IMHO: You don’t need a digital strategy

Businesses have been under increased pressure, accelerated by Covid-19, to “go digital”, adopt new technologies and digitally transform. Consequently, we get asked by our boards to develop digital strategies and sit through hours of discussions and debate about which new technologies, channels and ERP systems we will use to transform the business.

The key focus of a digital strategy is usually the central technology used. I’m using “technology” in the broadest sense of the word, including new tech (AI, robotics, automation, machine learning etc.), online channels, cyber security systems, ERP systems and migrating to the Cloud, to name but a few of the technologies keeping companies busy. Sometimes, it’s the new trend that will be followed (for example, XaaS, platform strategies or subscription models).

Prioritising the technology above all else is detrimental to strategy. Along the way, in your multi-year implementation strategy, a simpler, more effective solution might present itself. In these cases, you might need to pivot to new technology. But companies that are too heavily invested in the technology part of their digital strategy struggle. Therefore, a company’s vision of where it wants to go should be technology agnostic. For example, instead of asking, “how can we increase online sales?” you should be asking, “how can we make it easier for customers to buy our products?”

When Liberty Media acquired Formula One in 2016, it set its targets on becoming the greatest racing spectacle on the planet. They listened to the biggest fan complaint: There wasn’t enough wheel-to-wheel racing. Despite inheriting an organisation steeped in tradition and embedded in a complex ecosystem with the teams and the FIA, they experimented with new ways of making races more entertaining.

Formula One set about changing the way cars and tracks are built, and how races are run, to achieve that goal. This strategy has been heavily data- and technology-centric, with Formula One partnering with Amazon Web Services and Salesforce, developing a state-of-the-art website, app and streaming service, fostering eGaming and partnering with Netflix to attract a younger and more diverse fan base, to name but a few. However, their strategy is not a digital one. It’s focused on better serving its clientele: the fans.

Once a clear vision is developed and there is buy-in from top executives and middle managers, the company can focus on how technology can be used to enable the strategy. But even then, technology is only a quarter of the puzzle. The rest are people, structure and processes. When new technologies are implemented in the organisation, the processes and tasks associated with that business area (and possibly other areas, too) inevitably change. Typically, this happens organically but with a lot of resistance and uncertainty from staff members, often taking much longer than anticipated. An employee may stop doing something that took up most of their time, but they soon fill their time doing other things. However, that “empty” period creates a lot of anxiety and fear of replacement (or downsizing) among employees. They might also need to obtain a completely new skill set for the new processes and tasks expected of them.

Second, with big technology implementations, the organisation’s structure needs to change, too. In fact, many digital transformations fail because adequate structural change did not get implemented with the transformation strategy. Teams often become smaller, but more interconnected, and new departments and divisions often need to be created.

Finally, the people element of strategy implementation is the hardest: Have we ensured adequate buy-in? What skills will people need for the company to obtain its vision? Is this strategy appropriate for the current corporate culture? If not, how are we going to change the existing culture? What communication channels will we use to communicate updates and changes? Is that communication channel two-way?

All four factors (technology, people, processes and structure) constantly interact and influence one another in organisational systems. Focusing on just one of these (like many digital strategies do) can be detrimental. In summary, you don’t need a digital strategy. You need a strategy that is enabled by technology. 

About the author

Elsamari Botha is MBA Director at the University of Canterbury. Elsamari’s research focuses on online consumer behaviour, the digital transformation of business and digital disruption and its associated technologies. Elsamari has published in leading international journals such as Industrial Marketing Management, Business Horizons, the Journal of Retailing and Consumer Services, and Public Relations Review.

The views expressed in this article do not reflect the position of the IoD unless explicitly stated.

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