For months and years I have been facing questions from friends, colleagues, my B-school friends, my E-school friends and even family members (including my mom who can’t fathom what I do!) about what is Digital Strategy? There seems to be a lot of confusion in the market involving probably the two most overused (possibly abused) words of recent times — “Digital” and “Strategy”. These two words evoke very contrasting images in our minds. Strategy reminds us of B-school types with fancy MBAs, PowerPoint fetish and a dollop of pride. Digital reminds us of Shoreditch-style hipster CX designers with loafers and no socks. And believe me, they have very different takes ofeaturedn what is Digital Strategy. A large number of Strategy guys look down on digital strategy because it is almost as untouchable as “IT” (yes I just said the forbidden word!). In contrast, the Shoreditch crowd’s perception of Digital Strategy involves mobile apps, cool websites, service design, a bit of data analytics, social media etc.

So I decided to pick up my pen (well, keyboard) to answer that question in a very simple way (as one of my colleagues says “Teach me like I’m 5”). Please note that throughout this blog, I am not going to cite any consulting-style charts or infographic or data to support my claim. This blog is purely my opinion based on my own experience and it does not reflect my employer’s opinions and views.

The Definition of Digital Strategy

Digital Strategy, to me, is more Strategy than Digital. Digital Strategy is a discipline involving continual development of skills, assets and capabilities that enable an organization to create, execute and re-calibrate business strategies in order to delight its customers and defend or extend its competitive positioning against the digitally-enabled disruptors. You will notice that I mentioned “disruptors” and not just “start-ups”. This is because digital disruptors come in different shapes, forms and ages — there are no stereotypes. A digital disruptor could be “GitHub” disrupting “CalTech or Stanford or Cambridge or IIT” because a developer no longer needs a fancy degree to get a great job in Apple or Google as long as she has a high GitHub rating. Another example of a Digital Disruptor could be the Fortune 10 giant General Electric (GE,) who partnered with crowdsourced co-creation and product invention start-up Quirky, to develop and launch Connected Home devices at a rapid speed-to-market.

Now the question is why is Digital Strategy different from traditional Strategy? I have tons of friends who are strategy consultants — and most of them are genuinely talented, analytical and structured. They “get” strategy. They consult CxOs, they can do issue trees, they swear by MECE (Mutually Exclusive Collectively Exhaustive), they have a very structured approach to problem solving, they know Balanced Scorecards, Customer Segmentation, Operating Model etc etc. So what has changed?

Well, there are three main trends that will impact the way we think strategy, consult strategy, develop strategy and execute strategy. Firstly, the customers (who are also employees) and their needs, expectations, demands, beliefs, values i.e. their overall mindset has changed. This includes rising preference for access over ownership, preference for employers with sustainability credentials, preference for flexible work-life balance over high basic salary, preference for speed over perfection etc. Secondly, the advancement and commercialization of digital technologies such as mobility, cloud, Internet of Things, 3D printing, machine learning, next-gen genetics (DNA sequencing) etc. combined with digital phenomena such as social media and digital marketplaces have changed the competitive landscape. And thirdly, macro trends such as rapid urbanization, climate change, increased life expectancy, shortage of natural resources like water and arable land, higher average income etc. have dramatically changed our environment and are changing the way we live, work, behave, eat, drink, share, travel, emote, negotiate, transact, make and maintain friends and even find (and give up) love! As you have already understood, these trends are not completely MECE — they are rather inter-related.

All these three trends above led to one disruptive phenomena:

Anyone from anywhere can now come up with new business models (often supported by new Operating models) that are way more attractive to customers than your current business model.

Without sounding too Peter Drucker-y or Michael Porter-y, here is my home cooked definition of business model “Business model is a constantly changing framework for any for-profit business which defines how it will attract, retain and delight customers by providing products, services and customer experiences and convince people to pay money (not necessarily customers are payers) which should ideally, in the long run, cover its costs and more.” And operating model is simply the way a business needs to organize itself in order to most effectively implement its business model. This could include people, culture & incentives, org structure, business technology, business processes etc.

Digital disruptors are coming up with new business models by cleverly capitalizing on all or some of the three trends mentioned above e.g. Netflix’s success with its subscription model is not only due to web, mobile, machine learning and cloud but also capitalizing on consumer trend of access over ownership at the right time at the right speed. Pinterest’s success is not based on its technological superiority but its strong understanding of people’s desire to collect and share ideas. Their founder might not have thought about making money when they started it. However, with the new “Buy It” button they may happen to become a very successful e-Commerce retailer! Digital has re-shaped competitive landscape and blurred industry boundaries e.g. Apple has moved into payments, Telcos are trying to be banks, Pinterest are moving into e-Commerce and Red Bull opened a media house etc. Also customers cant care less about who is providing what service /product as long as its useful, cheap and fast and most importantly, the overall experience is great!

So what is required from a Digital Strategy Consultant as opposed to Strategy Consultant or Digital Consultant?

A Digital Strategist, in my view, should consult the CEO (not the CIO!) of an incumbent organization to answer these seven key questions:

  1. What is our current business model and how does it get impacted by these three trends (consumer, digital and macro)?
  2. Which parts of my business are under (or, are prone to) attack? By whom and how?
  3. Given that we have a mission and vision of our business and that we have some assets and capabilities, are we in the right business in the first place? If so, are we competing effectively? If not, where should we play?(The mission /vision is important because it is every business’s guiding light. Google may realize that they could transform to become a top hedge fund and provide great returns to its shareholders by building on its current assets such as people, data and algorithms — but it’s not what they exist for)
  4. Based on our (i) understanding of consumer and macro trends and (ii) our knowledge of the commercial application of emerging technologies, how can we spot market opportunities and what are the new products, services and business models we could launch to grab these opportunities fast before our competitors do and delight our customers?
  5. Should we Build, Buy or Partner to develop these new products, services and business models?
  6. What would be our internal operating model to deliver the new business models? Can we re-use some of our existing assets and capabilities (such as data, brand, algorithm, customers etc.)? Should we create a separate new venture and keep it at arm’s length from the mothership? What kind of people do we need to attract, where to find them and how to convince them to join? (Anecdote from one friend: Steve Jobs once joked at a Chief Digital Officer of a Fortune 500 company in a meeting saying “I feel sympathy for you because you have a tough job, but all the best digital guys want to work for me and not for you!”)
  7. The last and most important question, how much money do we need to invest and will these new things make money? (i.e. the business case) If so, how much and by when?

As we can (hopefully) see now, Digital Strategy requires much more than MECE issue trees, strategy consulting PowerPoints, mobile apps, digital marketing, data analytics, creating “Innovation Hothouses” or appointing a Chief Digital Officer. It’s about re-positioning the business model of an incumbent organization so that it can compete effectively against the digital disruptors. In fact, I would go further to say that Digital Strategy is just a placeholder for Strategy. Give it 2 years, Digital Strategy will be synonymous with Strategy.