A proper digital strategy is an integral part of the business strategy. It is essential to see the internet ecosystem as a business ecosystem. The digital strategy makes it possible to create new value models and revenue models from the social networks, in the relationships of all interested parties within the internet ecosystem.
Your digital strategy must approach the internet ecosystem as a platform, that is self-sufficient and becomes a source of revenue instead of a cost item, which achieves the set objectives and targets step by step. Within the social networks, content is the glue for this, and information is the fuel to keep the system up and running and monetise the revenue models.
Just as in military operations, is important for managers to differentiate between the objective and the strategy. An objective is a desired end result, and a target is the measurable norm. A strategy is the plan to achieve that result. You can determine that objective at various levels.
A business can strive for a certain growth percentage in sales, profit or revenue, or a certain dividend pay-out to the shareholders of a company. People can also set objectives for each individual manager, so that the company as a whole can achieve a specific objective. This is how managers who reach a certain market share, can consider that as a measure for their performance.
The main objective (of an organisation) could be a rise in the market share with a certain percentage, the target in that case would be the time period in which this rise must be achieved. An objective could also be expressed at the level of individual products in terms of market share, profit rate and client satisfaction. This is directly related to the company value.
Other, primary objectives of organisations can for example be related to the supporting the sales of other products from the sales line. For example, a newspaper may have a Sunday edition, only to build up the sales of its week editions. The importance of explicitly defined targets — or measurable norms — should not be underestimated. After all, they give aim and direction to a strategy and make it applicable. Organisations must know exactly what they want. For (managers of) organisations that clarity is no less relevant than it is for soldiers.
The development that must now take place is a balancing act between the innovative efforts that have already been made and the existing opportunities and resources. With the compilation of your digital strategy it concerns selecting efforts which:
- Connect best with the current and new targets;
- Can be implemented in the existing organisational structure most effectively with the current information provision;
- Get the best results.
Finding the right balance between the sources of information that are already available and the set targets based on the framework is key. Working in a data-driven manner is then implemented in a more focused way. The progress is made transparent in a clear way. Making the entire process manageable is the motto.
By adding focus, compiling a solid strategy and disconnect the discussion about this from automation issues, it will be much easier to oversee the data and to translate it further into efficiency, vision and results. This provides you with control over the available data as well as over the data still to be generated.
Three important pillars
It is handy to use a fixed way of working when you commence your digital transformation to achieve the greater objective. A way of working that works. A tested method which leads to fast results. Three pillars that you should consider here:
- 5 objectives — When you analyse the performance of websites and social media of organisations, then it appears that they struggle with digitisation. The effort made ‘at the front’ is often there. However, the reward at ‘the back’ is missing. Monetising digital assets and a real digital vision are still missing in many cases. With almost all organisations the context in data is missing. That is a primary component of the digital vision. Management based on the five strategic objectives (value, reputation, efficiency, acceleration and activation) is the solution for this.
- 9 steps — Organisations want more insight into the progress of processes and results. The framework allows them to get control over the organisation and to get everyone working towards the five (predefined) objectives. These objectives are needed to get the operating capital (the analogue and digital assets) to grow. This capital is: the relationship with the (potential) fan or client. Implement the nine steps which lead to a successful digital transformation and which allow an organisation to accelerate in the digital world.
- 12 analyses — Organisations create relationships with (potential) fans or clients by satiating their need for content and providing more relevant answers and content quicker and quicker. However, organisations cannot just get started with the framework and the plan. Before they can keep up with the speed of the digital world and can accelerate with regards to their competition, the 12 analyses first need to be completed. The zero point of the framework and the plan for the digitisation must first be created. The image of the digital transformation on a timeline and containing the milestones for the five objectives comes from this.
If we have to name one thing that has become clear for organisations, then it is the realisation that they have to do ‘something’ with all available data. Data within the own organisation, but primarily external data. External data can be used to enrich the profile of fans and clients.
Slowly but surely, more and more investments are made in the implementation of platforms providing context to the available data from the various sources. The issues that such a platform will solve depend on the business model used by the company and its objectives and targets. Data-driven systems are not the future, business-driven systems are. When compiling the framework, the motto is always: business first.
Having data is key, but in addition to insight into the current situation, it may be even more important to have an idea of what the future and the impact of changes will be on the strategy and policy of the organisation. Data which adds genuine value to the business model does not start with collecting and analysing data, but with formulating the ultimate objective and strategy to achieve these objectives. How do we want to manage this? What do we want to know? Which data doe we require for this, and how will we analyse that data?
Which objectives does your digital strategy serve?
- Brand Equity (brand value) — This is the financial value which is in the brand. It is generally assumed that the brand value corresponds with the cash value of future cash flows that are allocated to the brand;
- Brand Reputation Performance (brand reputation) — The tangible result of the approach in a handy graphic overview on a single A4. It shows the approach of the project and the most important milestones. From the roadmap appears the rhythm of the communication regarding the release of products and the storyline. This rhythm is the digital heartbeat of the organisation. Without a heartbeat there is no life in the digital channels. The roadmap and the rhythm directly affect the brand equity;
- Marketing Efficiency — Generally, having a brand entails high marketing costs. Nowadays, much of the marketing budget is spent in a traditional way, where the target group is now digital. By adding context to data, marketing euros can be spent more efficiently;
- Business Acceleration — For an organisation, the quick win is primarily in the acceleration of the existing revenue models using internet technology. They have to address three things to do this: data centralisation, strengthen teams with knowledge and optimisation of the technological infrastructure;
- Business Activation — Find new revenue models. Introduction of, for example, adult eCommerce, digital exploitation of content via video services and more.
Design and management
The objectives of the framework have now been set. When designing and managing your framework, you should consider:
With the performance aspect, you primarily look at how simple and fast the information is available. With manageability you look at how simple it is to add new sources without it costing too much. Finally, with scalability you look at the amount of data that can be added without the costs getting out of hand.
These days, setting up a framework is not as complex and a lot cheaper. This trend is the result of the advent of reliable cloud services and the economic crisis. One does this by opting for a Platform as a Service solution (PaaS). With PaaS you have the option to store data and to process it without having to manage the supporting hardware and you do not have to worry about hosting the platform. You can use the platform for a fixed amount (often a monthly subscription).
A good example of a platform that adds a framework to an organisation is that of Fanalists. This platform stores data and turns data into a usable data that can be deployed for marketing, communication or sales purposes.
In this chapter the outline of the framework to be used become visible. From now on the framework will be called the Business Acceleration Framework. In the chapter ‘How Paradiso became a smarter club’ we will delve deeper into the nine steps and twelve analyses which must be made and completed to allow the framework to work.
- This post is a pre-read of Part 2 — Chapter 1of my new book ‘Digital Assets’ the translation of the Dutch publication ‘Digitaal Vermogen’.
- Also read the publication ‘EDM and the Digital Domain’