The benefits of alignment of your digital strategy and your business strategy include speed to market, business model innovation, and improvements in value creation and capture. Alignment between your digital and business strategies is a good thing.
However, before we go any further, it is worth pausing to confirm that we are on the same page in terms of what we mean by digital strategy and business strategy.
Business strategy is a defined path of action to create value by differentiating yourself in the market. Digital strategy is a subset of business strategy whereby a plan is formulated to achieve specific goals through a digital medium.
While it’s straightforward for us as marketers to define digital marketing strategy in terms of different digital communications to support goals of increasing online leads and sales, defining digital strategy is more difficult.
The reason is that for many business managers ‘digital’ is still often simply taken to mean ‘technology’ or IT.
Marketers and salespeople will see a digital strategy as meaning increased leads and sales, whereas IT and operations employees would look for cloud-based system and data analytics.
Depending on what guiding documents you already have or are working on, like your plan for the year, your larger strategic plan, and/or your 5-year plan.
It’s time to include a digital plan into your existing departmental annual strategic document. In the rapidly changing digital world that we all now live in, business and digital strategies must be aligned and informed by each other.
The components of alignment
A company needs to adjust their products / services, business processes and customer experiences to be fully digital.
There isn’t a distinction between the two.
Digital is how they do things. Each person in the company understands customer expectations. They use digital tools and data to service customers as well as provides feedback in order to continuously improve or innovate. The company’s digital strategy becomes indistinct from information technology strategy and overall business strategy.
There are three key components of a strategy – differentiation (or focus), action, and value. You must cover each of these components to gain the benefits from alignment.
This provides the direction for your digital strategy. While digital can support multiple forms of differentiation, it is critical that this is limited to your agreed strategic focus. Reducing focus dilutes the required action and resulting value.
Digital requires access to resources in terms of people, money, and assets. The wider your variance in alignment, the more difficult you will find to get access to the required resources to deliver on your digital strategy. Further, digital strategy often requires access to resources that sit across multiple business units. This means that you must create or at least approve the digital strategy at the C-level.
This defines the expected benefits from differentiation and action. These benefits generally consist of benefits to the organisation, customers, staff and partners, and or the community. If you can prove that your digital strategy contributes directly and or significantly to the expected benefits, you are much more likely to get access to the resources you need for successful delivery.
The process of alignment
We use a three-step process to align digital and business strategies:
1. Understand the existing business strategy including the underlying key performance indicators, measures, and reporting cycles.
2. Complete an investment logic map as an input to the digital strategy. This will provide you with the key drivers for a change that will leverage information and technology, and the expected benefits from making a change. When you define the expected benefits, you can easily reference these against the value statement in the business strategy. An investment logic map also provides you with a strategic response to deliver the expected benefits, and the top-level change requirements. Together these last two points help you to understand the resource requirements and helps you ensure that the proposed change supports the agreed organisational focus (for differentiation).
3. Develop your digital strategy and then use the relevant key performance indicators from the business strategy to determine the success of your digital strategy. Note that the measures are likely to be different but the key performance indicators must be the same. I also recommend using the same or shorter reporting cycles so that you have the appropriate proof to support your standard strategic reporting process.
Most companies are still evolving or maturing from a digital perspective. I suggest starting with the company’s vision, business objectives/goals and priorities and identifying how digital can support these.
This can help focus the strategy to those areas that matter most. For example, if the company is focused on growth through better distributor relationships and more repeat business – focus your digital efforts on processes, app’s and data that will drive this.
Often IT or Marketing leaders will need to bring the digital opportunities to the broader business strategy conversation and ensure the right strategies and initiatives become part of the broader strategy. This clear alignment makes the Digital agenda relevant and helps pave the way for broader support and funding of digital initiatives.
Selecting digital priorities that don’t truly help deliver on the business goals or objectives or set the stage for these possibilities can be a frustrating endeavour. Conflicting objectives and battle for company resources and mindshare often doom these digital strategies.
In companies where you don’t have the alignment or guidance of an enterprise digital strategy, offer opportunities where digital can enhance the broader business strategy (e.g., new digital channels to exploit). This informing of the broader business strategy helps the company move toward alignment and can demonstrate your digital leadership.
In sum: You improve the chances of real impact of your digital strategy when you have a business strategy and digital strategy alignment. If it’s not coming from the top-down, seek out ways to influence and align where you can.