Updated: Jan 20
The rules of business in the new digital world has changed dramatically. The traditional ways of setting up the value proposition and differentiation the market place has been changed and if businesses ignore this rule, their business will die.
The world has changed dramatically and indeed, the rules of the business have shifted as well. Years ago, if you wanted to be good at business and have a winner value proposition for your target audience, all you had to do is to make things better (Operational Efficiency) or cheaper price. This was the winner strategy in the traditional legacy markets and it used to work very well.
Now in the digital world, these strategies are still playing an important role, but they are not the actual real differentiation in the market place. This means, if you come up with just a small improvement on price or faster service, chances are you competitors can do the same as well.
I will give you an example. If you go to a electronic store chain and look for an item to buy, there are lots of options that you can make your purchase. If you are looking at a TV for instance, you can see the specs in the store and ask questions from the sales person and educate yourself in this area. And as we all know, you can purchase the TV from an online retailer to get a better price. This means, the store chain, could not capture the actual value from their potential buyers. To be able to understand this better, I recommend this short presentation by professor Sunil Gupta from Harvard Business School:
Another example will be if there is a market leader in technology space (Let's say a Router manufacturer), and you as a competition want to expand your market share from 10% to 15%, just offering a cheaper (cost effective) price messaging will not get you there. The value provided by you as an alternative product or service must be exciting enough for your target market and wake them up in the morning happily.
The difference in these scenarios between the vendors that are winning and those that are fading, is all come down to the digital strategy that these vendors are adopting.
Meaning, you cannot be in the business (enterprise or startup) and have no clear understanding on who you want to be in 1 year or 2 years time. Please note that I intentionally did not mentioned 3 year or 5 year plan, because these timelines will not work in today's business world. Many companies and organizations will die in 3 years time if they do not do anything about the changes that are happening around them (remember Blockbuster?)
If you as a CEO or CIO of an organization, simply ignore the new rules of the business, there will be no business in a very short period if time. This is a brutal fact and unfortunately it is true. So when you should start drafting your digital strategy is actually now!
The question is, what we should focus on? This is a great question. The answer is "what your customers want?". This seem like a very basic answer but shockingly many organizations do not know what they customers want. They think they know what they customers want. The normally sit in the corporate meetings and discuss what great products they are now offering, but no one is actually is using them. In my opinion, best way to understand what your customers and target market want is to simply ask them! This way you start engaging your target market in drafting and shifting the strategy from the very beginning and this engagement will bring lot of value to the table. The other important force in determining what to do, is to engage your employees as well. You want to know what is now working in the field and what questions your customers are asking on a daily basis. Plus, you can make things simpler for your employees as well and we all know what happens when employees are happy.
And now getting back to the original question, what we should focus on when drafting digital strategy? The good news is there is only two potential choices.
This means you start asking yourself, what my customers are asking right before or after buying my products and services? Do I need to shift my vision to cover all those situations as well? How I can provide personalized relationship with my clients on a daily basis and also deep enough so it brings brand persistence, meaning clients persist on doing business with me.
The best example will be GoPro (https://gopro.com/). GoPro is not just a camera that you put on your head. It is the engagement and experience of athletes that can share their stories and adventures through great videos and sharing them online.
From the operational perspective, GoPro is not just a camera manufacturer. They are a data company that can capture millions of videos every day around the glob and see which part of the world which sport activity is more popular. The they can drive more ads or more accessories to that part of the world. They can start investing on branding and marketing activities like sponsorship of different sports depending on how many videos from those activities are uploaded. So they become more smarter in what they are doing.
Digital Products and Services
Here is where you put your focus on building the best products possible for your target market. The best example is Apple (https://www.apple.com). They build such a great product that can satisfy almost all the needs of their customers. The built such a great brand and product, that every apple employee in the apple store is a one man shop. Meaning they have access to all the tasks possible and have full access to the entire operation information and supply chain transactions all the time. Radical transparency in these scenarios are the winning strategy for Apple. If you go to one of the Apple geniuses in Apple Store, they are able to sell you, they are able to book you for repairs, they are able to replace or change the faulty phone and all other tasks that you may think of. This means the the customer is only interacting with one person when they are in the store and they do not have to run to different departments to do a simple job.
The good news is the business can go either way depending on what type of organization you want to have in 1 year or 2 years time.