Looking to develop a digital strategy? Start with the basics “but with a digital twist,” says Mark McDonald, managing director and digital business strategy lead for Accenture. McDonald, a keynote speaker at the Fusion 2014 CEO-CIO Symposium in Madison, Wis., said every digital business strategy should answer five questions:
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1. Who wants to be your customer? “That’s a fundamentally different question than we’ve had in the past,” McDonald said during his talk. “Who are our customers presumes we are in control of who does business with us.” But in the digital world, it’s the customers who have the control. In a blog post, which he published after his talk, he expanded on this idea, writing, “This inverts the answer to this question and the approach to finding that answer.”
2. Why will digital outperform the current business model? Don’t fall into thinking you can simply digitize the way you’re already doing business; that “does not constitute a digital business strategy,” writes McDonald. To avoid “the digital substation trap,” start asking why. “It’s a motivation question,” McDonald said. “Yes, I can put it out there, but why are people going to use it and why are people going to abandon a different kind of activity?”
3. Where will the value be demanded and delivered? Related to the question above, digital businesses demand different thinking. And things as basic as a “value chain” simply don’t translate. That’s being replaced by customer networks and ecosystems, according to McDonald. One way to answer the question of where value will be delivered is to think “less about where you play and more about who you play with,” McDonald writes (emphasis added).
4. When will digital transformation happen? Only a soothsayer could pinpoint exactly when a market will transform or face digital disruption but, McDonald said, if you can learn to recognize the “forces that shape the market,” you’ll be able to see the storm before it strikes. Signals to consider: customer direction, product selection and pricing, and even product information intensity.
5. How will you win? To answer that, McDonald suggested businesses must first know this: How will the players assemble — both internally and externally? Both questions get at the same thing: survivability. As he pointed out in his blog, a strong digital business strategy needs a direction. One to consider: How to shift from using new technology to improve business as usual to using “new technology to bring new value proposition and operations to market.”