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 (http://edgeperspectives.typepad.com/edge_perspectives/2007/01/retailers_and_c.html) 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.

Impacts of a handset leasing model on mobile telcos

Following yesterday's post, here's some related thinking on the impacts on operators of handset leasing. Handset sales represent around 25% of operator revenues in a typical European market, but generate only around 5% of margin. It may therefore be the case that the scenario described would lead operators to a more profitable structural model than exists today. Oil companies are consistently and acceptably profitable, despite being (literally in some cases) the ‘dumb pipe’ that operators are so desperate to avoid becoming. One of the reasons for the oil majors sustained profitability is clear focus on their role in the value chain – to supply the fuel that enables transportation, relying primarily on location, then brand and finally product innovation to compete. BP or Shell do not need to subsidise the purchase of a car in order to drive consumption of fuel because consumers are ‘hooked’ on it (it gets them from place to place) and there are many credible car manufacturers an

Value drivers for telecoms retail

I've been doing a really large number of driver trees recently - we've taken to using them on every project to get really into the guts of value creation for businesses and thus decide where to focus initiative development (How To Win, if you're keeping score). Anyhow, I had to pause for thought recently to work out how to represent the subscription aspect of telecoms retail for a client. Since it took me a minute, I thought I'd share... its lack of elegance suggests that its not quite right, although it was enough to demonstrate that there was a certain lack of coverage in the initiatives that my client was pursuing and thus spark a debate. Enjoy.

Chief Strategy Officers II - Career Development

Here's a follow up to my earlier post on the starting point of Chief Strategy Officer (CSO) careers in the FTSE 100 and S&P 500 companies - a visualisation of two steps in their careers: their first employer or job and the job they had before they got their current position. Lots of work went into this... so any insights that you glean from the visualisation would be great to hear about :). The CSO is a crucial strategic role on the executive (!) and the owner of the tone and philosophy of decision making across much of the business, knowingly or unknowingly. Scrutiny of their experience in defining the process and language of strategic management is therefore appropriate not just amongst their executive peers, but in my view amongst shareholders. The days when being very smart and able to analyse large amounts of data were enough to be a CSO are basically gone... has the profession moved on enough to cope?

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