Business strategy in the digital era is one of the toughest thing to do. It requires rethinking and scaling the way you work, do business, building new capabilities while balancing the current and future. It is sometimes referred to as Digital DNA, Digital Transformation, Business Transformation in the Digital Age, and others. It is fundamentally organized into two broad things:
- The What or the Opportunity Areas: Things that make a dent in the universe however big or small it might.
- The How or the Foundations: Ways of Working that unlock the ability to significantly alter the What.
The Opportunity Areas as the name suggests refers to the big-hairy audacious problems that you want to tackle. It exists in every company and only the size and complexity grows manifold. An Opportunity Area typical leads to value creation and hence there is a direct co-relation to a key performance indicator or KPI.
Achieving a significant win in each of the opportunity area requires decomposing it into smaller goals that are often called as Use Cases. A Use Case is a collection of problem-sets which when solved leads to a capability build or unlocks a key building block of the opportunity area.
The Opportunity Areas can be categorized into the following areas based on how we define the end customer.
- Digital for Enterprise is about building products for your own company. This could be anything from revolutionizing the IT infra structure to building your AI Footprint to come up recommendations across all the functions of your company. The primary end customer for your product are the employees within the company.
- Digital for Consumers refers to new products and services that may be core or in the adjacency that needs to be delivered for the end-consumer. The primary customer for this is your end consumer. For example, no food company or a restaurant company thought about Instacart or GrubHub. They are fundamentally fine creating new food products and pay to deliver them via the channels.
- Digital for Partners includes building an approach to bring customers and partners into the ecosystem. The primary customer for this is the business you work with to reach your end-customer (or) partners like distributors. Think about this — your customers are probably facing same challenge digitally and sometimes your go-to-market channels are all disaggregated across distributors preventing you from having right data and visibility.
- Digital for Developers is about how a company can enable open innovation. The customer for this is the extended developer population that can use your infrastructure to build new solutions. Open Innovation is the concept of how you can include people outside of your corporation to participate in innovation. Large companies have access to data and capabilities and opening up that to the world can unlock a community that can then help build disruptive solutions.
The high-performing companies basically integrate all of the above to create a Digitally-Powered Growth Platform. The not-so-good performing companies or the mediocre ones crumble under the weight of politics, silos, and just end-up creating point solutions fundamentally undermining the ability to unlocking the full potential.
The foundations can further be broken down into three broad areas or in a very simple way call it ABCDE - Agile@Scale, Business Transformation, Customer Centricity, Data & Insights, Ecosystems.
- Agile or Adaptive Teams Agile and Adaptive teams is the name of the game. It is about small dedicated cross-functional teams called pods led by an able product owner building solutions to solve a big hair audacious problem.
- Business Transformation: Business Transformation is about looking at enterprise-wide problems and achieving breakthrough ways to rethink them. It could be the entire business model innovation or capabilities within a specific function and the entire change management associated with it or being clear about the journey to greatness.
- Customer-Centric Culture: Customer-Centricity is about equipping every individual both within and outside of the Agile pods to begin with a customer-first mindset. It involves building empathy, challenging status quo, and iteratively learning and building solutions.
- Data & Insights: It is about putting everything you have as data to work. It starts by creating insights for everyone to make a decision, getting more descriptive, predictive, and the utopia state which is unlocking autonomous transformation.
- Ecosystems: It is about creating the right environment for success. The typical enterprise ecosystem primarily manifests as talent, technology, partners, and the organizational structure and/or processes.
Each aspect of the ABCDE is a work stream of its own requiring massive leadership buy-in and change.
Building digital transformation strategy
Building a business strategy for digital era doesn’t happen overnight. It requires time, thought, failures, and lessons. There are large companies like GE that dedicated $4BN+ to build out a digital department and scaled prematurely and then there are companies like Honeywell and Sanofi that are learning from those lessons and rethinking their approach to scaling.
Are you wondering what does it mean for you?
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