Digital strategy can explain up to 73% of the variance in a firm’s profitability. Yet, only about 15% of the firms have digital strategy at the core of their businesses. Here, we take a look at digital strategy definition. Further, we shall see, how defining the digital strategy can help us visualize the objectives better.
Digital Strategy Meaning
Digital strategy is assessment, analysis and planning to use digital technology to meet the firm’s objectives. It helps us chalk out the roadmap for future. For instance, if your firm wants to adopt AI in your business processes, you may need to develop a roadmap for AI. Similarly, most businesses are developing elastic digital workplaces to reduce cost and increase employee wellbeing.
Defining digital strategy also helps in establishing a direction for your business. Strategy is like the rudder for a boat. Now, imagine a modern Yamaha motor powered boat, connected with GPS. Further, let us visualize that this boat is a smart boat. It has a navigation system. Now, do you see the difference in capabilities of the boat. On one hand, a manual rudder works in setting the direction of simple boat. On the other hand, a smart boat can offer better maneuverability. It can even have auto pilot. All thanks to the digital controls. A digital strategy for your business is analogous to this smart control, but for your firm.
Digital Strategy Definition Mckinsey
McKinsey developed the definition of business strategy as “an integrated set of action designed to create a sustainable advantage over competitors.” Further, they have emphasized that the definition is valid for digital strategy as well. A recent Mckinsey Quarterly article suggested the following steps to defining the business strategy:
- Assess the current situation
- Ascertain the future scenario for business
- Develop the pathways that will ensure success in these predicted scenarios
Digital Strategy Examples
Managers had a common misconception earlier. They thought that digital strategy was only for firms that had business model that was based on digital goods. However, digital strategy helps not just companies dealing with dealing goods or digital platform. It can be one of the competitive advantage for traditional companies as well
Domino’s Pizza
Dominos has nothing to do with ‘digital business’ per say. However, they are one of the pioneers of digital strategy. They developed their digital strategy definition way in 2008. Since then they have kept digital at the core of their transformation. Firstly, they focused on leveraging the website as point of sale.
Secondly, they heavily invested in transforming to an app-based food ordering service. Consequently, they launched a comprehensive iPhone app in 2011. The app-based ordering system was an instant success. This is where competitors like Pizza Hut lacked behind. Finally, they also surprised the world with first drone delivery of pizza in 2016.
Renault
The auto giant Renault is another excellent example of how to develop digital strategy definition. They were able to get an increase of 25% in their EBIT through digital transformation. In an interview to BCG, the Chief Information Officer Frédéric Vincent shared the details about the process.
Firstly, the company assessed the options they had with digital projects. Subsequently, they devised their digital strategy. They realized that they had data scattered over a large number of applications. In the first step, they consolidated the data and created a centralized data mart. Secondly, they worked towards improving their business processes. Consequently, they were able to achieve a lift of 50% in productivity.