16th May 2021
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Digital Strategy: What matters and where to focus
Earlier this year I was asked to put together my thoughts on the priorities for digital strategy in large established organizations by Digital Jersey, the economic development agency and industry association supporting the state of Jersey. It was published earlier in May. Here is a reprint of what I put together.
Welcome to our digital world
Today more than ever, digital technology is having increasing impact on all our lives. What is most visible about this digital revolution is a sea change in the way individuals utilize digital technology. It has become cheap, easy to use, consumable like a utility, mobile, always on, and operates seamlessly with devices we frequently carry around with us. In just a few years, we have become sophisticated users of such technologies, and accustomed to the flexibility and freedoms they enable, whether at home or at work.
The impact in business and society has been equally as dramatic, if sometimes less visible. Initially, companies and government agencies focused on repeated efforts to upgrade to the use of digital technologies, digital media, and digital delivery channels to open new ways to connect with customers, clients, citizens, and stakeholders. This resulted in improved efficiencies in areas such as customer service delivery, back-office data management, and many forms of management auditing and reporting. Such savings were an essential part of an organization’s strategy during years of financial austerity experienced in most commercial and public sectors following the financial crisis and ensuing economic recession in the early 2000s.
However, accelerated by our experiences during the ongoing global pandemic, digital transformation has now led to a more fundamental shift. It has driven organizations to question major assumptions about who is being addressed by the services they offer, the experiences offered to them, and the most efficient ways to deliver those experiences in a coordinated, consistent, and cost-effective way through periods of volatility and uncertainty. A distinguishing feature of successful organizations during these troubled times is not their choices of specific technologies, but the digital strategies that have guided decision-making and operating excellence in the face of rapid change.
But what are the key elements of a digital strategy? And how can they be organized, prioritized, and managed to greatest effect? These are critical questions to address in facing the needs across a broad set of organizations. As businesses and communities come to terms with the increasing impact of digital technology on their ways of working and living, core elements of digital strategy have increasing impact. In practice, a digital strategy must be defined to galvanize all stakeholders around common themes and priorities. Without this, the diversity and lack of a strongly defined common purpose will greatly reduce the impact of current digital investments and bring chaos to future plans and practices.
In these circumstances, a meaningful, well-structured digital strategy is essential. It needs to be grounded in the reality of evolving demands from an increasingly digitally literate society and responsive to the uncertainties of an unstable economic outlook. At its most fundamental level, this means that a digital strategy must address 3 main concerns: Creating a digitally-driven environment that simultaneously enables services to be faster, cheaper, and better.
Faster responses with data-driven analytics and insight
A fundamental promise of an increasingly digital world is to support more rapid and sophisticated access to data for businesses, government agencies, and individuals. Speed and efficiency in data access and management are essential to ensure greater insight and flexibility to adapt quickly to an ever-changing environment. For example, by adopting new methods and techniques designed to tap into the abundance of digital data now being generated, businesses can build their operational processes to be optimized to respond quickly, not only to changes that they see occurring, but also to design predictive models to ensure plans being put in place anticipate future needs.
The basis for data-driven innovation is fast, reliable, widely available communications infrastructure. For this reason, investments in high-speed broadband technologies have been crucial. Supported by more sophisticated software-driven network improvements, digital knowledge capture and sharing is continuing to see improvements that enable ever-more complex scenarios for collaboration, engagement, and value generation.
Such demands are as important in public sector organizations as they are in the commercial world. From healthcare to transportation services, accurate and actionable data in planning and decision-making is fundamental to receive the efficiency and service delivery benefits we all expect. The introduction of digital technologies for data acquisition and management is an essential starting point. However, these benefits also require significant improvements in the skills necessary to use this data in meaningful, responsible, and ethical ways. This will only be possible with a priority on improving training programmes and recruitment activities for data analytics as a critical component of every successful digital strategy.
Cheaper delivery by removing waste
As organizations seek to optimize tasks across all their activities, digital technologies present an opportunity to take new perspectives on the eternal challenges they face: to run their businesses more efficiently, to find out more about how their products and services are used, and to redesign processes to improve customer experience. Several key elements must be addressed in digital strategies aimed at reducing cost and maximizing value.
First, in most organizations significant effort is expended in non-value-added activities such as monitoring, tracking, auditing, and reporting. While these are essential for the smooth running of any organization, their impact on cost-of-delivery of services can be severe. Digital approaches to the automation of many of these routine tasks are critical, and require constant encouragement and support to ensure it continues to be a focus across all organizations.
Second, all organizations experience challenges in reducing waste due to errors in the quality and effectiveness of products and services they deliver. An increasing number of digital approaches are available to gain insights across all steps in an organization’s design, production, delivery, and servicing activities. Whether inside a factory or in a hospital ward, access to data provided by digital sensors and using techniques such as digital twins can be used to learn about current practices and to enable optimizations that deliver significant improvements.
Third, most products and services can be much better targeted by gaining a more in-depth understanding of stakeholders and their needs. Digital approaches for information gathering and analysis help improve our ability to develop a more complete and accurate perspective on those we serve, whether businesses, communities, or individuals.
Better services through learning and adaptation
The real measure of all products and services is the extent to which they meet the expectations of their users. Organizations must constantly focus on understanding more about their users and learn from how their products and services are used, adapting their solutions in line with the feedback they receive.
For many organizations, their interactions with customers, communities, and individuals are their most direct channel for understanding their needs and responses to products and services. Typically, an organization invests significantly in a variety of online, phone, and face-to-face channels to support their clients to learn about their customers and the products and services they supply to them. Digital technologies support many aspects of this relationship to ensure these interactions are effective and efficient. Improving their data capture and analysis capabilities adds significant value to an organization.
However, rapid response to changes in market conditions, competition, and customer feedback requires the organization to be able to reconfigure its internal processes at speed. For many organizations such adaptation is difficult due to inflexible decision-making and complex multi-stage approval processes. Structural and cultural inhibitors block many organizations’ attempts to be more responsive to what they are learning about their dynamic environment. More radical management approaches are required where hierarchies are flattened, and outcome-based prioritization is promoted.
A digital strategy must therefore also define the management and leadership changes that are required for success in transforming an organization to be successful in the use of digital technologies. Leaders in digitally transformed organizations should be encouraged to promote a broader systems-thinking approach to problem-solving where individuals and teams are encouraged to share their understanding to improve performance.
Driven by rapid technological change, all organizations face pressure to rethink their approach to digital strategy in a world that is quickly moving toward digital products and services. For existing organizations, the most critical task is to expand their view of digital strategy to take advantage of the efficiencies promised by digital technology. Not only does this allow them to be “better, cheaper, faster”, it also drives them to reorganize to be more resilient in an unpredictable environment where they must operate in new ways, make decisions at speed, and adapt to the volatility of their clients’ needs.
Digital Economy Tidbits
Global survey reveals CFOs prioritizing digital transformation investments. Link.
It is always interesting to hear what the CFOs are saying about how they are using their budgets for digital transformation and the language they are using to justify the spend. Here, we see that CFO are turning to digital transformation to make a difference to their bottom line.
According to the survey report, when it comes to digital transformation and its significance amongst other corporate priorities, 80% of CFOs globally cite it is within the top-five of their list of priorities, 71% of CFOs surveyed believe that digital transformation investments are key to their company’s success and 77% said they would help the CIO find a way to fund a new digital transformation project if the initiative delivered strong ROI. In addition, 67% of CFOs say they “refuse to waste precious dollars on IT investments that don’t move the needle.”