CIO Upfront: ‘Why you need a business strategy for digital, not a digital strategy for your business’

Kevin Fitzsimons of Element Digital Consulting writes about why organisations often get it wrong when they commit to a digital transformation.

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'Under the old model, your business could stay ‘as is’, with a bit of digital on the side. The new model forces your business to evolve, and reset its focus'- Kevin Fitzimons

Digital, in all its forms, has changed the face of business. From customer experience to sales to operations, rare is the industry that has remained fully analogue and unaffected.

Businesses have tended to address this change by creating a standalone digital strategy (or strategies), often confined to the marketing or IT departments.

While digital was still in its teenage years, this approach was understandable, if not ideal. Everyone was working out just how this new technology impacted their customers, their processes and their bottom line.

Today, this approach is no longer good enough. Digital has matured to become an innate part of our daily lives. Ninety three per cent of New Zealanders are online. Just as customers are channel-agnostic, making no distinction between digital channels and ‘everything else’, so digital must be recognised as an intrinsic part of the business strategy, not silo-ed or confined to one department.

In other words, your business no longer needs a digital strategy. It needs a business strategy for a digital world.

The distinction is critical. Under the old model, your business could stay ‘as is’, with a bit of digital on the side. The new model forces your business to evolve, and reset its focus. Digital is not a tool. Digital is not a channel. Digital is a culture of connectedness, with the customer at its heart. Your business must learn how to operate within, and take advantage of, this culture.

To paraphrase Jay Baer: “The goal is not to be good at digital; the goal is to be good at business, because of digital.”

The number one reason digital initiatives fail? Poor governance and a lack of advocacy from the top.

Kevin Fitzimons, Element Digital Consulting

Good point: ‘You need a business strategy for #digital, not a digital strategy for your business’ @CIO_NZ's @divinap https://t.co/G50EXBAX70
— Mark Innes (@Mt_Innes) February 25, 2016

Creating your strategy

A business strategy for digital will have to consider a number of new evolutions, such as the shift to user-first or design thinking, the role of innovation, DevOps and systems management, business speed and agility, and more.

Digital presents a number of opportunities - to become more efficient, productive, responsive, innovative, collaborative and agile. But which do you embrace?

Digital also presents a number of challenges. It requires certain capabilities, management structures and culture, which in turn means decisions around investment, risk appetite, scale and so on.

As with all good strategic planning, it comes down to hard choices around where-to-play and how-to-win (to borrow a phrase from A.G.Lafley and Roger Martin’s Playing to Win). How your business can deliver (or not), in the context of a digital world, should ultimately inform the strategic choices you make, and in turn, how you create a competitive advantage.

For example, I have a client operating in a highly competitive marketplace. They recognise that competitive advantage will most likely be gained by using the benefits of their size to develop a unique experience only they can offer. Their target audience skews young, so digital must be at the heart of how that experience is created and delivered. Internally, delivering the experience will require coordination between a number of business units, not just marketing and IT. It will also require a change in culture to a customer-first approach.

They have made difficult choices that recognise the role of digital as a fundamental driving force within their business and their market, and will prioritise investment in the capability and skills needed to deliver. But their digital activity is very much in the service of key business goals, such as revenue, brand position and uptake. It is not in the service of Facebook likes, banner ad impressions or web traffic.

Every choice regarding digital will have an impact on your business, and it’s a fine balance - moving too fast can be overly disruptive; moving too slow risks being left behind.

However, this integrated approach is actually easier to manage. Another example: companies embarking upon digital transformation often mistakenly equate ‘transformation’ as an investment in technology. The transformation strategy is silo-ed in the IT department, neglecting important factors such as culture or process. The transformation then faces barriers around internal buy-in, transparency and accountability, inevitably leading to delays, cost overruns or an ineffective programme. This is digital in the service of IT, not the business.

When digital transformation sits as part of the business strategy, new IT infrastructure simply becomes investment in a capability to deliver on that strategy, as opposed to being the strategy. This ensures visibility and integration from the top down, and the ability to tie investment back to key business goals.

The importance of leadership

Leadership is the other vital ingredient in this mix. The number one reason digital initiatives fail? Poor governance and a lack of advocacy from the top.

My view is that many C-level executives have, in recent years, been afraid to admit what they don’t understand about digital. Silo-ing the digital strategy into one department is a convenient way of avoiding it. But once embedded as part of the business strategy, there’s no escape.

It is important to note here that, when dealing with digital, leaders shouldn’t be afraid to admit what they don’t know. Digital is a complex beast, with multiple specialisms. Your intern will always know more about Snapchat than you do. What leaders must have is an understanding of digital’s potential impact, an eye for the opportunity and the ability to make informed investment decisions. They don’t need to know the nitty gritty of every channel or technology.

Digital is not a mystery. It’s simply a new way of thinking about how your business connects with its customers, staff and the wider market. Embracing digital as a core thread within your business strategy is recognition that the world has changed, and for your business to grow, it needs to change with it.

In summary:

When, where, why, and how you participate in digital should be firmly anchored in the business’ strategic priorities.
Digital should work in service of the business, not in service of itself.
Know your audience - a digital business is customer-led, not product or sales-led
Capability is key to digital delivery - many companies fail to invest adequately in resource and infrastructure
Digital change within a business must come from the top. Without leadership, it will not happen.

Kevin Fitzsimons is founder/strategist at Element Digital Consulting.