Business Strategy is Digitalization Strategy

This article is dedicated to the first topic in a series of articles ranging from strategy to implementation:
The success factors.
Let us start by looking at key figures and performance indicators, tools and support programs.

Start where you are, use what you have, do what you can – as simple as Arthur Ashe’s saying seems, strategy development and improvement projects, whether digital or not, are often approached in a complicated way.
Of course, the (digital) and globalized business world is complex. This makes it all the more important to be able to break things down to the denominator that can be seen as common to a market, a company and the respective function. It is equally important to avoid artificially increasing complexities by creating a new or parallel world in which not everyone is allowed to play. As with any change project, continuous communication about the plans and their significance for the department, division or company is important.

Understanding the initial situation

It is essential to establish clarity about your own starting situation. Not in depth, but across all functions or the company. In good change projects, the internal starting point is the company base, e.g. with the help of employee surveys or cafés, portals for suggestions for improvement, through to the close and programmatic involvement of the talent pool and top management. All committed employees can list in a few minutes what they think could be improved. Many of them also know how the improvements can be brought about and more employees than is generally assumed can, at least roughly, quantify a benefit.

The same applies to the assessment of their company from the perspective of customers, partners and suppliers. If you do not yet collect information regularly or even automatically, standardized customer satisfaction surveys from external providers are a good idea, as they can also provide you with a benchmark against your industry. #common sense #swarm intelligence

A good filter for all suggestions is a so-called heat map. With this, the business-critical activities and capabilities of the company and the necessary degree of improvement, whether with or without digitalization, can be easily visualized. In the example below, tasks from a department were rated from 1 (inefficient) to 10 (highly efficient) by the responsible team, the supplying departments and the recipients of the services. The more frequent a poor rating, the redder.

Further assessments of urgency and importance include
– Which specific tactical or strategic issue will be resolved by when and how
– the expected ROI
– how often activities occur and how much time is tied up (it is usually worth comparing this with the actual capacity of the function)
– how objective quality measurement is carried out today (if available) and what the measurement should look like tomorrow

What are the critical success factors for implementation?

The effects of the improvement in terms of time, money, for the function, for other areas and for the company as a whole.
Our urgent advice here is to include not only the acquisition and maintenance costs of systems, but also the ‘operating resources’ such as campaigns or added value in terms of content for direct sales in CRM systems, because
a) otherwise there is no ROI and
b) a lot of work (time) and motivation can be lost in maintaining a ‘zombie system’.

This not only provides them with a basis for future changes, but also allows them to check, for example, how:
– how robust their current strategy is in comparison with internal skills, capabilities and capacities
– where there are areas of tension between departments that are affecting business development
– where media or information disruptions exist

Integrate the growth path (digital roadmap) into the business strategy:

A major challenge for a realistic medium and long-term strategy with a well-integrated digital strategy is determining the bandwidth and pace that is required to operate successfully in the market and can be sustained by the relevant stakeholders (employees, partners, suppliers). (We will talk about adaptive ways of working and methods in a subsequent article).
Every company has had its (first) experiences with digital projects and their impact on business success. A success review with documentation of the key findings supports better self-assessment and learning within the organization, especially in the case of rapid personnel changes in key positions.

How to advance your digitalization program

In order to advance your digitalization in the right steps or in targeted leaps, it is helpful to correctly assess the current status of the respective organization (unit) and thus also the processes.

A major challenge for a realistic medium and long-term strategy with a well-integrated digital strategy is determining the bandwidth and speed required to operate successfully on the market and to be sustained by the relevant stakeholders (employees, partners, suppliers). (We will talk about adaptive ways of working and methods in a subsequent article).
Every company has had its (first) experiences with digital projects and their impact on business success. A performance review with documentation of the key findings supports better self-assessment and learning within the organization, especially in the case of rapid personnel changes in key positions.

Internally, it is important to assess how processes work today, how automated they are and where the processes take place in the company. Optimizing a process locally in an organizational unit and possibly without interfering with the IT/application landscape is easier and quicker to accomplish than global optimization across several business units or partner companies.
Externally, existing business relationships and transaction/communication channels with customers, partner companies such as distributors and suppliers must be taken into account. After all, the new should be better than the (tried and tested) old. If eCommerce goods from a neighboring country are suddenly available at a lower end customer price in a country that they supply via distributors, they quickly have an issue.

Some core prerequisites

Last but not least, the best plan does not work without commitment, empowerment and investment. We focus here on the financing requirements / funding of digitalization initiatives that must be clarified as part of the business strategy. We would like to suggest the following considerations from countless projects:

Turnover / Revenue
– Avoid over-enthusiastic sales planning when introducing eCommerce
– Major organizational changes due to digitalization regularly lead to performance slumps in the initial phase, plan for a buffer
– If you open up market areas with high digital price transparency, expect increasing pressure on margins, not only in online business

Costs / procurement
– Plan with room to manoeuvre – faltering digitalization projects quickly suffer (internally) from a poor reputation and you lose momentum
– If you are used to buying (construction) parts and other services worldwide, you cannot – but do not have to – buy your digitalization from the high-end boutique next door. The global competition doesn’t do that either
– Focusing on technology costs without considering additional costs such as digital content creation, employee expenses (new skills profiles) or far-reaching integration within the company
– Ensuring the sustainability of major changes in work processes through training, feedback and regular monitoring

Conclusion

This results in a – healthy – selection of projects. Which can then be finalized with the financial, market-relevant or other benefits of digitalization. We will explain which key figures can best support you in the next article. Business strategy is digitalization strategy Part 2 – Performance indicators.
Our recommendation for the dimensioning of projects is a maximum project size that your company has already successfully completed (several times) on its own or with the help of service providers.

Kudos for the great pictures found on unspleash.com to:
Title Photo by Anne Nygård on Unsplash