Digitalisation 2.1 – Impact on Strategy
The Starting Point: Understanding One’s Own Organisational System
This article is part of a series and looks at how digitalisation affects an organisation as a whole.
The series explores how all aspects of a business are impacted and interdependent. As mentioned in the previous article, we use the 7S model as a framework, a concept which considers all essential parts of a business. The model is based on the premise that, for an organisation to perform well, 7 elements need to be aligned and mutually reinforcing. So it can be used to identify what needs to be (re)aligned or how to maintain alignment (and performance) during times of change. It effectively illustrates the organisational impact when managing accelerated change.
STRATEGY & Digitalisation
Let’s start today with the first ‘S’, Strategy, and the impact technologies will have on strategy formulation and execution.
Strategy formulation needs to start with a clear understanding of market dynamics, opportunities and customers. We are not referring to usual corporate exercises here but to a much more insightful, practical and informed (i.e. data-driven) approach. For example, analytics technology is allowing businesses to serve and interact with their customers in innovative ways. Cutting-edge businesses use the technology for activities as diverse as picking up early warnings of design failures from users’ tweets or tracking consumer behaviours to predict what ads to display and when (as does ebay, Amazon).
At this point it becomes clear how dependent on and revealing of company culture strategy development is. Commonly, in big corporations and more traditionally managed firms, strategy is developed and decided at the top whilst lower levels are asked to implement; find ways to achieve strategic objectives. It is very much top-down.
Modern technologies provide not only real-time insight into changing market demands but also instant feedback when implementing strategies – for example when trying out new marketing and sales techniques. The single most effective marketing channel in today’s best marketing campaigns is video. However, this is the traditional one-way approach. We are referring to a much more engaged approach. For example, implementing the strategic actions, gaining information, providing feedback into what works and what doesn’t in order to recalibrate your resources and efforts.
There are many successful examples from BestBuy to Nature Air. The latter carried out quite a lot of tests on their website to gain insight into what works best. They discovered that their ‘call-to-action’ wasn’t strong enough and, by getting additional qualitative feedback, managed to relaunch and increase conversions from 2.78% to about 19% – nearly 6-fold.
It is paramount for any organisation to properly translate its overall strategy into the different functional strategies (e.g. sales, marketing, operations), and to align these with the digitalisation strategy or, better still, embed digitalisation.
Furthermore, organisations must focus on delivering a seamless and meaningful cross-channel engagement model for their stakeholders. The below visual shows how the engagement model has changed to date, and how it may evolve in the future. Getting this right will require an agile strategy that incorporates the latest technology as it is released and adopts a test-and-learn approach. Companies should adopt a continuous improvement strategy, launching new digital channels early and iterating based on customer feedback.
In the future, strategy formulation will be much more about focussing on key data, making sense of it and sharing insights with specific teams to re-calibrate business opportunities and strategies. As a consequence, strategic horizons will shift to 1-3 years rather than the usual 3-10 seen in many corporations.
Make sure to include all your people in finding out what works and what doesn’t. However, do not demotivate them by asking but not providing feedback. If, for whatever reason, the decision differs from the input, explain why you are taking a different approach.
Ultimately, a thorough approach to executing the strategy should consider the other areas of your business (the 6 remaining ‘S’) and their interdependencies. We have all heard of Peter Drucker’s “culture eats strategy for breakfast” and the ratio of 1:6 helps us understand why, nowadays, it is truer than ever.
To see how we integrated the 7S into what clients call a “clever and game-changing approach” when assessing business units and teams, please try our Pathfinder Freemium version.