By Anne Cheng
Digital strategy focuses on using technology to improve business performance, whether that means creating new products or reimagining current processes. It specifies the direction an organization will take to create new competitive advantages with technology, as well as the tactics it will use to achieve these changes. This usually includes changes to business models, as new technology makes it possible for innovative companies to provide services that weren’t previously possible.
Oftentimes mistaken to be interchangeable with digital marketing strategy or digital transformation strategy, digital strategy differs in terms of scope — that is, it focuses on the technology, not the marketing and/or promotion of the business, nor the culture of the company.
A dive into digital strategy begets a few questions, according to this article from the Harvard Business Review:
1. Does digital technology change the businesses you should be in?
What are your distinctive assets and capabilities and how could you create a new business by combining them with digital technology? Could digital technology help you expand your company’s boundaries in the value chain downstream or upstream of your current businesses?
2. How could digital technology improve the way you add value to the business you are in?
How could digital technology make your company better at how it helps your individual businesses be more competitive in their markets?
3. Could digital technology change your target customer?
Is it eroding your target market as it did for newspapers and travel agents, or is it opening new potential targets?
4. Does digital technology affect the value proposition of your target customer?
Instead of providing a product or service for a fee, could you promise an outcome in exchange for a share of the result that digital technology allows only you to deliver, as many hospitals are seeking to do with their patient populations? Or how could you use digital technology to enhance your physical products, as Lego did by using virtual reality that enables kids to play online with its famous plastic bricks, and which had the effect of increasing demand for the real thing?
5. How can digital technology enhance the enterprise capabilities that differentiate you from your competition?
This is not about adding digital capabilities but about adding digital to your capabilities.
While one can arguably answer the above questions easily, the next step is really about executing the strategy. In order to execute any strategy, we begin with the end in mind — to first align the business’s overall strategy with that of the digital strategy, before taking a measured approach and creating the tactics that serve the purposes of that strategy. One should always endeavor to build a strategy that not only serves the current objectives of the organization but also builds the right foundation for the organization’s future.