Successful Strategic Transformation aligns business model modification with strategic objectives, drives change through the correct enablers and secures long-lasting, differentiating business value. To tackle the demands of the future and deliver sustained business impact from Strategic Transformation, organisations must think disruptively about creating value. Digital strategy a fundamentally different way of delivering this value, shifting the competitive landscape and increasing the pace of change in many sectors. Without considering the impact and growth opportunity digital strategy presents for both internal and external customers of your business model, the full end-to-end impact of Strategic Transformation will never be unlocked. The question is, how do organisations cohesively and effectively put this into practice?
Where we are: Digital has diversified traditional business models and altered the pace of change, offering more choice than ever to organisations
Organisations have long been exposed to evolving digital technologies impacting how they operate, what they sell, and to who. But over the past decade this has changed from a force on the periphery to a fundamental tenant of how they do business. Consumer demand for new generation digital services has become the default, even in B2B sectors. Equally, the availability of easily scalable digital platforms boasting leading edge capability, often through affordable subscription based contracts, has meant that new disruptors can quickly become a match for the most established incumbents.
Consequently, threatening new entrants have emerged from unexpected places and traditional competitors have expanded their service offerings beyond where they typically play. Recent Capgemini World Retail Banking Reports have documented how upstart disruptors have not just taken customers and revenue for the world’s most established brands but, to add insult to injury, are now enabling out of sector disruptors to move in on financial services territory. Business transformation through digital strategy, it seems, no longer requires years long transformation programmes and once-in-a-generation investment in new technology.
The opportunity: When considering digital for business model growth, think ‘Strategy’, not ‘Technology’
While digital enablers have unlocked competitive playing fields and increased customer demands, it has also provided the means to offset these pressures and grow the business model. Organisations should see digital as an overarching strategic opportunity to shape a long-term sustainable business model which is a departure from the paradigms of the past.
When done correctly, applying digital technologies to business models will form differentiating business capabilities and foster digitally mature organisations. However, the driver of such digital maturity can often be unclear; perhaps Social, Mobile, Analytics or AI? Crucially, it is none of these isolated technologies, but the role they fulfil based on the organisational strategy within which they operate. The role of ‘digital’ in Strategic Transformation must be driven from the business strategy and not from the technology itself. Technology choices have now become strategy choices.
Many strategies are already enabled by digital levers and should therefore outline a clear commitment to understanding what digital means for an organisation today. Aligning an organisation around this common vision is a key first step in articulating the possible role of digital within a Strategic Transformation journey.
Interestingly, few organisations have even this clarity, with the Capgemini Digital Mastery study illustrating that only 31% of senior executives share a common vision of how the business should change through digital technologies.
The solution: Long-term enablement and short-term coordination
If defined in a way that supports strategic business objectives, digital capabilities can pave the way for organisations to create new competitive advantages with technology. Strategic Transformation then provides the tactics and vehicle to achieve these changes, ensuring the most relevant digital capabilities are considered and integrated successfully across the business model. Incorporating digital within strategic transformation should therefore focus on long-term enablement and short-term coordination of an entire organisation’s revolutionised business model, rather than solving discrete and isolated business problems by deploying individual technologies.
Take developing better customer relationships in banking, for example. Over 70% of banking executives agree on the need to leverage untapped digital opportunities, via collaboration with BigTech partners, making more strategic use of data to improve customer relationships. A well executed Strategic Transformation approach will then enable banks to enhance their digital potential by ensuring that the data collectively accessed can be leveraged effectively across the rest of the business model; whether that be creating smoother customer journeys, developing relationship-based pricing, building personalised loyalty rewards or creating lifecycle-stage products and services.
The journey to execution: Integrate a test and learn mentality into the structured Strategic Transformation framework
With worldwide spending on digital transformation technologies including hardware, software, and services expected to cross the USD$2 trillion mark by 2021, there is no doubt that organisations recognise the importance of this investment commitment. The frustration lies in turning these investments into successful and coherent Strategic Transformation journeys.
Organisations must incorporate a culture that challenges and assesses whether new technologies can complement the business model, avoiding the temptation to falsely see digital as a silver bullet for growth. Once implemented, there must then be boundaries set around digital enablers that foster the continual testing of hypotheses, drive insights from actionable learnings and provide opportunities to either adapt or discard experiments along the Strategic Transformation journey. Digital enablers should be flexible enough to carry companies through changes in the digital economy, in a way that continues to bring a disruptive edge to the business.
Digital will alter the growth trajectory of an organisation, but must be wielded for its strategic value, not its novelty
Digital enablers play a crucial role in unlocking the full growth potential of an organisation, but must be wielded for their strategic value, not for their novelty. To do this, organisations must look to their strategy to drive coordination and integration of digital plays. In this way, strategically integrating digital and understanding its implications across the business model creates something more than isolated IT products or platforms and instead unlocks wider and sustained business growth, reshaping an organisation to tackle the demands of the future.
Isobel is a Senior Consultant in the Innovation and Strategy Team at Capgemini Invent, with experience across Retail and Consumer Goods, Public Sector and Finance. She has a particular interest in the pace of emerging technologies and their impact on changing consumer habits, helping organisations to respond to these pressures and develop their business models for competitive advantage.
Ryan is a Managing Consultant within Capgemini Invent UK’s Energy & Utilities and Strategy & Operating Model teams, and leads the Strategic Transformation proposition within Capgemini Invent UK. Ryan holds a wide variety of international experience in both regulated and non-regulated industries including banking, utilities, government and military aviation, dairy and manufacturing, FMCG, education, and retail distribution.