Digital Strategy is Dead
The traditional foundations businesses relied on in the past to provide a clear enterprise digital strategy, business case, and roadmap forward are non-existent today. Complexity and time to value continue to rapidly expand, while the time horizon of what can be confidently forecast/anticipated has shrunken from years to months.
The equation of ‘planning to act’ has flipped. Today, digital strategy can only be defined through action.
This is not an article about why traditional digital strategy doesn’t work anymore. It’s an article about why it can’t.
What companies need to do is ACT: Create organizational Agility, captivated Customers and transformative Technology — created and proven by doing.
ACT is much more than a handy acronym, it’s an entirely different mindset that transforms digital strategy into digitizing strategically. But before we leap into what it is, let’s take a moment to understand why it’s so important.
Why Do You Want a Digital Strategy?
Forrester predicts that “every business that exists today will undergo significant change in the next five years” and that every business is a digital business. That’s some pretty heady stuff. Let’s start by skipping past all the gee-whiz numbers, Uber stories, and dreamy videos about talking mirrors and just agree that digital is more pervasive than ever.
The breadth and depth of change digital is creating continues to expand and accelerate as it becomes more pervasive throughout customer experiences and business operations. For example, 84% of retail shoppers are using their mobile devices before or during a shopping trip. In B2B transactions, the typical customer is 70% through the purchase journey before contacting a human.
There are no guarantees that your company will be destroyed by digital, nor will it be completely immune to digital’s influence. The fuzzy truth lies somewhere in the middle and continues to change, leading to continually increasing risk and uncertainty for your company.
While today’s business landscape is obviously different than a decade ago, the reasons behind the desire for a digital strategy remain much the same, often triggered by a common set of challenges that can basically be summed up as getting unstuck:
- IT is frustrated that the business isn’t being a good partner and just tossing projects over the wall with little long-term planning or collaboration
- The business is frustrated that IT isn’t being a good partner and not responsive and accountable to requests.
- Marketing is excited/overwhelmed/scared by the wave of digital problems they are being asked to solve and manage.
- The CEO believes digital is important, and the company is doing lots of digital “stuff,” but without building much momentum or sustainable value.
- The CEO believes digital is important, but the company is not doing much with digital because leadership has struggled with how and where to start.
- The board is asking the CEO what the company is doing about digital and a response is needed.
- A competitor just released a new website / mobile app / shiny object.
A decade ago, most senior executives weren’t as concerned about all of this because digital was largely seen (and mostly was) separate from the core business. Digital was a channel, “a marketing thing,” and often something IT often owned and handled. That’s no longer true.
Today, we know that digital is a pervasive part of business. It’s not a channel, it’s a pillar of corporate strategy, a force multiplier that amplifies business efforts — and one that crosses quite awkwardly across traditional organizational silos, markets and customers. Ownership of digital is often fuzzy at best and continues to migrate from IT and marketing to P&L owners and executive leadership teams.
Obviously, the scope and scale of digital strategies needed to expand with the growing influence of digital over the years. What often took only a workshop or two in the past now takes many weeks to solve the myriad of enterprise complexities to create a clear plan, and then requires investment of tens of millions of dollars to execute over 3–5 years. And, that barely scratches the sweeping organizational impact of trying to digitize your business operations.
But the reason traditional digital strategy won’t work today is not only because it’s gotten too big, complex and daunting to execute (although that is why so few end in any significant action). The reason traditional approaches to digital strategy are no longer relevant is that they require you to believe in foundations that no longer exist:
Today There is a definable end state. There isn’t. Agreeing on a directional True North is the best you can do and it will continue to move. A detailed roadmap will control risk. It won’t. Instead it will provide a false sense of control and will actually limit your ability to achieve objectives. Benchmarks can provide clarity and build support. They can’t. At worst, they provide an easy way to rationalize kicking the can another year. A strong business case ensures executive buy-in. It doesn’t. There aren’t reliable long-term indicators on which to base financial models and defend forecasts. Plus, the reason most executives fail to act (very justifiably) on large digital strategies is due to apprehension about the broad organizational impact. Traditional decision-making processes can be applied to digital strategies. They can’t. In most cases, leaders simply want answers that don’t exist because of digital’s speed, asymmetrical growth and impact.
Changing the Game: Digitizing Strategically
Leaders have always been faced with two increasingly unsatisfying extremes when it comes to decisions about digital investments:
- Enterprise Digital Strategy: comprehensive but overwhelming
- Quick Wins: faster results, but no lasting impact, and typically leaves a trail of unused/underused technology
Digitizing strategically is a fundamentally different concept. Instead of relying on pre-defined strategy to guide action, companies today must ACT to explore, discover, learn and evolve the best path forward. It still involves digitizing the business, but in a series of very small strategic steps to better manage investment, accelerate realization of benefits, and create momentum that can drive sustainable change.
In practice, it’s as simple as quickly identifying and deploying a portfolio of bets in a matter of weeks or months, not years. Rapid measurement and iterations then determine which ideas are most viable, profitable, and successful in achieving your business goals. It’s an intentional effort to prove what positive outcomes can be generated by leveraging a portfolio versus project approach.
Compared to traditional digital strategies, there are a number of benefits to this approach:
Traditional Digital Strategy Digitizing Strategically Significant capital expenditures Limited early investment Promised benefits Proven value Cumbersome cross-functional groups Small teams Extensive internal selling Early excitement Leadership presentations Leadership participation Customer research Real-world customer learnings Project completion Organizational momentum
If all this sounds like a happy mix of lean enterprise, agile, innovation, evolutionary architecture, and emergent strategy, you’re right. If you also believe that the end benefit is quickly deploying a series of successful outcomes, you’re only partially right.
The biggest benefit companies realize from this approach is the most intrinsic. By learning to act and iterate quickly in small ways, companies begin to transform and build their most important and sustainable competitive advantage: agility.
There’s no doubt all of this can seem pretty daunting — if not literally impossible — for many traditional organizations. But there’s good news: the elements that make this such a big change dramatically lower the barriers getting started and proving the value for your company and customers.
Coming soon in this series: The SIMPLE approach to ACT.
Originally published at www.thoughtworks.com on July 18, 2016.