TL;DR
A digital strategy is a plan of action designed around a series of decisions based on contextual understanding.
A digital strategy must:
What is a strategy
Business is like chess in that the hard part is not knowing the rules about how the pieces move, the hard part is being able to look ahead and make strategies. Paul Graham
A strategy is the process where we optimise our decisions on the understanding we have of all our options and their subsequent trade-offs. To do this, we need two things:
- Develop an understanding of our context
- Identify a set of possible decisions.
When we make strategies within a digital environment, we have access to a lot of information upon which we can make our decisions. This can be both a blessing and a curse. It's a blessing because we are more readily able to gain insights, but it's a curse as it's easy to be overwhelmed by a sea of information.
Why have a strategy
The contour of the land is an aid to the army; sizing up opponents to determine victory, assessing dangers and distance. "Those who do battle without knowing these will lose." Sun Tzu
Strategies are inherently helpful because they allow us to do more with less. Like many tools strategy was birthed through necessity on the battlefield. It's not surprising war brought on the origins of strategy, as war creates a situation where two sides each have winner-take-all goal, each with a limited amount of resources and many unknowns. The word strategy itself originates from Greek where it meant, the art of troop leader.
Those who deployed strategies in battle won. The ancient Greeks decimated countless opponents by forming a phalanx, a mass formation of heavy infantry. Although they had vastly superior resources, the US army ended their campaign during the Vietnam War due to the Viet Cong's superior knowledge and use of their country's terrain.
In practice modern business has the same constraints as the people who originally deployed strategies in battle. In operating a business we are working toward a goal, we have a limited amount of resources and many unknowns. Much like in battle, making considered decisions based on an understanding of the context we're operating in allows us to achieve more with less.
How to develop a strategy
In order to develop a strategy we need to go through four phases: identify success criteria, create contextual understanding, frame solutions and optimise through feedback. These four phases will enable us to create a either a foundation strategy where we have no current strategy deployed, or an emergent strategy where we have a strategy and are looking to improve it.
1. Identify success criteria
A digital strategy will usually start to help solve a business goal. Success criteria add specificity to high-level business goals. By making our high-level goals specific we can better understand the scope of our digital strategy, more readily gain stakeholder buy-in and identify our core assumptions to be tested during contextual understanding.
2. Create contextual understanding
Contextual understanding allows us to best represent our environment in order to achieve our goals. When creating contextual understanding we need to highlight important insights and disregard informational noise. Our ability to understand our context greatly affects our ability to create the best strategy. Nokia was the most successful mobile phone manufacturer in the world until Apple unveiled that the context for these devices shouldn't be mobile phones but mobile computing. By misinterpreting their context Nokia lost out on one of the most lucrative market in modern business.
3. Frame solutions
A solution encompasses the procedures and rules that dictate how we use a set of resources to solve a problem or leverage an opportunity. Solutions take contextual understanding into consideration and define the best course to take. It is impossible to have full contextual understanding, it is also impossible to understand how our environment may change in the future. Therefore any solution we architect as part of our strategy relies on making assumptions.
If we don't make assumptions our ability to make a strategy can be suffocated by analysis paralysis. If assumptions are structured correctly we can overcome them when our solution is in market. For example, we could assume that a simplified checkout process will lead to greater sales, we can test this assumption by testing a simple checkout against our current one.
4. Optimise through feedback
What's measured improves. Peter F. Drucker
Feedback allows us to readjust our solutions and contextual understanding based on new insights. How could a general redeploy his troops without knowing how many survived their last battle? In order to gain actionable feedback we need to identify key metrics, measure them correctly and have processes in place that allow for rapid action based on how they change.
Conclusion
In business as in battle strategies give us a competitive advantage by allowing us to do more with less. Digital strategies allow us to:
- Achieve a positive outcome
- Use our resources to the best of their ability
- Make the right decisions
- Create plans that cope with the unknown.