Digitization enables us to keep the economy going in the age of COVID-19 and it is a possible way out of the crisis.
Analogous to previous phases of economic downturn and exceptional situations, a positive upward trend will follow even after the victory over the COVID-19. Although the duration of the current exceptional situation cannot be estimated at present and the situation must be reassessed daily, companies must continue to be able to build a bridge between supply and demand for products and services even under the current conditions. Resilience, agility, the ability to make the right decisions from reliable information, and the timely implementation of the right measures will prove to be key success factors for companies.
The Corona crisis is unparalleled in its intensity, its degree of globalisation, and its economic impact. Nevertheless, we can learn a lot from previous crises when specific challenges and tasks must be solved in order to maintain economic success and ensure the continued existence of the company.
What is a digital strategy?
A digital strategy is the application of digital technologies in business models to create new differentiating business opportunities. In the future, every business strategy will be a digital strategy.
A digital strategy aims to improve business performance based on technology. This can be done by creating new products or by improving current processes. The digital strategy sets the future direction of an organization to create a competitive advantage through technology. At the same time, it defines the tactical measures to achieve these changes. This includes changing a business model, as new technologies enable innovative companies to provide entirely new services.
Today, technology integrates itself into business processes and is, therefore, more than just hardware or software. As more and more companies use digital technologies and as they move further along the path of digital transformation, digital strategy and business strategy will become one. Nevertheless, it makes sense to use the term “digital strategy” to focus on the efforts behind the digital initiatives.
The digital strategy is both a concept and a thing, i.e. a digital strategy should ultimately serve to create a concrete plan or roadmap. While you can change specific tactics that apply to your business, there should be a clear understanding of what “digital” means for your business.
Suppose your ultimate goal is to monetize the basic digital product that your company has already developed and used internally. First, you define a plan to make it available and sell it to individual users. Later, you realize that you can generate significant value by selling it to companies and having them integrate it into their own systems. Your digital strategy has not changed, but your plan has. If the central idea of the digital strategy is changed, this is accompanied by a reorientation of the company. Ideally, however, an organization should be flexible enough to react and change when necessary.
Where to start?
How do you build a digital strategy? First, ask yourself these 5 questions. The answers will help you understand more about digital technology.
- Are digital technologies changing your industry?
- How can digital technology add value to your business?
- Could digital technology change your target customer?
- Does digital technology influence your customer’s value creation?
- How can digital technology help you strengthen the core competencies that give you a competitive edge?
For some companies, there will be obvious answers to these questions, especially for those who have already faced disruption or are in competition with new digital players. You need to identify the impact of digital changes on your business and derive and refine insights from industry trends based on specific values. These then form the cornerstone of the digital strategy.
Common elements of your digital strategy
For success in the digital transformation, you must consider various elements:
Identifying a Leader
Selecting the right person based on corporate culture, structure, and priorities is probably the most important part of implementing a digital strategy. Whether the leadership rests with the CEO or a chief digital officer, their influence must be commensurate with the scope of the digital strategy. Otherwise, it is difficult to engage and win overall departments to make effective and necessary changes.
Attack or Defense
Companies benefit when they categorize their potential threats and opportunities in digital business and align them with their own goals. It then becomes clear whether new initiatives require a proactive or defensive stance.
A digital strategy often includes a process to assess whether new technologies are really driving growth. If there is a fear that your company already has a digital backlog, it is tempting to launch projects without first assessing how they fit with your current strategy. A balanced approach is recommended to avoid wasting resources on initiatives that don’t meet your needs and priorities.
The goal of the digital transformation is to create an appropriate foundation for digital business. This involves building an organization that constantly reinvents itself and can keep pace with changes in technology and new customer expectations. The digital strategy should be visionary enough to guide a business through the changing digital economy in a way that gives you a digital advantage.
The COVID-19 crisis affects more and more areas of people and companies’ lives. A crisis strategy is essential for the survival of the company. For this reason, companies of all sizes must consider how they will run their business in the coming weeks, months, and how they will react in which situations. Diversification of the business strategy and maybe even of the business model is necessary! For the vast majority of companies, digitisation is currently leading to a considerable change in the competitive environment too. This is also an opportunity to conquer new markets and new target groups with digital business models.