It’s tough for organizations to think strategically these days, especially when the hallmark of the 21st century has been the rapid changes enabled by digitalization.
From disruptive startups snapping at their heels, to competitors investing in innovation labs, to consumers with the power to broadcast their failures to the world, it’s no wonder that executive boards look to digital strategies as a means of finding control among the chaos.
Is the Strategic Planning Process Broken?
The problem with that approach is that digital strategies are still being developed and executed in exactly the same ways as other strategic plans before them. For example, I’ve personally lost count of the number of 'Vision 2020’ roadmaps which are drawn up by executives as part of annual planning cycles and then communicated through polished presentations.
In short, my hunch is that the way companies are managing their strategies is broken. To test this — and to discover alternative approaches — I recently co-led a research project into this topic.
My conversations with 18 CIOs and heads of digital not only confirmed the failure of classic approaches, but also revealed a lack of alignment on what digital strategy even means.
Solutions ranged from vague vision statements that read like buzzword bingo scorecards, to the creation of siloed digital labs, separate from core businesses — and sometimes both.
Buying Into the Status Quo
It's no shock that the net effect of this indecision is that employees struggle to understand what any of this means for them. In fact, our interviewees named lack of employee buy-in as their second largest concern.
And when companies have imprecise or unconvincing goals that don’t seem to bear any connection to employees’ activities, it’s not surprising that many staffers simply roll their eyes and continue to maintain the status quo.
Bridging Needs and Skills
But the biggest pain point of all — identified by nearly every interviewee — was a gap between employees’ existing digital skillsets and those needed to achieve company strategies. Yet, instead of training employees to bridge those gaps, we heard a reluctance to trust that employees were even up to the task.
To us, this unwillingness to bet on one’s own people through investment in digital skills development seemed more conducive to fostering disengagement and cynicism rather than encouraging the digital transformation CEOs claim to want.
From Gantt Charts to … What Exactly?
These topline findings confirmed that traditional methods of managing strategy don’t seem to be helping organizations meet the demands of unpredictable, digital-age markets.
What’s more, those we interviewed seemed painfully aware of this and had the battle scars to prove it. But they also expressed acute frustration at the lack of alternative options: if not roadmaps or Gantt charts, then what?
Identifying the Necessary Shifts
To address these frustrations, we analyzed strategies from five Financial Times Stock Index (FTSE) 100 companies and compared them to the strategies of five companies lauded as digital leaders. We discovered surprisingly clear indicators regarding the shifts needed.
We believe organizations can use these comparisons as a mini-diagnostic to help assess whether their strategies are pre- or post-digital shift, and provide pointers toward the shifts needed in five key areas:
- Pre-Shift: A company almost always speaks of digital in terms of technology or channels, betraying the attitude that digital is still an afterthought to its core business model.
- Post-Shift: Best practice companies rarely mention digital. When it is spoken of, it is done so in holistic terms to describe market forces, internal capabilities and new ways of working.
- Shift Needed: Companies should create a unified approach to digital strategy, focussing not only on technology, but also on organizational structure, practices, culture and leadership, with the goal of creating an adaptive organization.
- Pre-Shift: A company solely measures financial metrics, which forces an unhelpful reliance on lagging indicators that don’t reveal progress or problems until too late.
- Post-Shift: A company supplements financials with holistic KPIs that pick up on early warning signs that plans are going off track, or indicate where it should double down on solutions that are working.
- Shift Needed: Companies should develop a quantified approach that measures success through lagging and leading indicators to gauge the pace of customer, employee and stakeholder change.
- Pre-Shift: A company is still stuck in the 20th-century mode of annual risk review cycles that emphasize process over outcomes.
- Post-Shift: A company acknowledges the velocity and unpredictability of the world today, and leverages data to sense and respond to risks as they appear.
- Shift Needed: Companies must master an emergent approach to strategy that learns from, and allows for, outcomes that were not originally intended as new situations arise in the environment.
- Pre-Shift: A company refers to annual planning cycles and 3-to-5-year roadmaps. Often within the same reports, they then admit that they’ve failed to spot opportunities and disruption.
- Post-Shift: A company reviews strategy continually and puts mechanisms in place to surface outside-in, real-time intelligence from employees that informs key decisions, using digital tools.
- Shift Needed: Companies should develop strategies that use iterative processes to break down strategic objectives into minimum viable programs that can be tested, learned from and modified using an incremental approach to change.
- Pre-Shift: A company still refers to broadcast communication, indicating that its leaders are still expected to have all the answers. It then compounds that antiquated thinking with the misconception that engagement surveys can fill its knowledge gaps.
- Post-Shift: Company communications are two-way, unfiltered and open, and recognize that the power of the digital age comes not from hoarding knowledge but from activating networks.
- Shift Needed: Companies must make their strategies participatory, inviting employee input into the strategic planning process via social channels to surface ideas and concerns. Companies use employees as ‘human sensor networks’ to spot emerging threats and opportunities.
Strategies That Embrace the Digital Age
Admittedly, shifting to a different approach to strategy is not easy, even when companies know what it is they want to be shifting to. They are working against assumptions and processes that have prevailed for decades and managing a host of demands from investors, board members and the marketplace.
But by using these alternatives as a starting point to test new practices, a little at a time, companies can start the evolution to reboot their strategies for the digital age.