What is a digital strategy and why is having one important?

I’ve been a digital strategy director for a number of years now, and like a lot of people who work in emerging fields I spend some time justifying my existence: I often get asked by clients what a digital strategy is, why they might need one and how they might go about developing one. Which are legitimate questions – digital is a relatively new and often confusing field and there isn’t much precedent out there.

In this, the first of two linked posts about developing a digital strategy, I’m going to explore what a digital strategy is and why having one is increasingly important.

What is a digital strategy?

Let’s start with a definition, according to Wikipedia a strategy is:

a high-level plan to achieve one or more goals under conditions of uncertainty

By extension, a digital strategy is a high-level plan that details how digital media and platforms can be used to achieve the goals of an organisation. A typical digital strategy will be a synthesis of digital product, service and content strategy as well as digital media strategy, e-commerce strategy, data and measurement, all of which will be informed by and will in turn inform the broader company technology strategy.

The role of the digital strategy is to define which of these activities further the goals of the organisation most effectively, how they do so and the relationship between them all.

The digital strategy feeds into the wider overall business strategy, informing investment decisions, technology choices and broader business strategy.

I’ll look in more detail at these components of a digital strategy in the second of these posts, but for the moment I’d like to focus on why I believe digital strategy is not only important, but in many cases mission critical for many organisations.

Why is digital strategy important?

Again, let’s start with first principles – I believe that there are three fundamental reasons why companies need a digital strategy:

Technology

As I’ve already discussed before, the shift from an analogue broadcast world to a digital networked one is a profound shift that fundamentally changes the way in which value is created and distributed. And, as I’ve also discussed before, digital disruption is set to intensify – smaller and more powerful chipsets, 4G mobile broadband and ever cheaper sensor technologies are making the Internet of Things a reality. New consumer-ready interfaces like Google Glass and Oculus Rift will significantly alter the way we interact with the world and one another. In addition, digital disruption is very fast and noisy. The Gartner Hype Cycle which used to play out over months and years now seems to happen in days and weeks. This makes it hard to filter the signal from the noise – to make decisions about which platforms and technologies are superficially interesting and which ones structurally important. For example, while people liked Twitter from the early days, few predicted that it would become an essential tool for many organisations. On the other hand many have invested significant time developing for My Space, Second Life, Foursquare, etc., only for platforms to not develop in the manner anticipated.

However, while technology remains a vital component of any digital strategy, digital strategy differs from traditional IT strategy because it looks at how digital technologies are used to connect with people outside of the organisation. Traditional IT was and is more of an internal-facing engineering function and is clearly one that still matters greatly to any organisation, but traditional IT or technology strategies were never designed to fully consider how digital technologies might be used to engage people outside the organisation.

A digital strategy is not a technology roadmap. A digital strategy should help to define broad principles on how to engage with new technologies and platforms when they appear, and what technologies are part of the organisation’s core business, but it also needs to focus on people and how they behave and what they need from digital platforms.

People

On average, people now spend more and better quality time with digital platforms than they do with traditional platforms like TV and magazines.

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In July this year for the first time, aggregate digital media consumption overtook traditional TV consumption in the US. For years, many of the most influential demographics have valued and consumed digital media over traditional forms, but now higher bandwidth, more user-friendly mobile devices and social networking applications are driving rapid uptake amongst the mainstream/late mass and even laggards. The people you want to reach are now more digital than not, and getting more so.

This is the predictable outcome of a bigger historic shift that most technologies make – from military applications, to business applications to consumer applications. As the Greek philosopher Heraclitus said:

“War is the father of all things”

The twentieth century history of computing and information technology follows this pattern. Computing theory and technology was developed predominantly as a tool of war by people like Alan Turing in the UK and Claude Shannon and John von Neumann in the US, for the purpose of signals intelligence and missile control, etc. It was then adopted by business, with companies like IBM, Intel, Microsoft and Oracle growing to serve the corporate sector with IT infrastructure. And while many people bought home computers and used computers at work, significant usage was still confined to innovators, early adopters and some early mass. In other words, home computing was, until very recently, resolutely the domain of the ‘geek’.

Many organisations have been caught unawares by the rapid and mass mainstream adoption of computing and information technology. A coordinated digital strategy can help an organisation better understand and respond to these shifts in behaviour.

Organisation

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Digital is a hybrid discipline – it’s not just a communications channel, it’s a commercial platform, a place to build communities, services and products. As a consequence digital teams and budgets often sit in difference places in different organisations – sometimes digital’s a separate department, sometimes it’s part of marketing, sometimes IT and sometimes product. Often there are digital budgets and work streams in all four. And where the team sits tends to determine the approach – product people will tend to be driven by revenue models, marketing people by reach and brand perception, IT people by data and technical concerns.

No individual business unit can fully respond to the challenges and opportunities that digital presents. A digital strategy should help to coordinate activity between business units, joining the dots to develop a more connected and efficient approach to using digital platforms. For example, a strategy might help coordinate CRM with media spend with content creation and e-commerce strategy back to CRM. The digital strategy helps understand how work flows and briefs might be coordinated, and how underlying technologies and platforms might support any planned activity.

A digital strategy should help define the organisational response to the challenge of engaging with digital audiences.

The Importance of a Digital Strategy

The rapid pace of consumer adoption of digital platforms has taken most organisations by surprise. In many ‘digital’ has been, until recently, an relatively minor offshoot of the marketing department. Suddenly it is a C-Suite priority. Gartner recently reported that over half of the firms in their CEO survey have some sort of digital strategy. Many others reported that they were working on one or knew they needed one – so digital strategy is clearly important for a wide range of organisations.

Many now believe an effective digital strategy is mission critical for most organisations, in the recent MIT Management School report Embracing Digital Technology they went so far as to say:

“companies now face a digital imperative: adopt new technologies effectively or face competitive obsolescence. While there is consensus on the importance of adopting digital technology, most employees find the process complex and slow. Many say their leaders lack urgency and fail to share a vision for how technology can change the business. Companies that succeed tend to have leaders who share their vision and define a road map, create cross-organizational authority for adoption and reward employees for working towards it.”

These are far from isolated opinions, many organisations and the consultancies they work with now consider a coherent digital strategy a significant driver of competitive advantage and therefore a key strategic priority.

The Aims and Limits of a Digital Strategy

While a digital strategy is a key priority for many organisations, it shouldn’t be a weighty tome detailing every aspect of digital activity for the next five years. Things are moving too quickly, and the future is too uncertain for that. A digital strategy should be a clear but flexible high-level vision and framework that helps an organisation plan how it engages with customers across digital platforms; how it uses technology to do this; and the new structures and processes required to support this activity. It needs to be something that can be developed and amended over time, something that helps the organisation understand digital user need and behaviour, rather than a prescriptive technology-lead plan.

In the next of these two linked posts I’ll explore in more detail what a digital strategy looks like and how to develop one.

TL;DR

Technological innovation is radically changing the way users connect with many different organisations. A digital strategy can help coordinate a more effective organisational response to these changes.

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