How to create a digital strategy

By Adam Cranfield

 

Many digital strategies read like someone in their twenties trying to convince someone in their seventies that they should take "digital" seriously. Take this line from Camden Council’s digital strategy: "According to research from McKinsey, businesses that harness the internet successfully grow around twice as fast as those that don’t."

Since you're reading this, I'll assume you're already pretty decided about "harnessing the internet" in some way.

How about Oxford University’s digital strategy? I like that it's all on one web page, but it does tend to lapse into fluff: "embracing the opportunities afforded by digital technologies", "improve the utilisation and exploitation of digital technologies" and "underpinned by an innovative and holistic digital capability".

Not every company or organisation has a digital strategy. Even fewer have a good digital strategy. This is a weakness that you can exploit to help your business succeed.

You need a digital strategy for two big reasons:

  1. Digital opportunities are new and evolving. Your business strategy has probably not adequately explored the possibilities.
     
  2. Digital transformation and excellence require long-term planning, integrated thinking and cultural change. It won't just happen. You need to get your people aligned around a clear, realistic and inspiring strategy.

Playing to win

Strategy is about playing to win. In order to win, you first have to decide what your winning aspiration is. What are you all working towards?

Your winning aspiration can come from your vision. Amazon's vision, for example, is "To be earth's most customer centric company. To build a place where people can come to find and discover anything they might want to buy online."

But vision statements are often too vague. Think about Amazon's: what does "most customer centric" actually mean? And do they really intend to sell anything you might want to buy online?

Oxfam’s vision is: "A just world without poverty." The rhetoric of vision statements should be inspiring and ambitious, but when it comes to strategy you need something more grounded in reality if you are going to win.

Who is a digital strategy for?

It should primarily be for the team or teams responsible for delivering it. It's their gameplan to win. This goes right up to the most senior level.

It's also for senior management not directly involved in delivering the plan. They want to know what the gameplan is, and to have an opportunity to challenge it if necessary.

And it's also for a wider sphere of stakeholders and influencers who will benefit from knowing your goals and agenda. If they understand where you want to go, and what's in it for them, they will help you get there.

What's so special about a digital strategy?

Sometimes you may hear: "We have a business strategy, do we need a digital strategy?"

Well, usually you do, because the business strategy doesn't contain enough detail and direction for digital success.

Often the business strategy doesn’t focus enough on the "how" of marketing. That’s where your marketing strategy comes in.

But digital goes beyond marketing. Digital also deals with internal communications, customer service, product and operations. Thinking holistically about digital will lead to a much more effective organisation. (That’s why "digital transformation" is now such a buzz phrase.)

Take Uber, for example. Its digital strategy goes way beyond using digital marketing channels to promote its taxi services. Uber’s whole business - its whole product - is fundamentally digital, from the technology that shows you exactly where your cab is on your phone, to the algorithm that adjusts pricing in real time based on local demand.

The holy trinity of digital strategy

Digital brings together your marketing, your products and your services. Increasingly, these three are hard to separate, and you shouldn’t try. As digital professionals we are now required to work fluidly across these three domains.

The process for creating a digital strategy

The strategic process isn't linear. Your strategic goals will not be handed to you on a plate at the start. Nor is it a case of setting those goals up front and then moving on to the next step.

Goals are really just hypotheses ("maybe we could achieve this") until they are explored and evaluated. The process is iterative. You are creating, validating, testing and adapting a range of potential strategies.

We can segment the digital strategy process into three main phases. But, because the process should be both top-down and bottom-up, don't be surprised or frustrated if you have to move back and forth between these phases.

Phase 1

  • Understanding the customer

  • Defining the vision

  • Where are we now?

  • How is our market and environment changing?

Phase 2

  • Goals / hypotheses

  • Evaluation and feasibility

Phase 3

  • Prioritisation

  • Setting the strategy

Start with the customer

Any good digital strategy is grounded in a true understanding of the target customer or audience. And a fundamental strategic decision is deciding which target groups, markets or audiences to address.

Peter Drucker, the father of business consulting, said: "The purpose of business is to create a customer." Notice that he says "create" rather than "serve". When you think about your digital strategy, you should think about creating new customers. You may want to create completely different customers to those you currently have.

To have a clear and up-to-date picture of customers' needs, you need to do research, such as interviews, surveys and user testing or observation. A maxim when investigating user needs is to observe what people do, not rely on what they say. People are fairly bad at predicting their own behaviour. Every "pain point" you can identify is a potential opportunity for your digital strategy.

