The Strategy Divide – Or: Why you need to do strategy digitally

Digital Transformation, Design Thinking, Lean Business Model, Digital Change… Many such words are trending the corporate speech charts these days. Hardly a CEO who doesn’t have his own portfolio of digital pet projects or hasn’t yet hired a CDO, a chief digital officer. The ongoing hype vividly recalls the boom of the first dot com rush at the end of the 90s of last century: When we did what was called “online projects” at the time, the spirit of optimism in the board rooms was very similar: It was a mixture of the fear of missing out on something and the excitement of beginning something new. On the surface, it was only the trend words that were different at the time (such as “Online-whatever”, “Web”, “E-Business”, and cool companies put a “!”, a “24” or an “X” into their names). However, this is merely today’s equivalent of a digital strategy, not a strategy done digitally. We argue that it is high time now that corporate strategy must become digital.

More than manager’s speech: A cultural transformation

Unlike at the end of the 1990s, today we find ourselves in a phase of fundamental transformation. Compared with 20 years ago, of course the technology has made huge advancements. To name only a few: APIs, agile development methods such as SCRUM, layered system architectures, performant middle wares and of course; much, much more processing power (e.g. by comparing only Intel’s fastest consumer chip, it has become at least 12,000% quicker!). But there is another, even much more significant difference with the first internet boom. Meanwhile, not only have consumers accomplished the digital change, they have now become the main force pulling it further. It’s not only the technology that has become digital, people have become so, too. Of course I don’t mean we are all wandering the earth as robot creatures but be honest: How long ago have you last checked your smartphone? If you are like everyone else, it was on average 18 minutes ago. Chances stand at 70% that you are even reading this article on your smartphone or tablet. And chances are also, that you would not give any credit to these words if they weren’t presented to you in a contemporary format.

This is why the ongoing transformation is of such unparalleled relevance to any company: Because it’s driven by the people.

Flagship projects are OK – but strategic ones, please

As a company leader you should take this development very, very seriously. Don’t brush it off as a fashion of the time with a new website (which is finally also “responsive”) and some playful app. You really should act strategically given the speed of the transformation. Please don’t give in to the temptations of quick, isolated projects just to give you and your company the shiny facade of a digital player. Of course there is absolutely nothing wrong with digital flagship projects per se, quite to the contrary: They can fire up or accelerate change very effectively if they show success. However, being a decision maker it is your responsibility to use such projects strategically. This means, you must have an idea, where you want to go with your company and how digital is part of this vision. And by vision, we don’t mean a long term plan, we mean your ultimate goal.

The end of long term planning: A change in the way of doing business instead

This is the difference between a digital strategy and strategy done digitally: A digital strategy is something that gives you some digital fruits to harvest. You can therefore easily outsource it to your corporate development department, to McKinsey or to your new CDO. But strategy done digitally means, that you have intensively thought about the consequences of the digital transformation for your company and embraced them into the way you do business.

One of the most important changes of this transformation is the environment becoming ever more dynamic and more quickly so, too. E.g. many companies still cherish long term business plans. However, those mid- and long-term planning exercises, occupying entire staff departments, are reminiscent of communist acts of administration, they are no meaningful way of management anymore (with the exception of cash flow management).

Visionary management

What you need instead, is a vision. A good vision (along with a mission) is probably the most powerful leadership instrument of them all. A good vision achieves many beneficial effects in an organisation: It reunites the employees across hierarchies behind a common cause. It motivates people far more than money. And it influences behaviour in such a way that the company as a system becomes more focussed, agile, quick, customer oriented and therefore lastly; more successful. A good vision is not some divine inspiration; it’s the result of hard work that you can not delegate.

You might use the value proposition as a vision for a start

From our experience with many startups, there might be a short cut to a good vision: It’s the value proposition, which explains how exactly a business is creating value for a customer. Many startups don’t have an explicit vision other than their value proposition, and yet they are extremely inspiring. It’s because their cause is to resolve a particular customer problem. This can make up for a very good vision, although it was not the original intention. Done well, a value proposition can not only be translated directly into a so called “Minimum Viable Product” (that you can put into action just as one of those flagship projects we’ve talked about above). It can also drive the change in your business model very sustainably. But this doesn’t come cheap, in particular not for established organizations with a strong resistance to change: The precondition is that the value proposition (or any other vision) is really strong and bold, which requires tough decisions, such as the willingness of cannibalizing old business, and cutting off many old and cherished habitudes.

Where strategy consulting meets lean startup

This is where the classical strategy work of top management and supervisory board meets the lean startup methods from Silicon Valley. Those methods are not only extremely effective for the business development of digital products. If you understand them as instruments for corporate management and leadership, i.e. if you use them in highly strategic contexts, then you’ll arrive at what we call a strategy done digitally: It’s a vision as an ultimate goal (maybe in the form of a value proposition), and a plan how you can lead your organization towards it in the digital age.

 

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