Never Waste a Good Crisis – The Time for a Digital Strategy is Now
For over ten years, large and small businesses alike have been talking about the importance of Digital Strategy. Those that have invested in digital solutions have reaped the rewards during the COVID-19 pandemic. Yet many organizations still struggle with developing and executing a sustainable digital strategy in an ever-changing landscape.
First, some background on how we got here. Many business leaders mistakenly believe that digital means doing what they’ve always done except now it’s with a mobile app or via online chat. Or they view digital as the new term for what the IT function does. They fail to reflect how digital is disrupting industries, the behavioral changes along with the technology that’s driving it, and even what it means to compete. Most of all, they underestimate the momentum and scale of the disruption that is ahead of them.
It’s also important to understand what is meant by “digital”. McKinsey defines digital as the nearly instant, free, and flawless ability to connect people, data, devices, and physical objects anywhere. While implementation varies by industry, early adopters are ones you might expect such as technology and media. Other sectors such as manufacturing, healthcare, and higher education tend not to be viewed as digital leaders, though there are some areas where they are making progress, such as telemedicine and online learning.
Since companies have made progress on an opportunistic basis, you may be wondering why we need a digital strategy at all? Here are a few good reasons:
- The pandemic has resulted in an acceleration of trends that were already happening. Streaming services were eating Hollywood for lunch; home delivery was crushing retail chains and turning shopping malls into ghost towns; and work-from-home was slowly convincing large corporations of the benefits of allowing employees to stay at home more often.
- It is anticipated that by 2025, nearly 20 billion devices will be connected, almost three times the world population. Mining the data from these devices greatly enhances the power of analytics and automation, leading to brand-new business models. What’s happened with the smartphone over the past decade should be reason to pause. And no industry or business will be immune.
- Digital creates more customer value than it does for firms, which can be unnerving if you’re looking to turn a profit. The digital landscape forces the need to quickly adapt and compete in a world of shrinking profit margins and winner-takes-all economics (think Amazon).
- In the digital world, the spoils go to first-movers and some fast-followers. Why? Due to a learning mindset. They launch early prototypes, fail fast, and refine in real-time, cutting down innovation cycles from months to days. They can also scale quickly and are pushing out versions faster than their slower competitors.
That said, given the uncertainty many industries and businesses are facing, the greatest opportunity that digital offers is the ability to differentiate a business from the competition, to re-imagine business models and get closer to customers and employees. A digital strategy has, in fact, become a necessity.
So how do we get started? Here are some recommendations:
- Understand what your audience wants. Going digital means committing to knowing how your customers use technology to access what they need, when they need it. It means showing them the right thing at the right time. Not everything just in case.
- Determine where to start: Digital Optimization or Digital Transformation. Digital optimization is evolutionary; it entails improving productivity or existing products and providing better customer service. Digital transformation is revolutionary; it means developing new products and services and new business models. Focusing on growth areas and understanding your risk tolerance in advance can help guide your decision.
- Set SMART Goals. Do you want to attract more visitors to your website? Do you want to increase online shopping by 25% over prior year? Do you want to engage more customers via social media? Remember that goals must be achievable and measurable in the short and long term in order to know what you did worked.
- Develop the Plan. A goal without a plan is just a wish. Set milestones, track progress, and report results to measure success. After all, if you don’t track it, did it even happen?
- Enlist the “A” team. A visible executive sponsor and team of high-performers are key to success. Be willing to change out those who may not be supportive…never an easy thing to do.
- Select the first initiative, kickoff, and accelerate. Ensure adequate funding, resources, and leadership attention are provided. Just as important, make sure all involved have the willingness to create and nurture a digital culture along the way.
Digital is fundamentally changing businesses in many industries. It opens the doors for new entrants from unexpected places… Banks are entering the travel business and travel agents are getting into the insurance business. So, your competitors are not just who they used to be. And competitors can attack pieces of your value chain, not just the whole thing. Digital allows services and products to be mashed together quickly and cheaply. In the end, digital winners are the ones who are the disrupters and reinventors. They know that if they’re not, they’ll pay a steep price in the marketplace.