Thursday, 29 May 2014

Where to start with digital strategy - build a digital trading platform

One of the problems we've found with digital strategy thus far is how to get organisations started. There are so many ways in which digital can transform a business, from radically transforming sales and service to automating a swathe of back office tasks that it can be overwhelming and doing nothing or something too small is tempting. To us as well, at times. So I've been thinking about the best way of biting off a meaningful chunk - these are thoughts in progress so comments are even more appreciated than usual!

The first question I came to was whether to start at the value generating centre of the business or in a costly but unsexy back office area. My conclusion is the former. Why? Because energy and momentum is a crucial part of the journey to a digital culture and it's easier to advertise that direction somewhere visible. It's also arguably easier to make a conventional (basic ROI) business case in these areas - the cost of back office functions is often very murky in a pre-digital environment.

What's that value centre? I've always liked Hagel's model for abstracting the purpose of a business ( which gives three models:
- Infrastructure management
- Customer relationship
- Product commercialisation
The theory goes that you can't bundle more than one together and still retain focus on performance of the whole. I'll come back to that idea another time, but it's a decent model for my next thought, which is as much semantic as anything else.

One challenge with digital strategy is that it's actually strategic! The basis of success in the economy is changing radically and entire business models, organisations and cultures need to change over time to adapt and succeed. That's hard when dealing with organisations with hard short term targets. So the way I like to explain the first part of digital strategy is building a 'digital trading platform'.

What does that mean? I see it as an trading platform designed with from scratch with digital, measurable and automatic technologies as the default, as opposed to a set of technologies used to marginally enhance the old ways of doing things. It's process and technology and the operating model, organisation and culture needed to trade that platform effectively. The results should be a step change in value creation in terms of efficiency, sales performance or IP generation & monetisation, depending on the organisation's business model.

Why the language? Because it's all about focus on making money where you make it today, in a radically better way. Reinvent the things you know how to do today, rather than seeking value in things you don't understand using strategies you don't understand. Pick one thing to learn at a time! And in doing so, you'll find out a lot about the new skills, practices and organisation you'll need to transform the rest of the business. 

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