Why you need a strategy for the digital age, not a digital strategy

Neil Hampson
February 22, 2019

Executive summary

Developing a successful strategy in the new world of digital, data and AI is not, as some would tell you, a separate endeavour, it’s now the most important and fundamental element of any modern business strategy.

What hasn't changed is that your strategy needs to be about hard choices: what products and services you offer and what you don’t, who your customers are and who they are not and how you go about efficiently delivering these to create sustainable economic value. The strategy development process should contain a diagnosis of what you do now and where you create value; how this might change or be disrupted in the future; some well thought out options to create new services, customers and business models; a series of initiatives stemming from this, and a commitment to change.

However, what has significantly changed versus conventional strategy development are four things: the speed and magnitude of change that technology brings; the potential rapid destruction of old business models and value chains; the significantly greater level of uncertainty, and the higher costs of failure.

Simply put, you need a robust strategy for the digital age, not a digital strategy...and the one thing this strategy cannot be is incremental.

To avoid the pitfalls of incrementalism, we have developed a series of simple rules and processes to develop a strategy for the digital age.

Some new rules

Assume your value chain will likely be destroyed. Find and fix the weak spots now and redefine how you create value before someone else does
Vision, leadership and culture count more than ever
Don’t fall too far behind or you will never catch up. You can be a successful fast follower for a while but you should assume the cost of failure is high and that the winner takes all
New digital native organisations play by new rules, they don’t respect you, your industry or widely held conventions
Banish hubris, ignorance, guesswork and apprehension from your executive team and replace the technology dreamers in your organisation with doers
You cannot do it alone any longer. You will need an ecosystem of partners that is different from a traditional supply chain and you have to be prepared to genuinely share value
Democratise analytical tools and technologies across your organisation so that everyone has the opportunity to learn and progress
Be prepared to take on new types of employees skilled in technology and be aware that what motivates them is not what motivates you
The path ahead is uncertain and opaque and you need to take one step at a time. You should be prepared to have multiple pathways, to fail often but to learn fast from failure

Developing a strategy for the digital age – a roadmap

We recommend a pragmatic seven-step approach to deliver on the above objectives:

Understand and debate the scale of disruption you and your industry could face in the next 2, 5, 10 years
Win, or at least fight hard in, the war for technology talent
Start with value not data
Be prepared to fail often and develop a culture that learns fast from failure
Partner and create a mutually beneficial ecosystem
Train ‘everybody’ in your organisation
Don’t forget the rule makers