As business leaders work to create an efficient digital business strategy, they must first understand the forces that help define a digital strategy. At a high-level, we can define digital business as the creation of new business models by blurring the digital and physical worlds. This unprecedented convergence of people, business, and things will disrupt existing business models and create opportunities for new models to succeed (or become mainstream).
In “Digital Business Key Initiative Overview,” Gartner says, “Businesses will introduce new products and services, even new business models, which connect people, business and things (physical objects that are active players and contribute to business value). This will drive revenue and efficiency that will ensure businesses' ability to compete for years into the future. The estimated economic value adds for the Internet of Things (IoT) —just one component of digital business—is expected to be $1.9 trillion globally by 2020.”
If that’s the case, it’s essential for the CIOs/CDOs to take a hard look at their current business models and embrace change by building competent strategies that blur the digital and physical worlds of their businesses. Ignoring this need or planning to act when the market shapes up is no longer an option—the Ubers and Teslas of the world are already engaged in defining new business models that are overtaking existing business models.
CIOs/CDOs should ask the following questions to reassess their business models in light of digital business:
- How can our business be made substantially more valuable through disrupting the ways people, business, and things work together?
- How will digital business introduce new areas of competitive advantage and change the business ecosystem?
- Do we have leaders who can convert digital business theories into concrete reality for the business?
- Can we exploit technologies such as IoT, smart human-machine interfaces, 3D printing, rapid development/prototyping techniques, and digital security?
- Can we leverage new service offerings from business or IT consultancies to reshape the business value chain?
With those questions answered, the next step is a structured approach to identify, assess, and implement the various components of the overall digital business strategy. There are four major phases involved:
- 1Discover. Discover the “digital aspiration” in your business value chain and identify whether disruption will consist of adding to your value chain or transforming it completely. We recommend a hybrid approach that begins as fragmented add-on and evolves into a complete transformation.
- 2Assess. Assess all aspects of the results of discovery (this could be anything from a simple SWOT analysis to a more complex analytical assessment). At this point, it is important to identify and prioritize the components within the value chain that most need digitization or those that generate most value for the business.
- 3Acquire. Try to simultaneously build, hire, and acquire competency based on the results of the first two phases. A simple 2x2 BCG model could influence your decision to build, hire, or acquire capabilities and competency. In most cases build, hire, or acquire will suffice, but some may want to consider joint venture or collaboration to meet certain digital goals.
- 4Refine and Operationalize. Learn from your digital business experience and refine the business model. In other words: innovate while providing stable operations.
This DA2RO approach is designed to help businesses take a strategic yet tactical approach to building a proactive digital business strategy and competency.
Post Date: 1/27/2016