I was speaking recently at a Digital Strategy conference and chose to reflect on our experiences in assisting large corporates with their digital strategies. Many of our discussions start with executives just seeking to understand what a digital strategy should actually encompass and how to go about it. It was somewhat revealing to synthesise this experience and I thought worth sharing.
Frankly I can’t help but feel that the concept of what comprises a Digital Strategy has been hijacked in recent times. For many now it seems that any strategy that leverages the Internet of Things, Social Media, Cloud Services or Big Data qualifies as a Digital Strategy. Call me old fashioned, I remain a firm believer that Digital Strategy is about disruption and businesses should leverage the aforementioned forces either to disrupt their own traditional service and value model or that of a new target market / service segment. Frustratingly I see that in many cases thinking is limited to organically evolving existing service paradigms by leveraging the four planks of digital – which is apparently sufficient to satisfy the digital strategy KPI of the CDO or CMO or CIO.
Organic or evolutionary digital strategies abound, here are a few examples:
The airline that leverages the IoT to minimise touch points for passengers from terminal entry to boarding a plane – is just a technology enabled process efficiency play.
Providing business bankers with remote tablet access to client history and analytics does not change the service model – it is just a mobility strategy to make the bankers more effective.
A bricks and mortar retailer implementing a mobile online catalogue and purchasing – is just a me-too channel strategy.
That recently hyped manufacturer putting sensors on bearings to inform service life condition – is just another instrumentation strategy – which has been happening in capital intensive industries for years.
- Health Insurance
An insurance provider targeting a social demographic through a social media campaign is – well – nothing more than a marketing norm in the modern age.
Don’t get me wrong, all good things to do but for the most part they are just examples of leveraging available technologies in organic service and process evolution. In my world the digital strategy should support digital disruption, which give or take some fluff words should imply … disrupting the conventional ways of creating value within established markets…
So why do incumbents struggle to disrupt and why does digital disruption seem only to occur at the hands of entrepreneurial disruptors spending seed capital in a garage somewhere! This question is no different to the fundamental challenges of innovation in major corporates – and we’ve been watching major corporates struggle with this since Tom Peters was a boy. Many of the answers are found in the psychology of human behaviour and we should not be surprised:
We resist revolution, it involves risk. Innovation and disruption implies a preparedness to fail, but unfortunately major corporates are not geared to accept failure. More so they are oriented to punish it and if it’s an expensive failure then you may likely be fired.
Those charged with defining the strategies are not digital entrepreneurs. Generally they are highly experienced executives with many years (read 20+) honing the effectiveness of certain market and service models. These highly experienced, entrenched and often vested individuals are not the people who are naturally going to promote the dismantling of their traditional value models. There is something incongruent in the realisation that the oldest and inflexible and least digitally aware are in many cases being charged with driving digital innovation.
We tend to settle on strategies that everyone agrees with. We often joke that in large corporations it takes a room full of people to agree in order to move something forward and only one dissenter in the room to stop it in its tracks. There is a truth that we gravitate to a point at which consensus across senior stakeholders can be reached. Unfortunately when it comes to strategies for disruption this point represents a pretty low hurdle.
Shareholders and regulators may intervene. Large public companies do not enjoy the same freedoms of start-ups. A start-up can run under the radar of regulatory control (until it gets too big as in the case of Uber), which would attract scrutiny in an incumbent provider. Similarly, a strategy that promotes to disrupt entrenched business models may prove unpalatable to shareholders and market analysts and thus be rejected by the board, whereas a start-up has the very obligation to disrupt a market without fear of breaking the existing business.
There is an element of professional risk to lone authors and promoters of disruptive digital strategies. Daring strategies can result in the strategy being buried and personal trajectories being adversely impacted; I’ve worked with a number of executives charged with producing the Digital Strategy and I’ve known more than one of these strategies to never see the light of day.
This raises the question of whose job is it anyway! The trend is that this obligation is handed to the CIO, CMO or a CDO, but the fact is that it is not one person’s job. They are stakeholders to be sure – as a disruptive strategy must encompass the dimensions of Consumer Desirability, Business Viability and Technical Feasibility – but it is a wide ranging group of stakeholders that must come together on a journey to establish a vision for what the market will embrace, what the business can viably provide as a service and what is technically feasible to achieve. This is simply not within one person or team’s capability to deliver. Ultimately the journey of disruptive digital strategy delivery is one of inclusion, shared vision and belief across the business; a topic for another time.
While the market expects corporates to enunciate a digital strategy, the question is how many will be disruptive at any level – and how many will merely be tactical plans to leverage contemporary technologies and mediums to improve existing service and delivery models. If you are accountable for the digital strategy it is advisable to seek clarity on expectation beforehand. If the expectation is to be disruptive then you should reflect that a strategy is unlikely to be genuinely disruptive unless…
Someone in the business will be upset. If you are promoting to disrupt traditional value models then the chances are that an existing part of the business will be changed negatively. Someone will either have their market cannibalised or their traditional power and influence structures eroded.
The board will almost certainly need to know about it and approve it. The capital allocation, shareholder and market and regulatory perceptions and impacts will need to be understood and managed at that level.
Success is not guaranteed and there will likely be a need to pivot and iterate. Pursuit of the strategy will be dependent upon the preparedness of the business to realign more than once through is implementation and ultimately for its potential to fail.
As I said, not many large businesses are oriented for public failure of a strategy and for this reason large corporates tend towards the concept of “innovation incubators” or labs which play with concepts and take experiments into market in a low threat way. It’s less disruptive – but no one loses their job.
Mac is Managing Director at Enterprise Architects
Mac is Managing Director at Enterprise Architects