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August 26, 2014
The digital world is ‘Cloud Cuckoo Land’
By: Mark McDonald

If you watched The Lego Movie you know all about Cloud Cuckoo Land. If you develop digital strategy, then it feels you live there most of the time. You can get the gist of this mystical place by looking at this excerpt from YouTube. Cloud Cuckoo Land provides a metaphor for the way the digital world works. It is confusing in the sense that there are no rules, except there are a lot of things that sound like rules. The digital world is dynamic as things are constantly changing and it is heterogeneous with different things that do not normally go together fitting in.

In the movie, Cloud Cuckoo Land has a little bit of everything unlike other Lego Lands where all the pieces are thematically related e.g.: cowboys, castles, pirates etc. This makes it the commons, where no predetermined theme allows everything to come together in innovative and creative new ways. Sounds familiar? Well it should, because that is the nature of the digital space.

Dynamic markets appear disorganized when you try to control them

Dynamic markets seem chaotic. Think about people renting rooms to total strangers or companies creating games to sell their products, or giving your product away for free to 9 out of every 10 customers. It is easy to see the world turned upside down.

“There are no signs or anything, so how does everyone know what not to do?”

Conventional wisdom uses classification to control chaos. If we can name it, describe it, define it, then we can know it, make a plan around it, measure it, etc. People have named the digital space as consumer oriented, only for the millennial generation, or just about marketing. These descriptions support a spending structure without sustained success. Reclassify the market and you are back at square one and past investments at zero.

Heavy investing in digital marketing and customer experiences by wrapping yesterday’s business in tomorrow’s technology is a temporary fix easily torn apart by those with a better understanding and ability to act. It is a risky approach that hides risk in apparent action. The result is initiatives that chase what is possible in digital without understanding the investment portfolio required to be profitable.

Strategy in moving and multi-dimensional markets

Be too focused to fail. Know what you want to achieve. Setting a course in a dynamic situation by defining customer and business outcomes defines the essence of digital strategy. Implementing a digital strategy does not require locking down your capabilities in ‘Kragle’, rather they form a direction that you are always tending toward. They let you know that you are making progress. The alternative is to let your future be determined by floating on the surface of the market or customer sentiment. It is possible to win for a time by being popular, but sustained performance requires more than being a fad, just ask any number of mobile gaming companies that have fallen out of popular favor.

Strategies in a digital world recognize that there are no rules – just like Cloud Cuckoo Land. Rather than trying to impose them from the inside-out, digital leaders have a view of strategy from an outside-in perspective.

Outside first in terms of thinking about customer wants, needs and development opportunities. They explore “who should be our customers?” not ‘who are our customers?’ in order to figure out where the future will be rather than chasing the past. This is where teams explore issues of relationships between players, their experiences, journeys and business opportunity. It would recognize what people want. In Cloud Cuckoo Land it’s about dancing, fun and creativity, all of which present real business opportunities.

Then inside thinking through how best to define, create, source and partner for the capabilities customers require. The result is a roadmap and business case for digital transformation. This is the core of traditional strategy and therefore the most likely place for people to want to start, but DON’T as chances are the context you create internally will have limited bearing or innovation in how the world works externally. Remember that President/Lord business wanted to create order by locking things down with Kragle aka Krazy glue to bring structure that required destroying creativity, energy and experience.

Decisions are the essence of strategy, so too in a digital world where there are many more decisions coming at a faster and faster rate. Rather than making the ‘old’ governance process go faster, leaders recognize the need to re-form the organization and operating model around outcomes rather than business functions or products. They know where they are ‘tending toward’ and what to expect to achieve along the way. Plans are flexible in the sense that once an assumption is proven wrong, corrective adjustments are made and evaluated. This requires understanding that any strategy is likely to be wrong at the start more often than right, so strategies and organizations need to be flexible.

Don’t be President Business

In the Lego Movie, structure tries to destroy chaos as President Business and crews of micro managers destroy just about anything they can get their hands on. Such is the fate required to drive the plot of a movie. Don’t bet on the same outcome in the digital world for the simple reason that building blocks should come apart as information and intent will always change before it can be crushed.

Remember; in digital “everything is awesome”!

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