There are always mistakes that are made when it comes to the digital strategy. It’s not about how to make a good strategy, but how to avoid mistakes.
Despite the changes brought about by digitalization, a good strategy remains a consistently important factor. After all, much depends on the right digital strategy, even if digitization is successful.
Although much has been written about “How to make a good strategy,” some have not really dealt with anything: What are the signs of a not so good strategy?
The following 7 points have mostly turned out to be early warning signs why it didn’t work
1. The strategy is too narrowly focused
In some cases, digital strategies are only defined for a partial area. Only marketing (website, social media marketing etc.) is included. But the fact that many other things are involved is forgotten. Products/services, marketing/distribution, ecosystems, processes as well as the supply chain can be digitalized and often have a great impact.
2. The strategy does not include what NOT to do
Strategies should always formulate clear goals. This also includes being able to say what is not wanted. This results from the fact that every company always needs more investment than money for investments. This also leads to a proliferation of projects that do not add value in the end.
Good strategies clearly define what should NOT be prioritized.
Without these clearly defined “do” and “don’t do” statements, not all digital projects can be implemented in a targeted manner.
3. The strategy considers the wrong competition
Existing competition is usually not the driver for market-changing innovations. More and more often, it is companies from completely different industries and other areas that suddenly expand their portfolio because digitization allows them to do so. You read more and more often about retailers offering banking services, product companies entering the payment business and many more. This leads to the fact that digital has also changed the power structure in the market and competition can occur from other sources than just existing competitors in their own industry. Good strategies cover these possibilities and also consider measures for these scenarios.
4. The strategy focuses on current capabilities
New strategies often require new skills. General Electrics, for example, needed completely new skills to build up its software division. However, it often happens that companies base their strategy only on the resources currently available. However, a future-oriented and value-oriented strategy also needs to build new capacities and capabilities.
5. Strategy is too short-term
In the digital age, short turnaround times and quick adjustments are important. Companies must significantly accelerate the exploitation of ideas. But speed should not dictate the digital strategy. Contrary to perception, most things in digital distruption are a relatively slow process. One example is digital banking, which started in 1999 and is still in a state of flux. Strategies that are too short let you run blindly somewhere and wrong initiatives can be chosen. A longer-term view of change can help to give a picture of what one’s own digital disruption will look like in 10 (or more) years, and can then be more focused. Of course, short-term successes are vital, and a strategy that fails to achieve this will never see the light of day. Nevertheless, a clear long-term goal is important.
6. The strategy receives too little money/resources
A good digital strategy can have an immense impact on the value of the company and shareholder value. Often companies develop great strategies and ideas, but fail to provide the necessary resources. Companies that enter into digitalization later usually experience a vicious circle. Their revenues go down and it becomes increasingly difficult to invest in digitization, which in turn leads to falling revenues, etc. Good strategies invest in proportion to the percentage at stake. Of course it is not about blind investment. Investments should always be based on clear detailed analysis, tracked and adjusted over time and market dynamics.
7. The digital strategy is not part of the corporate strategy
I myself have observed this many times before. Companies that have brought their overall strategy into line with the changes in the digital world have had much better success. However, if there are different goals that “bite” each other, it will not work. If the digital strategy is to grow through new channels (mobile, etc.) and the corporate strategy is to focus on cash flow and margins, it will not work. Good strategies are always fully aligned, not only at the headline level, but also in the goals, KPIs and changes.
I hope you can’t find yourself in any of the points, and if you do, it might be worth sitting down again or getting some help