To better understand your customers or users, you need to consider the full ecosystem. As set out by Sofia Hussain (with reference to Dave Jones), this includes: the practices they perform, the information they share, the people they interact with, the services available to them, the devices they use, and the channels through which they communicate.

The aim is to build up a complete picture - maybe even a map - of your customers/users and the ecosystem they inhabit.

Playing on a moving board

Strategy is about making the right moves to win. It's about saying: "We will reject that possible move in favour of this better move." It's also about recognising that the game you're playing is being played on a moving board, with ever-changing rules, and with new opponents joining the game. Nowhere is this more true than in the digital arena.

Your strategy should reflect experience and learnings. What has worked in the past? What hasn’t? And - really importantly - what are the trends?

For example, having a mobile app may be a competitive advantage in the short term while none of the competition have apps. But when all of your competitors have mobile apps the competitive advantage will come down to who has the best app. In this scenario you may have to weigh up whether being first to market will give you more opportunity to learn how to build a great app (because you will have all that user feedback and data), or whether in fact it would be a better strategy to hold back, let your competitors go first, and learn from their successes and failures.

Here's another example of the importance of strategic digital thinking: a few years ago many companies focused their digital strategies on building up their fans on Facebook. Having more fans meant that you could reach more people for free with your content. Organisations designed their content strategies around this goal. Then Facebook changed the rules of the game, by dramatically restricting the amount of company page content appearing in people’s news feeds.

Had companies better understood the direction Facebook was moving in (towards sponsored content), they could have predicted this. And had companies focused on owning their own customer data, rather than letting Facebook have it, they would be in a better position to adapt their strategy.

Digital as both enabler and leader

Digital is both an enabler of other business functions and a driver of innovation and success in itself. As a digital professional, you are an enabler and a leader. It's important to recognise these two facets.

In the research phase of the strategy, ask people across the business: "What one thing could 'digital' do to help you perform better in your role?" You don't have to stop at one thing, but make sure you get at least one idea from each department or team.

Where are we now?

To get a clear picture of your market or environment, you need to do competitor analysis, and explore trends and analyst forecasts. Collate and scrutinise your own business data to understand where you are succeeding, where you are failing, and how the situation is changing.

Employees, customers and potential customers will all have valuable viewpoints on "where you are now". So ask them. Try to be objective and use these viewpoints to get to a realistic and accurate situational analysis.

Defining goals

A digital strategy must define its goals. This is for two reasons:

1) Sometimes the overall business goals have not been adequately defined.

Now you may be lucky enough to work for an organisation that has a very clear business strategy and business goals, but it isn't always the case.

2) Even when business goals exist, often the specific opportunities presented by digital are not known.

If your organisation hasn’t been through a digital strategy process, it's very unlikely digital opportunities (and threats) will have been adequately explored.

Sometimes you might be "handed down" goals from the overall business strategy. For example: "We aim to increase sales in France by 40%." In this case, the digital strategy should identify realistic sub-goals that will enable the overarching business goal. Like: "We will increase inbound web leads for our most profitable product in France by 30%."

Other times it may sit with you as the digital expert to identify completely new opportunities to improve performance, which can be scoped out, evaluated and may lead to a business goal being either created or enhanced.

Research and understand best practice in your sector, and outside of your sector. Many of the best strategies come from taking an idea or approach from one sector and applying it to another sector.

Follow the funnel

As you develop your digital strategy, you should always keep in mind the marketing/sales funnel. (If you aren't selling anything, this can be simply adapted to whatever is the right "conversion" for you.)

    Awareness > Consideration > Conversion > Loyalty > Advocacy 

Your digital strategy should strike the right balance between acquisition and retention of customers. It's almost always more costly to acquire a new customer than to keep an existing customer. Customer loyalty is one of the most powerful forces in business.

Making business cases and evaluating opportunities

New initiatives require some sort of business case. The level of risk or investment will determine the type of evaluation needed. If you want to foster a culture of innovation, you will need to make it easier for new projects to be approved, or at least piloted.

How do you evaluate whether a potential objective or sub-goal is realistic? An obvious but essential first step is to talk to the people who will be responsible for delivering the objective. A good digital strategy sets out objectives that the team or department (or wider organisation) assess to be realistic, but challenging.

There are a range of tools and techniques you can use to assess objectives. A well known one is SWOT - strengths, weaknesses, opportunities, threats - or TOWS analysis, which has the same elements but starts by examining external market factors (ie the threats and opportunities are looked at before moving on to the organisation’s strengths and weaknesses).

