What is a Digital Strategy?
A coherent guiding policy with a consistent action plan designed to make organizations become knowledge-based.
The Third Industrial Revolution — the Digital one — has been going on since the 1960s, and only since the last 10 years we’ve been able to perceive its exponential nature. The reason why it is one of the 3 major humans Revolutions is that it brought the Information Age, which is creating a global knowledge-based society that spans all industries. Because the organisational principles of knowledge-based societies are different from traditional hierarchies and mental schemes, and because the transition is happening fast and at different speeds throughout the world, cultures and generations appear to have a more difficult time getting along.
Many companies managed to digitalise their products, services, or processes, and are now reaping the profits of exponential growth. Many other companies are still struggling. Especially those whose core business is not digital. The need for change from analog, mechanical, and electronic technologies to digital ones appears largely unsubstantiated for many companies, for instance in manufacturing. The key point that is being missed is that digital technologies simplify the transformation into knowledge-based organisations, where information passes more freely, is abundant, and more relevant. The relevance, correctness, and timeliness of the information are more valuable than its origin, leading to more efficiency, sales, and customer satisfaction. And ultimately, it makes for the difference between leadership and survival.
Digitalisation enables Adaptability
Recognising that a properly connected digital company operates better than a traditional organisation is easy, as examples are abundant and very visible. Admitting, however, that an organisational structure that has worked so well for many decades has become a strategic problem takes a lot of courage. For 2 reasons: first, because the consequences are not imminent, and therefore it remains a mere probability, until it’s too late. Second, because it would be an implicit admission of failure. The combination of the two is a bombshell in a traditional, carreer-oriented society. We all like to have a certain visibility over the future, and often we draw straight lines from what has happened in the past, especially if everything’s going well. But acting like no one saw it coming is a recipe for disaster. When the problem becomes apparent, it needs to be fixed under enormous pressure, which most often leads to bad decisions and failure. Only few very talented, cohesive, and lucky teams manage to save the day.
Relying on luck is hardly a good strategy, especially in transitional times, in which fluctuations and change happen on a daily basis. Traditional organizations face challenges and crisis at every change, broadly because their systems and processes are cumbersome to adapt. If something is difficult to fix or optimize, chances are that the level of tolerance for poor performance increases.
One of the fundamental benefits of digital technologies is that they make it easier to modify and adapt to change. If properly managed, this characteristic drives a culture of data-driven experimentation and healthy perfectionism. Errors are minimized because short feedback loops allow for immediate corrections. Like sailboats, knowledge-based organizations are able to navigate towards their aim even against the wind.
How to make an Organization become Knowledge-based
While keeping in mind the overarching definition of digital strategy as an approach towards becoming knowledge-based, it is time to dive into the details. The coherent guiding policy is to apply digital technologies to achieve specific business goals.
In general, this is a four-step approach:
- Identify the opportunities and/or challenges in a business where digital assets can provide a solution;
- Identify the unmet needs and goals of the external stakeholders that most closely align with those key business opportunities or challenges;
- Develop a vision around how the digital assets will fulfill those business and external stakeholder needs, goals, opportunities and challenges, and
- Prioritizing a set of digital initiatives which can deliver on this vision.
Great, where do we start?
It depends. Although there is Subject Matter Expertise in Digital Strategy, there is no standard process. The reason why Digital Transformations are difficult is because they operate on existing environments, and therefore the steps need to be prioritised, planned, and carried out possibly without service interruption. Without mentioning the need for changing mentality, and the unavoidable shifts in power.
A consistent action plan solves these issues, partially through feedback mechanisms embedded in itself. Because it is a deep organisational transformation, the only way it can work is through supportive leadership that maintain the vision of becoming knowledge-based.
One of the most effective tactics is to use a modified version of Shadow IT, specifically focused on developing the Digital Strategy. The idea is to quietly test alternatives to existing systems and quantify the increase in performance. This principle of show-don’t-tell is (a) possible because digital technologies make it possible with limited resources and (b) consistent with the notion of being knowledge-based rather than opinion-based. In practice, the tactic foresees a digitalisation task force that is composed of internal-external members, divided into multiple small teams (2–7 members). Each team tackles a different key issue. The approaches, plans, and results are shared on an online platform, and periodically mined for common learnings that are specific to each organization.
Technology is just a means to an end, not the end per se. The end is a healthy flow of knowledge. In a knowledge-based organization — and because every organization is different — it is a responsibilty of the executive leadership to define and manage the healthiness of the flow, for instance by appropriately balancing opacity and transparency.