From Digital Strategy to Strategy Is Digital

Abstract

The tsunami-like smartphone revolution has fundamentally reshaped consumer behavior. It has caught retailers by surprise by bringing changes that were unforeseeable just a few years ago. This in turn is affecting value chains, which are becoming much more agile. And some organizations are adapting their products to incorporate digital features into traditionally physical experiences. All of these shifts are a result of big data.

Appendices

Appendix 1

2.1.1 The Evolution of the Corporate Strategy

This appendix provides additional information about some key business trends not discussed in the chapter.

2.1.2 Blue Ocean Strategy

This concept first appeared in 2005 (Kim and Mauborgne 2005). In a world of fierce competition, this model proposed to focus on untapped new markets in which to grow the company. Unlike red oceans, which refer to an ecosystem swarming with blood-thirsty rivals, blue oceans represented undiscovered territory with new market niches void of competitors.

Many companies took advantage of such opportunities. Uber was one of them. Many other successful companies like Apple and Google were not the first ones in their ocean yet they still managed to be highly successful. And companies that did create their own blue ocean, soon saw the ocean turn red as other organizations copied—and sometimes improved on—their original idea. So while this strategy can allow a company to make a U-turn in the way it operates or create a new brand from scratch, it does not offer a strategy for the long term.

2.1.3 Blurring Industry Boundaries

In 2013 Professor Thomas Malnight et al. published a book based on interviews of more than 150 CEOs and global leaders (Malnight et al. 2013). The goal was to offer insights and practical tools for leaders to prepare their businesses, and themselves, for the future.

One of the conclusions was that fundamental trends are reshaping the business landscape. For example industry boundaries are blurring, or even falling, and the expectations—or demands—of consumers, employees and even society as a whole are changing. Consumers have become much more proactive. They want to be listened to and be influential, and they expect organizations to react to their feedback.

To survive in this new landscape, Malnight proposed a two-directional thinking model that involves looking into the long term to define the company’s major strategic foundation while focusing on the short term to adapt the strategy to the current reality. This two-directional thinking requires leaders to reassess their playing field to form a clear-eyed view of the world around them. It also requires them to redefine their ambition as a basis for building a long-term agenda. While no one can predict the future with certainty, developing an informed point of view of how the future might look and what it will take to be successful is the critical foundation for leaders today.

In preparing for the future, leaders need to understand the new reality by observing it and analyzing it on its own terms as well as throwing away the old ways of operating. Boundaries are falling, “giving way to complex, connected ecosystems that are more like webs than a collection of boxes” (Malnight et al. 2013). Competition can come from unrelated fields and is no longer centered on what a company produces but on what consumers want, which again changes the playing field.

2.1.4 View of the Future and Back

Once we know the “why” of our company, we need to go back to Malnight’s model and prepare for the long term, bearing in mind that change is constant and that the pace of change is increasing and becoming more unpredictable, which means that planning and predicting the future based on the past we know is no longer going to work. Companies need to make up their mind about the future they want, and at the same time manage the short-term reality in a dynamic way.

Planning the long-term future while managing the short-term reality is not easy. Often managers remain stuck in the short term as they respond to the intense pressure from various outside players to deliver immediate results, thereby ignoring the future they had planned.

Two-directional thinking is the solution to manage both realities at the same time. The first direction is the usual one, where thinking goes from where you are in the present toward where you want to be in the future; the second direction, which often happens in parallel, requires leaders to imagine how the future will be and where they will be standing and, from there, look back to the present to see what steps are needed to reach the future they want to be part of.

Appendix 2: IMD Case LEGO