital that over time has simplified into the following essential elements:

Digital is the application of information and technology to raise human performance.

Human performance is the essence of digital transformation. Human performance creates the type of value that leads to revenue. Alternative goals for digital create efficiencies that largely drive down the cost of creating short-term benefits but drain the economy and growth.

Digital becomes just another technology when digital investments do not call for changing what people do in ways that enhance their ability to achieve their goals. If that is the case in your situation then the digital strategy option is simple – just spread the technology beyond its beachhead in marketing. Such peanut butter approaches fit that view of digital.

Digital technologies offer more than additional rounds of automation. Realizing what more looks like, however, involves reducing the idea of strategy to its essence. Strategy as a term has become too complex, loaded and limiting. Strategy needs to be simplified to its essential elements. Here is a suggestion:

Strategy is setting a direction, sequencing resources and making commitments.

While there is constant debate about what constitutes a strategy, direction, sequence, resources and commitment are all elements required to define transformation. Direction defines the “why” in terms of ambition and excluding alternatives. Sequence answers “when” and “what first.” Resources and commitment complete the discussion by answering “what” and “who.”

A business strategy for success in a digital world

Every technology with transformation potential starts in isolation, and digital is no exception. Mobile, cloud, process, customer, supply chain, etc. Each had its own siloed strategy before it blended into business strategy. As a result of these strategy waves the terms ‘digital’ and ‘strategy’ have become overused and misapplied terms.

Digital is no different. Digital strategy needs to become the essence of business strategy. Renewing the baseline for digital and strategy clears away the clutter, setting teams on a path for action. In that renewal a digitally informed business strategy becomes an answer to a simple question:

How can a business win using information and technology to raise human performance?

That is digital strategy, particularly after you have finished thinking of digital in the same light as IT, or as investments limited to marketing.

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