What’s the Best Way for a Board to Approach Digital Strategy?
Stop thinking about it.
That may sound like odd advice. After all, the whole world has gone digital—digital channels, digital stores, digital communities—and most businesses have spent the past decade thinking about almost nothing else.
But I’d argue that digital has become too pervasive to make sense as its own category. There’s no world of clicks separate from the world of bricks. There’s just a new hybrid world where people live their lives—a world in which “digital” is no longer a useful way to organize your thinking.
Boards should focus instead on a related “D” word: disruption. Thanks to digitization, all of us—at work, at home, and on the go—have new expectations about services, products, relationships, and experiences. We want higher levels of richness, relevance, convenience, and timeliness in all our interactions with companies. Disruptors like Uber Technologies, Amazon.com, and Facebook, have found ways to meet rising expectations, and in doing so they’ve defined what “good” looks like everywhere. These tech juggernauts are signaling that they intend to insert themselves anywhere they can remove friction, capture customer attention, drive out market inefficiencies, or strip away information to fuel their data and insight engines.
Most important, as digitization unfolds, power has shifted from companies to people, from supply side to demand side. That means boards need to focus on fundamental questions. They need to focus less on “where the puck is heading” and more on questions that dig in deeper: How fast can we move? Does our company have time to shift from low-growth to high-growth businesses, before disruptors steal our customers? Where do we have assets that can become the basis of new information-powered businesses? And the crucial issue in a time when customers are immersed in offers of low price and one-click convenience: How does our company stay relevant? How do we change our strategy for capturing and retaining customers’ attention?
The point isn’t to be right about the end-state—you won’t be. But you do need to encourage your management team to develop a point of view about how the future is shaping up, areas that your company has strong idea about, areas of weakness that may need more strategic thought, and options that will let you rally behind certainty and probe uncertainty. With this kind of framing, the board can take a disciplined approach to managing risk from digital disruption, instead of just trying to minimize or avoid it altogether. ‘Disruptors at your doorstep’ can become a rallying force and focusing lens —helping your team make clear choices about what to keep, what to start, and what to stop, liberating resources from declining businesses to fund growth and business reinvention. Put differently, think of imminent disruption as a crisis. As we’ve learned from times past, never waste a crisis.
The other critical conversation is about modernization of core capabilities, work approaches, and talent. Often this conversation shows up as an innovation challenge. As large incumbents, can we do new things and do things differently? Can we take a page from the playbook of digital market leaders like Amazon and Google? Some of these companies rent and assemble capabilities to get further faster, as opposed to building and managing everything on their own. They appear to work fluidly across functional and product “silos”—in fact, they have no silos to combat. And they tune their business cadence on the inside to reflect rapid changes in the external environment. In other words, they can operate in agile cycles with integrated teams.
Is your response to these thorny issues a “digital strategy”? I’d argue not. Disruption, on the other hand, requires vigorous debate to focus management energy on doing the right things, faster and with greater flexibility.
So forget about digital strategy. You’ve been losing sleep over it for too long. If you focus on the right issues, you won’t necessarily sleep better, but you’ll get a lot more value out of those wakeful hours. And value, after all, is the point.
Rick Chavez is a Partner and the Americas Head of Digital at Oliver Wyman.