In today’s quickly evolving digital world, where all is “going digital”, what does it really mean for businesses? “Digital strategy” is a loaded phrase that has many different meanings. Each business, no matter how big or small, will need “digital strategy” at one point or another, but it’s called various terms by the people within organizations. In my experience, “Digital Strategy” development can take on 4 major directions based on various scenarios.
Scenario: The team is overwhelmed with too many ideas involving enhancement of current products & services digitally or creation of new digital products & services. How do we prioritize?
- The team needs to figure out the best way to prioritize the work that they have ahead of them. Generally, they get prioritized based on political influence, resources available, or ease of implementation. However, these are not the best ways to ensure good decisions for the business.
- The decisions need to be taken with the goals of the business in mind. If a set of goals has not yet been developed, then I always urge clients to take a look at the projects with revenue/profit potential balanced against the implementation and maintenance costs. I’ve developed a methodology for our company to use with clients, by which prioritization decisions are taken through the lenses of business benefit and feasibility.
- Shaping all of the ideas into a well-laid plan requires much upfront work from the team, but well worth it when the entire team can move forward together with a common roadmap.
Scenario: Consumers are significantly changing their habits based on disruptive technology that is in play. Current products & services are in jeopardy. How do we adapt?
- The first step is to determine what are consumers doing differently, and is this based in reality for the long-term or just a hot trend for now. Understanding this market research is the driver on how to adapt the product portfolio, if needed.
- Based on the research, there are 4 main options: do nothing, update the current products & services, expand the current products & services, or create new products & services.
- A product development team is needed to create the updated product proposal along with a financial team to ensure that the business model(s) is sustainable.
Scenario: We started in the digital age… and built a core digital product that meets the needs of our key target markets. How do we expand?
- There are 4 ways to expand: 1st, serve unmet needs of the existing target markets; 2nd, deliver in another geographic market; 3rd, deliver in another industry; 4th, provide to another target audience.
- Each requires its own set of analyses; however, what the goal of expansion? Is it the usual “let’s grow revenue and be more profitable?” Setting business goals before conducting any analyses will set the guidelines for decision-making on which path to take. For example, if the goal is to grow revenue by 20%, serving unmet needs probably won’t be as big a revenue driver as delivering the same product & service in another geographic location or industry.
- Serving unmet needs of the existing target markets requires a needs assessment of the target markets, and an updated or extended product plan, including features, new revenue models (if any), time, resources, costs.
- Delivering in another geographic market requires a product assessment as to what will and will not work in the new market, new market assessment, including sales approach, implementation strategy and plan, and a financial analysis.
- Delivering in another industry requires similar analyses as to delivering in another geographic market.
- Providing to another target audience requires identification of potential target audiences and their needs, an updated product plan as needed, development of a sales strategy, and a financial analysis.
Scenario: And last but not least, financial growth is needed; both revenue and profit are the focus points for senior management. Yet, some ideas that we have to increase revenue from digital innovation will significantly impact and reduce our cash cow revenue. How do we move forward with digital innovation without disrupting our current revenue and profit?
- What can I say here, but change is inevitable. The sooner a plan for innovation is developed and put into play, the better for the long-term viability of a business. I’m not saying that management should disregard the cash cow revenue, but to lean to heavily towards protecting it without allowing seeds of digital innovation to flourish within the company is not sustainable.
- Encouraging innovation doesn’t have to be un-organized or deemed that the team is in the “wild west”. Small focused efforts with a plan for go vs. no-go decision can be accomplished, and should be proactively pursued. It’s the new flavor of a company’s R&D effort.
- Many different assessments can be required in this scenario, but the most typical ones are as follows: financial analysis, product portfolio assessment, market research and competitive analysis, multi-channel customer analysis, among others.
- It’s important as well to do an organizational infrastructure assessment to ensure that innovation is not stifled and allowed to be tested in viable ways.
Development of “Digital Strategy” needs to have senior management’s buy-in and leadership these days. It’s not enough to have a strategy team within a large organization develop strategies in a vacuum for strategy-sake, and then not implement any initiatives. And it’s not enough for small companies to think that they don’t need digital strategy. As I said at the beginning of this post, “digital strategy” is a loaded phrase. It is the development of a path or roadmap to achieve a company’s business objectives.
What are you doing for digital strategy in your company?