Digitization has transformed the way businesses operate. However, transformation brings a new set of roadblocks and challenges for the venture.
In this article at McKinsey & Company, Jacques Bughin & his co-authors explain that in a short span of time, smartphones have become a digital need for humans. Be it vacations, sharing rides, social connect, and even keeping a watch over old and sick parents, everything is just a click away on smartphone apps.
The acknowledgment and clutch of digitization are inexplicable in the corporate world. Many undertake digital strategies as the most certain initiative to achieve growth, but it may not bring growth unless the digital initiative are sound. At present, when every organization is anxious about its digital future, failure of digital strategies is not a positive sign. Here are some problem areas in digital strategies that organizations need to avoid:
- Fuzzy Definitions: Even being in an active part of the digital world, very few people know what ‘digital’ actually means. Due to a lack of clear understanding, many organizations struggle to connect their digital strategy to the venture. This may leave them adrift in the fast-churning ocean of digital transformation.
- Misinterpretation of Digital Economics: A set of core economic principles memorized years ago are no longer sufficing the need for fast-changing digital economics. Mixing old school learning with modern economics will only create confusion. Digitization is causing major disruption, frequently and faster. To keep pace with the modern setup, learn the new set of digital economy rules.
- Overlooking Ecosystems: In the digital arena, strategies are developed solely for the growth and advancement of an industry-specific firm. Tools or platforms that allow digital players to easily move across industries and diverse sectors are gradually destroying the conventional approach of tracking rivals’ moves closely. While it is clear that not all ventures are efficient in operating frictionless in the digital arena, some platforms are rapidly rewiring even physical markets. Thus, changing the way traditional companies need to respond. In a world of ecosystems, when industrial boundaries are getting blurred, digital strategies need a major facelift.
- Overindexing on the ‘Usual Suspects’: Many organizations remain concerned about the digital threats imposed by digital natives. Keeping too much focus on the usual suspects is dangerous because incumbents too are digitizing and trembling competitive dynamics. Significantly, the high performing incumbents impose a major threat to the revenues of conventional players as digital hackers do.
- Missing the Duality of Digital: For many organizations, the pace of digital disruption is uneven, and precisely, they cannot walk away from existing businesses. The solution for them is to digitize their existing businesses while innovating new models for the future. They need to understand that transforming the core leads to way lesser costs and much higher customer satisfaction for existing products and services.
Click on the following link to read the original article: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/why-digital-strategies-fail