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Growing buzz around ‘Digital Strategy’[i] and ‘Digital transformation’ has assumed a resounding proportion in recent times. Appearing confounding at one end and quite exhilarating at other end – frenzy built around ‘digital readiness’ has pushed firms to stitch a ragtag Digital Strategy somehow and present a confident face. Without realization that a standalone Digital Strategy in itself is not a winning strategy – rather each dimension of Digital Strategy should remain deeply moored to key themes of firm’s business strategy. Also, against the widely held misconception, Digital Strategy is not all about technology implementation or marketing alone – supported on new genre of devices and customer channels.
In absence of a commonly understood definition of ‘Digital Strategy’[ii], it remains open to many subjective interpretations – extending to wide range of less-evaluated options. Much like the story of ‘blind men and an elephant’, these choices on ‘Digital Strategy’ vary as per the firm’s myopic view of business opportunities or the instant pull from business challenges.
With changing client behaviour and expectations, Digital Strategy should ideally explore all forward looking possibilities of customer engagement, value added product features, self service capabilities and all underlying nuances of service delivery. Obviously, there could not be a single magical formula and requires all encompassing consideration. To take an example, some of digital options commonly appearing in recent discussions relating to Financial Services domain are enumerated below.[iii]
- Marking online presence on web and mobile channels
- Supporting digital marketing, product information and client prospecting
- E-mail and x-device based client communication and relationship
- Enabling client transactions and self-service on x-devices
- Social channel communication and harnessing business opportunities emerging on social networks
- Simplification of processes and systems to cut the breakpoints and clutter
- Enabling operational processes to support new level of service expectations (anytime, anywhere)
- Tools and analytics to get client insights and expectations – sometime unexpressed, sometimes even unknown to the customer
- Work place re-imagination, internal collaboration and continuous learning across functional silos
- Integration of service channels and partners
- Aggregation of third party services, where in-house capabilities is low
- Establishing thought leadership
- Enhancing digital branding and protecting reputation
Possibilities of digital options could be many, as each passing day firms keep coming up with new ideas – re-inventing themselves and challenging the norms of hitherto market normal. The emerging norm is ‘being abnormal all the times’ – breaking the fossils of status-quoism and inertia layered around organizational mind-set and processes over the years. So, in a very basic sense, an effective Digital Strategy[iv] must include all the key dimensions of an organization, namely:
- Business model
- Products and services
- Client engagement
- Process capabilities
- People and organization culture
Reckoning the unique drivers influencing above fundamentals, achieving clarity on the purpose and scope of Digital Strategy is the first step. Next comes, how the outlined Digital Strategy is to be closely integrated as a part of organization’s core business strategy. At this stage, it will be vital to set the direction and the next steps of organizational digital plan. Without much emphasis, a Digital Strategy de-linked with core business strategy cannot survive or achieve the intended business purpose, howsoever comprehensive it may be.
While formulating organizations’ Digital Strategy, it is important to consider on some key business imperatives – encapsulated as 7 ‘C’s below:
- Client Centricity: In this age of ‘Segment of One’[v], Client Centricity demands new level of client engagement and service fulfilment abilities – closely aligning with customer behaviour and expectations.
- Mass Customization: Standardization of product and services based on broad segment line is no longer a winning mantra. Customization to meet highly personalized services at each individual customer level becomes a basic necessity.
- Self-service Capabilities: New generation of customers expect to be aware, informed and explore at their own. Unless product complexity does not limit, full range of self-service capabilities is a feasible choice with minimal amount of support.
- Connect and Human Touch: An important point to consider, self-service capabilities does not allow human touch or relationship to completely go in the background. So, it is important to maintain a proactive level of connect with customer across all stages.
- Omni-Channel Presence and Round the Clock Engagement: With service delivery and customer engagement proliferating into virtually 24*7 model, it is a basic business requirement to remain at par with the competitors on timing and channel presence.
- Improved Service Cost: While early intention of digital channels was to realize reduction in service costs, increased level of customization and round the clock service demands need realistic assessment. At a basic level, innovation in service delivery model and simplification can still bring new ideas of cost reduction.
- Customer Trust and Reputation: In present time of social media surge, firm reputation is quite vulnerable to many unknown factors. While organizational branding and communication policy dictates the overall approach, it is important to keep an active and transparent communication / disclosures as a de-minimis.
Digital Strategy can effectively provide lot of muscle and firepower to take forward firm’s core business strategy. At the same time, it is not to be considered as a proverbial magical wand solving each of firm’s grappling business issues. If Digital Strategy is not appropriately nuanced, it will bring new form of challenges in front of the business – encapsulated as 5 ‘D’s below:
- Blurring Differentiation: Digital channels and digitalized customer engagement in itself has lost much of differentiating value. So, a true differentiation can be achieved only by creating unique customer value (e.g. providing customer insights on needs, value added research or integrating 3rd party services/products on firm’s platform to enhance customer experience).
- Increased Servicing Demand: As highlighted elsewhere, omni-channel and 24*7 delivery model is likely to increase service demand. It is important to take a realistic view of ably supporting the customer demand, without leaving customers grumbled about service quality or responsiveness.
- Disconnected Relationship: An isolated and exclusive digital channel, in absence of human connect is likely to result in a wilted relationship and lesser customer commitment.
- Risk of Dis-intermediation: With highly standardized (commoditized) products/services and high reliance on self-service capabilities brings a new risk of dis-intermediation. This challenge becomes acute in services traditionally being catered by expert advisors/relationship managers.
- Double (or multi) track IT strategy: Presence of legacy platforms, disparate technology footprint and lack of standardization create significant challenges in augmentation of process capabilities. With enterprise technology differentials, adoption of a uniform Digital Strategy across the organization becomes a complex exercise. It requires two (or multi) track IT approach for the implementation– interspersed between legacy platform focus at one end and advanced platform at the other end.
[i] Increasing level of attention on the subject (and consequently related dilemma) can be gauged from the fact that a basic googling on the phrase ‘digital strategy in financial services’ throws almost 47 million result pages – each bringing a new and possibly differing perspective.
[ii] Please also read: What the heck is ‘digital’ anyway?
[iii] Above list of options is merely given as a basic reference and neither intended to be exhaustive nor prescriptive in that sense.
[iv] Please also read: Design a Digital Strategy That Works
[v] Please also read: Segment-of-One Marketing
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