There’s a lot of shiny new objects in space – in the digital space, that is. So, there’s a lot going on in organizations – from integrating social networks to accepting electronic payments to going mobile to data-driven decision-making to transforming into a “digital organization.”
With so many potential assets demanding new initiatives, executives are busy devising “digital strategies.” Of course, vendor-pushed technologies could meet real organizational needs too, such as the need to create new revenue streams, the need to sell more customized and personalized offerings, the need for deeper customer interactions, and the need for agile reactions to changes in the environment.
The question is: Are executives using the right approach to devise digital strategy so that the strategy would guide them to invest in the right initiatives?
Why IT strategy often failed?
The moment a business unit or department creates its own strategy, a door is probably opened for poor alignment with the organization’s overall strategy. The IT strategy that is created by the IT department often suffers from the same silo effect. And initiatives that are triggered from such a “siloed” strategy hurt the organization because:
- They do not really link up to organizational business strategy
- They do not integrate other business elements that may be strategically-collaborative. That is, there is no business innovation or change.
Talking about IT and business change, Joe Peppard says, “What also seems to have been forgotten are the lessons from these earlier attempts to leverage IT. Unfortunately, the history of IT investments in most organizations is far from stellar: Research over the years suggests that the overall failure rate of IT projects is around 70%. We know that when IT projects fail, it is usually not because the technology didn’t work (although this can sometimes be the case), but because the changes required at an organizational and employee level weren’t managed effectively. Quite simply, adding technology does not automatically confer expected benefits; these benefits have to be unlocked and this can only happen through achieving organizational changes.”
How would you know whether you’re simply following the same old “siloed” approach that often failed?
Warning signs that your digital strategy might be following the IT strategy approach
SAS VP Jill Dyché nicely summarizes the warning signs: “The reality of business siloes means business units have launched their own digital projects. Marketing might be experimenting with real-time product recommendations pushed to customers’ smart devices, while manufacturing might be introducing sensors into the supply chain. Each business unit considers its challenges unique. Functional executives pay little heed to the connection, data integration, and analytics technologies that will ultimately be necessary to optimize these efforts. Exacerbating this is the fact that business units have managed to procure their own funding for these independent projects. They consider the chief digital officer with a wary eye, avoiding engagement lest their new colleague questions in-process work.”
Clearly, you need to do things differently to make your digital strategy help meet real organizational needs.
How to avoid
Derive your digital strategy from the organization’s overall strategy. A great way to do that perhaps is to use Strategy Maps by Kaplan & Norton. However, avoid creating the equivalent of the traditional “strategic IT portfolio.” Choosing from a predetermined list of assets to buy or build is not a smart idea. If you already have such a portfolio, make sure you validate each asset or initiative for strategy translation.