In today’s blog, we discuss some of the insights from the first interviews from our latest research project: Alternative Approaches To Developing Digital Strategy. We are uncovering some fascinating input, but our investigations are still in progress. If you are responsible for digital strategy at your company, and would be interested in participating and receiving a free copy of the final report, please get in touch.
You would be hard pushed today to find a FTSE500 company that doesn’t have a digital strategy. With the threat of start-up disruption, competitor innovation, and the rising power of the customer who can ruin your reputation with a single viral tweet, executive boards across the globe have responded the way they know best: Vision 2020 roadmaps and digital transformation Gantt charts.
The problem is, we know that these don’t work. They are 20th-Century tools designed for developing and executing strategy in a predictable, stable world. They lack the flexibility and feedback mechanisms to work in an unpredictable digital era where nailing jelly to the wall doesn’t even begin to cover it.
As if that wasn’t enough, not only are companies using the wrong tools, they are also struggling to get everyone on the same page. Senior stakeholders often have differing ideas of what a “digital strategy” means. CEOs reduce the dissonance by giving ownership to a sole C-Suite member. This leads to a narrow view taken, depending on the outlook and functional experience of that executive. It also has the effect of leading the rest of the C-Suite to believe that either they don’t need to engage, because “oh, John’s got that”; or if they have a differing view, to go off and create their own solutions.
Against this backdrop, employees struggle to understand what this all means to them. If you are lucky, they have read your Vision 2020 intranet blog, seen the shiny posters in the lift, and can recite the mission statement. But how many can tell you how their day-to-day actions really contribute to driving outcomes? Probably very few. This comms-based approach to employee buy-in perpetuates the thinking that digital is something that is being taken care of by someone else (senior leadership), and not something in which everyone has a role to play.
The human dimension is a strategy issue, not a comms afterthought.
Uncovering alternative approaches to aligning the digital strategy
Digital strategy needs to become something that touches and involves the whole organisation in order for it to effect ongoing change. It is not just customer interfaces, and it is not just technology platforms. It is a complete reimagining of how you think about your internal structures and processes — from closed rigid horizontals and verticals, to open fluid information-sharing networks. Enabled by technology, yes, but also culture and leadership.
Through our client work, we often hear common stories describing the tensions that arise when precisely-engineered digital strategies meet the messy world of execution. To help address, we have launched our latest research project to investigate how organisations are currently tackling these challenges. We are early in our discovery process, but we are already uncovering some fascinating perspectives:
- The digital vision is imprecise or unconvincing. To start with, many companies struggle to clearly articulate the vision for their digital strategy. We are hearing that it is usually couched in broad and vague buzzwords (this Strategy Madlibs generator is funny because it is so familiar). The vision is imprecise, difficult to measure, and fails to take into account the uniqueness of the organisation and the markets it operates in. It is not motivational nor aspirational, and, when looking at it, employees do not see the connections to their work. This leads to digital point solutions, that may scratch a short-term itch with a new customer app or website, but in the long-run drain resources and do not advance the strategic agenda.
- Why it matters: Executing a sustainable digital strategy starts with not just communicating it to employees but involving them in the design. Otherwise the strategy only lasts as long as the tenure of the chosen executive sponsor. We now want to investigate inclusive methods of strategy planning, and test these against our research participants’ real world experiences.
- Orchestration is, even at its best, mostly agile theatre. Additionally, we’ve found that organisations unsurprisingly continue to favour top-down, one-way strategy development, often sticking to their age-old annual planning cycle rhythms. This means that the digital strategies they produce are not iterative, nor agile. A common tactic to address this is to take the strategic plan and chop it up to deliver incrementally, perhaps even using Scrum methodology! Sadly, this is more agile theatre, than truly agile.
- Why it matters: Sticking to old process (or trying to retrofit agile methods into incumbent structures) give executives the illusion of control and something comfortable that they can report to the board at the end of every quarter. However, it doesn’t truly allow the organisation to adapt to emerging threats and opportunities, as it continues to be shackled by rigid traditional structures. Strategy development must become more fluid and flexible (and inclusive) to better sense and respond. We suspect clear vision coupled with repeated measurement and course correction are the keys to this approach, but we aim to dig into the detail of this as our research continues.
- Bi-modal structures fail to bring digital into the core. Finally, many told us that the execution of the strategy often sits outside of the core organisation, either in separate digital teams or innovation “labs”. These not only sit outside of the main organisation in a functional sense, but also are often physically located in different offices under the auspices of creating a protected space unencumbered by legacy thinking. However at some point, if the strategy is to have any impact on the wider organisation, these bubble-wrapped units will need to come into contact with existing processes and structures, and this pinch point is where our research shows the strategy starts to fall down.
- Why it matters: If digital strategies start to crumble when they rub against the existing analogue, siloed organisation, it is unlikely to have a sustainable or wide-reaching impact. For a digital strategy to succeed in execution, we believe firms must focus on creating an adaptive operating model, drawing on inspiration from firms such as Haier, Valve, and Spotify. In our research, we will draw out the specific practices and techniques that these and other pioneering companies use, to work with our participants to understand which of these could inspire the design of a more connected approach.
We are not entirely surprised by these challenges. We have had a sense that they would be confirmed as key barriers to executing an effective digital strategy. But it has been fascinating to hear that despite the awareness of the challenges described by our C-suite participants, there is a recognition that, at some point, the organisation will need to dramatically pivot on its 20th century ways of working if the strategy is to succeed and they are going to survive.
Why hasn’t the pivot happened? We suspect that it is because the frameworks and methods to manage that pivot – such as linking strategies and to practical change actions – don’t yet exist in a form big organisations can visualise outside of a Silicon Valley start-up.
We are hoping this project helps us to start to address this, and our investigations continue.
If this roundup of findings sounds familiar and you are interested in alternative models to strategy development and execution, then please get in touch. Through April and early May, we are conducting confidential interviews with executives responsible for digital strategy, and we would love to involve you.