A Fresh Take on Strategy Development
Businesses have been using the same formula to develop strategies for many years. However, is this formula still valid in today’s fast-paced business environment? etventure’s Andreas Stark, Vice President North America, explores this question – and provides a fresh take on how to approach digital strategy.
As a business leader, you’ve probably been through the development of at least one strategy or “five-year plan”. The traditional approach to strategy development is very “top-down”, and this approach certainly has its merits. However, the traditional approach is not designed to uncover disruptive business opportunities. So, what is the alternative?
With top-down strategy development, a SWOT analysis is used to map company strengths against current or future market trends. If this exercise is done well, it is a valuable way to identify business opportunities. A top-down strategy is then broken into objectives for your different business units – and operationalized on the business level.
The weak link in this approach – its strong focus on business drivers and market trends, rather than everyday customer needs. For example, the traditional top-down approach will identify if customer demand for a product is growing, but not how and why customers actually want to buy.
Forward-thinking businesses have recognized this gap, and shifted to a purely user-centric “bottom-up” approach to strategy development. This can be a critical mistake – as a pure bottom-up methodology is not a viable replacement for a top-down strategy.
Instead, bottom-up findings should be used to provide an additional perspective, that can be used to sharpen the focus of top-down findings. So it is not a question of top-down versus bottom up, but rather a question of what to do – and in what order.
Striking a Balance
Fundamentally, companies should have three strategic goals when it comes to digitization:
- increase revenue
- improve customer satisfaction
- reduce cost
Where to Start
So, the most important question is where to start: with your business needs – or customer needs?
Our extensive experience shows the best first step of strategy development is customer discovery. Why? It is imperative that you understand your customer pain points and their journey. In almost every case (and often best case), only a part of your customer’s supply and value chain meshes well with yours. Depending on your business, this might be only procurement and sales in B2B, or sales and retail if you do not have direct customer distribution channels. Regardless of the path to your customer, your customer discovery process still needs to look at all customer needs – from business partners (retailers) through end users.
A successful customer discovery phase will identify critical customer pain points – and indicate what key drivers trigger buying behavior. Now you are equipped to match these critical pain points and key drivers with the top-down capabilities and assets of your company. The business opportunities identified through this analysis will be a great foundation for your digital strategy, which can then be used to align overall objectives for your entire organization.
It is tempting to take a “big bang” approach to strategy development – doing the research once, setting the direction, and then pressing ahead. The danger with this approach – you are unable to quickly correct course if any of your core assumptions are incorrect.
The Iterative Alternative
It is far better to rapidly iterate to prove out your ideas, and then continually adapt and refine your strategy as you learn. You can leverage MVP-driven development and Two-Speed IT to move at an incredible pace, while minimizing your costs and risks.
Combining elements of classic top-down and modern bottom-up approaches to strategy development is a winning combination – with the potential to uncover game-changing ideas for your business. However, the approach is only one ingredient for success. Remaining focused on your key objectives will ensure your strategy and innovation projects are clearly structured – and are aligned with your overall strategic purpose. Strong leadership from your C-Suite is critical to retain this focus – and drive results.
If you’ve been through strategy development before, you know that it all sounds simple in theory – but can be much more difficult in practice. If the process seems daunting, consider engaging a strong partner to help you – from planning through execution.
About the author:
Andreas Stark is Vice President North America at etventure. He is an experienced digital consultant and entrepreneur, having worked in top tier firms such as Deloitte, as well as launching his own startups.