Digital Strategy vs. Business Strategy: Are you guilty of this one fatal mistake?

Do I need a digital strategy in addition to my normal business strategy?

A lot of people think Digital Strategy is something separate from the (normal) Business Strategy. Hence, they often develop a digital strategy in isolation from the business strategy. But, unfortunately, this practice frequently results in a disconnect between the digital and the normal business strategy.

As a strategist, I have seen many CIOs present a digital strategy unrelated to their firm’s business strategy. Once, a client of mine – a CIO of a multinational corporation – tried to invest in a data lake and the Azure machine learning software subscription because his strategy was: “Utilizing Data Science to generate superior value for the business.”

While this digital strategy matched well with the hot trend of advanced analytics, it did not correspond to the firm’s business strategy – which was to introduce a Key Account Management program at the global level in order to match customers’ structure, improve customer service, outmaneuver competitors, and accelerate sales.

For the firm’s executives trying to build a global key account management program, a data science platform and data lake were of limited use. The digital strategy designed by the CIO was not fit for purpose. It would be much better if the digital budget were spent on applications that support the establishment of the global key account management program, such as LinkedIn sales navigator subscription, appointment scheduling app, CRM and sales automation app, note-taking app, and task- and document-management tool.

A CIO should not get distracted by the hot trends, fancy tools, and most cutting-edge technology. Instead, he/she should focus on: understanding what the business people are trying to do; and pondering how to best help them with useful and easy-to-use tools.

I know it is not easy to resist temptation. Especially, with so many consultants, vendors, publications, all touting the benefits and advantages of digital transformation, the importance of harnessing the predictive power in the era of IoT (Internet of Things), and the possibilities opened by ML (Machine Learning) and AI (Artificial Intelligence). Who won't be tempted?

Please don't take me wrongly. I don't say that AI, ML, IoT aren't useful or powerful. I was once the Head of Data Science and Machine Learning for a global apparel and footwear company and the Data Science Expert for a top consulting firm. I am familiar with most data science algorithms, I can code really well, and I know the power of data science – having personally delivered multi-million dollar impacts. No, these modern tools are powerful and can be very valuable. The business potential from data-driven solutions, automatic decision makings, and smart predictions is in the region of billions of dollars.

But this doesn't mean that every problem requires AI, ML, and IoT as the solution. For some firms, they are the right solution. For other firms, they are the wrong solution. Blindly adopting digital transformation is a sure recipe for wasting time, money, and effort.

As you can see, a Digital Strategy should be about how the firm uses digital tools to facilitate and advance its strategy. It should not stand alone. It cannot be disconnected from the business strategy.

On the contrary, a Digital Strategy should be derived from the Business Strategy. It should only be developed once the executives: are clear about the business strategy; can articulate the required actions to achieve it; and understand what obstacles need to be removed.

In sum, a digital strategy is simply a plan to implement your strategy. Nothing more, nothing less.