Strategy is the new technology

Mature digital businesses are focussed on integrating digital technologies, such as social, mobile, analytics, and cloud in the service of transforming how their businesses work. Less-mature digital businesses are focused on solving discrete business problems with individual digital technologies. In this blog, we will look at how the ability to digitally reimagine the business is determined in large part by a clear digital strategy supported by leaders who foster a culture able to change and invent the new. While these insights are consistent with prior technology evolutions, what is unique to digital transformation is that risk-taking is becoming a cultural norm as more digitally advanced companies seek new levels of competitive advantage. Equally important, employees across all age groups want to work for businesses that are deeply committed to the digital process. Business leaders need to bear this in mind to attract and retain the best talent. 

Digital Maturity as a strategy 

Digital strategy drives digital maturity — companies at the early stages of what we call digital maturity are those where digital has transformed processes, talent engagement, and business models. Such organizations have a clear and coherent digital strategy. The power of a digital transformation strategy lies in its scope and objectives — Less digitally mature organizations tend to focus on individual technologies and have strategies that are decidedly operational in focus. Digital strategies in the most mature organizations are developed with an eye on transforming the business. 

Maturing digital organizations build skills to realize the strategy — Digitally maturing organizations are more likely to provide employees with needed skills than organizations at the lower ends of the spectrum. The ability to conceptualize how digital technologies can impact the business is a skill lacking in many companies at the early stages of digital maturity. 

Employees want to work for digital leaders — the vast majority of the workforce wants to work for digitally enabled organizations. Employees will be on the lookout for the best digital opportunities and businesses will have to continually up their digital game to retain and attract them. 

Taking risks becomes a cultural norm — digitally maturing organizations are more comfortable taking risks than their less digitally mature peers. To make their organizations less risk-averse, business leaders have to embrace failure as a prerequisite for success. They must also address the likelihood that employees may be just as risk-averse as their managers and will need support to become bolder. 

The digital agenda is led from the top — maturing organizations are nearly twice as likely as less digitally mature entities to have a single person or group leading the effort. In addition, employees in digitally maturing organizations are highly confident in their leaders’ digital fluency. Digital fluency, however, doesn’t demand mastery of the technologies. Instead, it requires the ability to articulate the value of digital technologies to the organization’s future.  

Digital transformation isn’t really about technology 

The strength of digital technologies - social, mobile, analytics and cloud - doesn’t lie in the technologies individually. Instead, it stems from how companies integrate them to transform businesses and how they work. A clear digital strategy combined with a culture and leadership poised to drive the transformation separates digital leaders from the rest. The history of technological advances in business is littered with examples of companies focusing on technologies without investing in organizational capabilities that ensure their impact. In many companies, the failed implementation of enterprise resource planning and previous generations of knowledge management systems are classic examples of expectations falling short because organizations didn’t change mindsets and processes or build cultures that fostered change. Also, similar shortcomings stand in the way of technology reaching its potential. There are also differences in technology use between different levels of maturity. 

As organizations mature, they do develop the four technologies (social, mobile, analytics, and cloud) in near equal measure. The greatest differences between levels of maturity lie in the business aspects of the organization. Digitally maturing companies are more likely to have a clear digital strategy than companies in the early stages. These organizations are also much more likely to have collaborative cultures that encourage risk-taking. Several obstacles stand in the way of digital maturity, a lack of strategy, and competing priorities leading the list of speed bumps. The lack of a digital strategy is the biggest barrier to digital maturity for companies in the early stages. As companies move up the maturity curve, competing priorities and concerns over digital security become the primary obstacles. To a great extent, digital strategy drives digital maturity. It is easy for companies at the early stages to have a clear and coherent digital strategy. Among the more digitally mature, effectively communicating strategy is equally important and maturing companies will have a chance to excel at it. So, the ultimate power of a digital strategy lies in its scope and objectives. We will now look specifically at the emerging contours of digital business and how companies are moving forward with their digital transformations. 

The contours of a Digital Strategy 

The digital transformation of a business is a new phenomenon, and no company has yet reached the end state nor definitively defined it. But the contours are becoming clearer, as are the practices that move companies forward. We are looking at three different trends that will impact digital strategy going forward as well as the leadership approaches and cultures needed to support them. 

Greater integration between online and offline experiences — Digital strategies will need to address the increasingly blurred distinction between the online and offline worlds. Digital technology will provide a completely immersive experience. 

Data will be more tightly infused in o processes — Organizational cultures must be primed to embrace analytics and the use of data in decision-making and processes. 

Business models will reach their sell-by-dates more quickly — Leaders of the sharing economies such as Uber, the mobile ride-services company, and Airbnb, the online accommodations marketplace, are rewriting the economics of their industries. Other disruptions are waiting in the wings. The onus is on leaders to stay ahead of the curve for their industries’ evolving business models. Whatever the end state of digital transformation turns out to be, reaching it is not simply about technology. A truism that is often lost in the face of technology hype is that digital maturity is the product of strategy, culture, and leadership. To position their organizations to move forward into a digitally transformed future, business leaders should tackle these questions…

Leaders, these questions are for you...

Does your organization have a digital strategy that goes beyond implementing technologies? — Digital strategies at maturing organizations go beyond the technologies themselves. They target improvements in innovation, decision-making, and, ultimately, transforming how the business works. 

Does your company culture foster digital initiatives? — Many organizations will have to change their cultural mindsets to increase collaborations and encourage risk-taking. Business leaders should also address whether different digital technologies or approaches can help bring about that change. They must also understand what aspects of the current culture could spur greater digital transformation progress. 

Is your organization confident in its leadership’s digital fluency? — Although leaders don’t need to be technology wizards, they must understand what can be accomplished at the intersection of business and technology. They should also be prepared to lead the way in conceptualizing how technology can transform the business. 

Addressing these questions can strengthen an organization’s ability to keep pace with digital technologies as they transform business and society. The change will be rapid and intense, and the road ahead is probably long. As Disney’s Milovich puts it, we are still in the first quarter of a four-quarter game.