Sunday, October 11, 2015

Digital Master Tuning #110: Five Highlights in Digital Strategy

Strategy agility is the characteristic of digital strategy execution continuum.

Digital strategy is the compass to navigate through the digital transformation journey in organizations today. So it's important to outline the strategic intent and frame the strategy to be understandable and implementable. Otherwise, people's different interpretations yield many unintended consequences. Then, it is vital to actively socialize the strategy to confirm its intent and understandability by those who will guide the implementation. Here are five aspects in crafting and implementing a digital strategy.

The digital strategy has to be top driven. C levels have to lead the effort by convincing the shareholders and middle business management about the core direction. IT often plays a pivotal role in leading digital transformation at many forward-thinking organizations today, so CIO can define IT strategy which is an integral component of the corporate level digital strategy, and plan the step-wise implementation. It’s also important in describing the psychological and organizational factors that get in the way of understanding the critical dimension of true 'digital strategy' that is about disrupting the conventional ways of creating value within established markets. So rather than how do you use information and technology to 'organically' make things better, 'digital strategic' thinking is more about how do you use it to CHANGE the game!

Digital strategy is a type of business strategy, enabled by information and technology. So once that is understood it is always going to be driven top down, whether a digital strategy has to incorporate disruption. A valid strategy that has existed for some time is a 'second mover,' in which a company validates the viability of a new, possibly even disruptive technology before employing it themselves. Although failures in some percentage of new technology-enabled business models are guaranteed and sometimes, waiting for a little maturity can put later adopters on a preferable learning/cost curve.

Building organizational capability as a preparatory step in implementing a digital strategy. There may be many elements of digital infrastructure that are foundational to almost any foreseeable digital strategy so implementing them could be viewed as a valid preparatory first step in readiness for a strategic opportunity when it is recognized. So a company must have a working group encompassing all of the relevant disciplines in place and actively monitoring opportunities in order to recognize and act on them in a time frame that will yield strategic advantage. For example, it includes establishing a data analytics capability, or organizational change capability, etc. In any case to monitor or seek disruptive opportunities requires businesses’ transformational capability with agility to adapt to changes. The corollary perhaps is that without such a mechanism, 'digital strategy' typically ends up as business as usual, IT related evolution with a fancy new title.

It’s a balancing act to make effective digital investment decisions. A key question is how much to anticipate disruptive digital business strategy by investing in information technology without either constraining the thinking and ability to pivot, which investment will tend to do, or wasting that investment when the game changes. Building flexibility, agility, sustainability and performance into applications and systems infrastructure is expensive. Building reusability into components is, likewise, expensive. The offsetting benefits for these incremental investments come only when planned-for scenarios are realized and the capabilities in which you invested get you to a desirable state more quickly, at lower cost and with less disruption than you might have otherwise. If the world doesn't cooperate or you've missed the boat on events, you may have made an unnecessarily large investment and get nothing in return. It's a balancing act. It always was and always will be.

Embracing the startup culture to move new ideas forward rapidly. Every company has to decide what strategic framework to employ and architect the enterprise, its processes, and infrastructure consistent with the plan they derive from it. The collaborative and challenging nature of this always has to come back to adding value to the business and engaging with people. The emphasis is on why companies focus on digital evolution, perhaps, digitally-enabled extensions of existing operational capabilities vs. disruption tear up the road map. For an existing organization to successfully progress almost any kind of discontinuous, or indeed the truly innovative strategy, it somehow needs to embed a start-up culture. This can and has been achieved by establishing a kind of less hierarchical organization that is able to field and move new ideas forward rapidly without the kind of psychological and process barriers.

Strategy agility is the characteristic of digital strategy execution continuum. The stepwise scenario includes: creating the strategy, aligning all your companies’ assets toward common objectives. The next step is defining intermediate goals that work towards achieving those objectives. Working backward from the end state, taking each objective or goal and breaking it down into incremental and achievable short, mid, and long-term goals, is important to the strategy implementation. Digital strategy is dynamic, emergent and convergent with corporate strategy to focus on radical digital transformation and radical innovation.

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