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November 06, 2015
The digital strategy paradox and how you can overcome it
By: Clemens Oertel

Paradox (noun) - A statement starting with something apparently true that leads to counterintuitive or unacceptable conclusions.

Strategy used to be the domain where companies increased their certainty about the path forward by peering into the looking glass. But with digital technologies disrupting all areas of business, answering one-dimensional strategy questions—How will a certain market develop? Will customers buy our product? Will we gain market share?—no longer sheds much light on the next best step.

That's because digital disruption has made it far more complex than in the past to set and follow a strategy. Since digital penetrates to the core—in your own business, in that of the competition, and in the minds and behavior of the customer—the whole market becomes much more unpredictable.

This means companies must make decisions based on premises, ideas, and hunches that are just those—educated guesses that may or may not have anything to do with the actual business situation that eventually emerges.

It's a terribly uncomfortable situation to be in, I realize. But this is the "new normal." Companies must take calculated risks and place bets on information that is far from reliable. If they don’t, then they risk falling into the trap of “disruption paralysis,” where the chances of becoming irrelevant and being left behind are high.

In a recent Accenture Strategy study, we asked business leaders, "How do you deal with this uncertainty?" One of the answers that emerged was that leaders make a decision—despite the uncertainty. That decision is the choice to focus, and often leaders choose to focus on growth.

Look at the media groups Springer, ProSiebenSat.1 and RTL, which are experiencing growth in digital business that has little to do with the traditional markets of TV, newspapers or magazines. A press report said ProSiebenSat.1 and Axel Springer realized growth from advertising platforms, online shops and comparison portals. What did these companies do? They focused on a narrow segment of the digital business. And one that had growth potential.

A second thing leaders do is respond with more empathy toward the customer when information about the future business landscape is uncertain, unreliable or non-existent. This means engaging with customers and external partners to create something new instead of following the competition's lead.

The cosmetics company Coty did this by engaging its customers in a crowdsourcing project to select the next color palette for nail polish. Customers were highly engaged: Some 5,000 comments were placed on the project website and by the end of the project, the website had received more than 35,000 visits. A report said that the 20 nail polishes the business co-created with its customers were among the most successful of its entire collection.

These two ideas—selecting and keeping a focus, and seeking a deeper understanding of the customer—come with certain risks. Focus means being heavily concentrated in strategic decisions and investments. Therefore, I believe a strong focus will get you further than trying to do and be everything to everybody.

I'd like to leave you with a third idea in parting—the need to speed up decisions as you seek to focus and to understand end users better. Fast decisions, based on new governance structures, make it possible to do both.

And, fast decision making can be critical for success. If a strategy focus does not pan out or empathic listening to the customer fails to yield results, then follow the Silicon Valley mantra of “fail fast.” The same fast decisions that started your company’s journey down a certain road can help it turn around, if needed.

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