How to Align Your Digital & Business Strategy

What’s the difference between your business and digital strategy? In truth, there should not be separation, but alignment.  

Almost all organizations understand the importance of defining business strategies. Most know that they need effective digital tools to execute these strategies. Surprisingly, few know how to align their digital and business strategies. Many are eager to invest in the newest technology, not knowing if it is truly beneficial to the business. A large percentage waste resources in the process.

Digital solutions are merely the vehicles that transport an organization towards actualizing its vision. By following the right processes, you can bridge the gap and define digital strategies that are aligned with, and help you hit your business targets.

Why Digital and Business Strategies Should Align

Without the right digital solutions, it’s impossible for businesses to make, deliver, and market products and services effectively. Business and technology are so integral that, according to Forbes, every company is a technology company. Technology is so pervasive that it is the means by which business is conducted. Therefore, business strategies are digital strategies.

As I was telling a client recently, technologies that don’t enable your business strategy waste time and money. You can’t be productive unless the initiatives you pursue takes you closer to achieving your mission.

With a tech portfolio that clearly links into a firm’s overall objectives, you’ll be able to:

• Identify and invest in the right technologies, not distractions;

• Ensure the right information flows to and from all levels; 

• Properly prioritize projects to get the right support and resources to make your initiative a success; and

• Build better solutions that support your commercial goals. 

How to Define your Digital Strategy

1. Focus on the Purpose of the Business

Because business and technology are so integrated, digital portfolios do not start with technology, they start with business planning. First and foremost, it’s vital to have a mission & vision that has everyone’s commitment. This all boils down to important questions about why a company exists, and what it wants to achieve. With a well-defined vision (looking at the next 3-5 years), you can be aspirational while ensuring your goals are realistic and actionable. This vision will drive all short-term technology selections and investments. 

Once you’ve defined your organization’s purpose, it needs to be effectively communicated to stakeholders at all levels. Digital teams in particular need to know what they’re working towards to be able to select the right solutions for the task at hand. They also need to know the why behind the changes so that they can be motivated to adapt.

2. Assess the Market Environment

Before you can brainstorm innovative projects to invest in, you need to understand the market environment the digital strategy will live within, and how it impacts the business’s industry position. You can assess the market landscape by using Porter’s five forces model, which will give you a better understanding of the following five areas:

• Rivalry among competitors

• Balance of power between consumers and your business

• Threat of substitution and choice

• Supplier relationships and bargaining power

• Ease of entry into the market for new and disruptive rivals

The output of the analysis is shown in the table below. It should summarize the threat level of each variable, with a description to explain the reasoning. This macro-level picture will prepare teams for activities like the SWOT, and to comprehensively think about innovations.

3. Build a SWOT & Generate Ideas 

With the knowledge you gain from Porter’s Five Forces, you are now prepared to conduct a detailed SWOT analysis. Too often, teams jump into the SWOT before assessing the market. Going through the exercise above, first, will prepare you to complete a better SWOT analysis. With the SWOT, you’ll be able to generate ideas on how to use your strengths to capitalize on opportunities, improve your weaknesses, and minimize threats.

This approach anchors the ideation process to the realities of the market, and the capabilities of your organization. From here, design thinking will be more focused, enable faster movement, and be tied towards achieving the business’s vision.

4. Define Strategic Filters 

At this stage, you’ll likely have a pool of great ideas, but they might not all be the best use of your resources, because they may not align with business targets. You need to first establish a set of parameters to filter ideas and determine which are worthy of further investigation.

The parameters and filters you choose will depend on a number of company-specific factors and your specific goals. The key is to balance qualitative and quantitative filters. These filters help you to decide which initiatives to explore, so you can drill down further from there. While filters will be specific to each business, the first level of filters should always be, “does this align with the vision and mission of the company? will this initiative bring us closer to where we want to be?”

Examples of filters can include: 

• Makes it more likely to achieve the vision

• Makes it easier to do business

• Improves supply chain efficiency

• Improves customer centricity

• Plays to the company’s strengths

• Has good Return on Investment

There can be many filters. All have to be relevant to your organization so that teams avoid getting distracted by the wrong technology. The main idea here is to simply define a criterion so that teams do not invest in initiatives unless they meet a specific set of standards.

5. Apply the Filters to Each Initiative Generated from the SWOT

Once you’ve identified the lens through which you judge initiatives, you can begin to whittle down your bank of ideas. Examples are given in the tables below. Each idea, or initiative, is a table, and each row is a filter. If an idea passes a filter, it gets a check, if not, it gets an x. If the idea doesn’t pass enough filters, it gets discarded.

It is okay at this stage if you do not have enough information for some filters. For example, ROI may not be known at this early stage but can be updated later. For now, It may be enough to know that ROI is likely high, while the exact number is TBD pending a discovery.

The outcome from this exercise should be a shorter list of possible initiatives that are both feasible, and advantageous to your business and vision. See examples below for more details.

6. Evaluate Risk, and Remove Initiatives That Are Too Risky 

A project may pass all your filters, but it’s unlikely to be a success if it puts you in jeopardy. With the remaining ideas, evaluate risk, and remove the ones that are too risky. There are five primary factors to consider when evaluating risk. All five are given below.

7. Prioritize Remaining Initiatives

Now you should have a shorter list of feasible initiatives that are appropriate for your risk tolerance. If this list is too much to investigate in the short term, you’ll need to prioritize. Separate what is worth being investigated immediately, from what will be backlogged for later. Much of this may be driven by available resources.

8. Conduct UX Research, Contextual Inquiries, & Map the User Journeys

Now that the best ideas have come into focus, you’ll still need to map out what technologies will bring them into being. Daito helps businesses investigate and map out the processes and user journeys that take concepts from the drawing board and into reality.

Now is the time to Identify what needs to change from the current state to execute each initiative.

9. Build the Business Cases

Having taken the time to explore the current and future state, you can now create a strong business case. This should include what needs to change, which performance metrics need to be used, and what the return on investment really is. Update each initiative’s actual ROI as needed.

10. Build Your Digital Strategy

By working through this process, you can build a bank of valid, actionable initiatives. This is where your technology strategy starts to take shape and becomes a working appendage of your business strategy. Below is an example of a portfolio of initiatives. Each bubble is an initiative with a label. The bubble size and number correspond to each initiative’s ROI. The X-axis maps to which initiatives will be executed first, and which will be executive last. The Y-axis relates to how transformative the initiative will be to the business. All initiatives are squarely focused on achieving the business vision because they were born from the business planning process.

From here, the next step is to begin resourcing each initiative and begin running your innovation program.

Bring Business Visions to Life with Digital Strategy

Many digital initiatives aim to break down siloed thinking, but to succeed we need to break out of the siloes we place strategies into. If your technology strategy doesn’t enable your business plan, it isn’t worth pursuing. 

Daito helps clients to look at big ideas in granular detail and distill them into more powerful projects that support change. When your digital efforts are focused on bringing your commercial plans to fruition, you can start to properly resource, communicate, and WIN with technology.