Another useful pair of tools are the Business Model Canvas and its startup-focused variant, the Lean Canvas (see both here), which are rapid planning tools for assessing everything from the real-world problem you are solving, to the unique value proposition, to channels, and customer segments.

The better the quality of information you can bring to the discussion, the more chance you have of making a good assessment and setting the right goals.

If your hypothesis is that building a mobile app for your online clothing business will add $1m in incremental revenue in Year 1, then can you bring data from competitors, or market research, or a pilot project to substantiate your case? Or is it just wishful thinking? And when it comes to your estimation of the time and budget needed to build the app, is it based on previous experience of the team (or similar team)?

Choices and prioritisation

Strategy is as much about what you choose not to do as what you choose to do. The “why” should be made clear and should run through a good strategy.

According to Michael Porter, author of Competitive Strategy, perhaps the most widely respected book on strategy ever written, a company creates competitive advantage over its rivals by deliberately choosing a different set of activities to deliver unique value. As Laffley and Martin say in Playing to Win: How Strategy Really Works: "In short, strategy is choice."

As well as making choices, another purpose of your digital strategy is to prioritise objectives. The first level of prioritisation is whether an objective, initiative or project even makes it into the digital strategy document at all. You will do lots of work throughout the year that is not mentioned in the strategy; the strategy focuses on only the most critical goals and initiatives. But a really effective strategy should make clear the order of importance of the goals. That way the strategy can be used to make decisions whenever resource restrictions mean further choices have to made.

Time and money

Your strategy will always be based on a set of assumptions. Assumptions about your internal capability to deliver and assumptions about how the external environment will change, and how it will respond to what you do. If you later find your assumptions (internal or external) are wrong, you will need to revise your strategy. But your aim is to create a strategy, based on sound assumptions, that will have some longevity.

When considering the timescale for your digital strategy, there are two opposing forces:

  1. We know that digital moves so fast - which makes longer term plans unrealistic.

  2. We know that digital projects can take a long time to implement - which makes shorter timescales unrealistic.

There’s no easy answer. All we can do is be aware of both of these forces. For many businesses, something like a two-year strategic cycle may be a sensible compromise.

As we all know, budgets for digital can be volatile - up one year, down the next. Or even: up one month, down the next. But changes in budget shouldn't necessarily affect your digital strategy. A good strategy will contain a lot of sound reasoning that shouldn't be too affected by changes in resources. So if your digital strategy looks more like a budget, or a list of projects, then it isn't really a digital strategy.

Strategy vs tactics

A strategy isn't a strategy if it just states: "We will become the market leader in two years". It must describe sub-goals and strategic moves that will make the big goal possible. A strategy that says nothing about the "how" is more like an ambition. Or simply wishful thinking.

Nevertheless, it's important that a digital strategy doesn't dive down into the tactical level. Building a strategy is a key phase in the business lifecycle, but it can't take up everyone's time all year round. A good digital strategy leaves plenty of scope for teams, individuals and agencies to use their creativity and ingenuity to work out the "how" of delivery.

Much like a good boss, the strategy should set out what you want done, but not exactly how to do it.

It's all about getting the right level of detail.

So, your digital strategy should talk about what defines your online brand, but it isn't your digital brand guidelines.

Your digital strategy should talk about your people and their digital development, but it isn't a complete org chart or training programme.

Your digital strategy should set out broadly how you will invest in your digital capabilities, but it isn't an annual budget.

Your digital strategy should describe the critical customer needs, but it isn't a functionality backlog or product roadmap.

Getting everyone to "buy in"

A strategy is useless if the organisation or team don't understand it or believe in it. So whatever you do, don't leave this to the end of the process.

Digital strategy shouldn't be a democracy, but if you can involve a wide range of people across your business in key stages throughout the process, you will build momentum and support for the strategy as it takes shape.

As you go through the strategic process, think about who might be feeling left out. These are often the people who are likely to cause a problem when it comes to implementation if they aren't brought "on board". How can you involve them? Most people in the organisation (and many outside too) will have valuable insights to contribute.

Make sure you communicate effectively and frequently throughout the strategic process. "Show your working", invite feedback at every step, and be transparent about changes in direction.

Use repetition in your internal communication around the digital strategy. Keep going over the vision, the goals, the customer needs, and always emphasise the "why". Always try to keep it simple.

Ultimately everyone in your business wants a clear view of where you want to be and how you will get there. Your digital strategy is a big part of that, and it should be welcomed and supported by everyone.

 

Adam Cranfield is a digital consultant and director at DigitalFWD. If you are interested in a free introductory digital strategy consultation, please drop a line to hello@digitalfwd.com.