ByDan Wald,Romain de Laubier, andTauseef Charanya
A lot of ink has been spilled telling the stories of companies felled by digital disruption— think Kodak or Blockbuster. What gets far less attention is the way traditional incumbents are winning at the digital game. For companies like Starbucks, John Deere, and Unilever, digital is driving new sources of competitive advantage, growth, and value creation. Incumbents have huge advantages—resources, customer relationships, and global scale, to name just a few—that when tied to the right digital strategy give them the edge over smaller rivals.
In our experience, successful digital transformation must rest on a foundation of smart digital strategy. And smart digital strategy, like traditional business strategy, is about making wise investment choices to maximize competitive advantage, growth, profit, and value—and then implementing with discipline.
In many traditional industries, the digital winners’ circle is still up for grabs. Here are five rules for how to get the most from your digital strategy. (See Exhibit 1.)
1. Assess the Strategic Impact of Digital
Good digital strategy starts with a rich understanding of the competitive environment and how it’s likely to change. Because new technologies can radically reshape business economics, it’s essential to think through the implications for your own organization and your broader ecosystem of customers, suppliers, and partners. What new offerings can digital enable? What new competitors can it empower?
The impact and opportunities of digital will vary by industry and by function. Core business processes can be reinvented; for example, supply chains are being reconfigured thanks to Industry 4.0, making it possible to operate smaller, more flexible facilities closer to customers that can rapidly deliver new products tailored to local demand patterns. Digital platforms and their related ecosystems can offer access to borderless global markets—consider Airbnb. And digital services, often data driven, can radically enhance differentiation and lock in customers—think predictive maintenance offerings to increase uptime of aircraft.
The key is to open your mind to the full range of strategic possibilities—and risks—that digital brings. What are the essential technologies and their cost implications? What new capabilities could be required? What new and advantaged positions could you occupy in the future?
Consider Domino’s Pizza. Digital wouldn’t replace pizza, but the company realized that digital could strengthen its advantage in speed and convenience. Its consumer-facing mobile app streamlined the steps for ordering and receiving a pizza (and capturing happy-customer feedback). An interesting fact: Domino’s and Google both went public in 2004. If you’d invested a dollar in both, you’d have made more money with Domino’s.
2. Set Your Digital Ambition High
Organizations that win at digital start by thinking big—whether seeking to strengthen existing advantages or to tap new ones. The best digital strategies aspire to move the needle on value creation. This is especially true because in so many digital domains, network effects create winner-takes-all situations, in which first movers and smart fast followers have the edge.
Digital strategies fail more often because of too little ambition rather than too much. Kodak invented digital photography, and Blockbuster developed an online movie platform before Netflix did. But these historically successful, market-leading organizations starved those opportunities for funding and organizational focus because they prioritized their legacy businesses.
The coffee company Starbucks embraced digital to make up for lagging same-store sales. It found new ways for customers to order and pay for their coffee by developing a mobile payment app and rolling out digital loyalty programs. The result? Mobiles sales increased twice as fast as in-store sales.
The car manufacturer Renault set, and achieved, an explicit goal to drive a 25% increase in EBIT with its digital strategy. And it jumped in with both feet, running 15 pilots across all functions—from marketing through production—to understand where digital could give the greatest lift.
And keep in mind that digital strategies in many industries are increasingly also ecosystem strategies. Rarely does a company have in its organization all the necessary elements (expertise, intellectual property, customer access, and so on). (See Exhibit 2 for a list of the characteristics such ecosystems share.)
3. Place Big Bets
Where to start, and in what order? “Let a thousand flowers bloom” may make for nice landscaping, but it is bad strategy. In general, focusing on the two or three most valuable use cases lends greater clarity and delivers the best results.
It’s important to manage priority initiatives as a portfolio and roll out the ones with short-term impact first. Short-term wins (typically in areas like precision marketing, AI-driven pricing and promotion, and digitally driven cost reduction) will help fund the journey by freeing up capital and releasing resources needed for more strategic high-impact priorities down the road. A portfolio approach also makes it possible to demonstrate progress to key stakeholders: board members, investors, and the organization.
Focusing on the two or three most valuable use cases delivers the best results.
Unilever has invested decisively in digital across its value chain, with a particular strategic focus on harnessing data as an enterprise-wide asset that supports precision marketing, manufacturing, distribution, and performance management. The company captures 1.5 terabytes of data daily from more than 150 sources in its data lake—and plans to have 24 digital hubs in 24 countries by 2020.
In identifying the right set of bets, a customer-centric lens that focuses on both competitive advantage and value creation is critical. Ask: Of all the customer pain points and compromises that digital can address, which are we uniquely positioned to address, and of those, which have the greatest value potential?
John Deere, in its agricultural business, began with use cases anchored in the jobs farmers were trying to optimize: planting seeds optimally, adding just the right amount of nutrients, and putting the minimum amount of chemicals on their crops to prevent pests and weeds. This led to significant innovations—for example, the “see and spray” technology, which allows individual weeds to be identified through a combination of optical sensors and machine learning algorithms, and then killed through highly engineered and individually controlled spraying nozzles.
4. Build New Strategic Muscles
A properly ambitious digital strategy inevitably calls for new capabilities and cultural shifts. The organization needs to build new strategic muscles to complement its traditional strengths—and to ensure that new and old work together in an agile and coordinated way.
New digital talent is critical, but increasingly scarce. So just as important—and often underestimated—is redeploying existing talent and skills to the initiatives that can make the most of it. With both new and existing talent, think through what resources and capabilities can be shared across business units, divisions, or regions rather than that which needs to be dedicated to a single place. And develop a workforce that does not adhere to fixed roles, but evolves with the needs and pace of emerging digital initiatives. Don’t worry about defining an end-state organization at the outset—a multistage process that adapts on the basis of experience and digital maturity makes more sense.
Don’t worry about defining an end-state organization at the outset—a multistage process makes more sense.
Establishing a “digital” culture in these ways is essential to a successful digital strategy. It helps attract talent, particularly millennials, who are drawn to opportunities for autonomy and creativity. And because of the flatter organizational structure that comes from agile ways of working, companies can achieve superior results, faster than a traditional organization.
5. Manage Transformation Actively
While there is no need to completely rewrite the transformation rule book when it comes to digital, some issues will need your attention—such as the rate at which the critical underlying technologies for your industry are evolving, and thus how often you should revisit the underlying strategy to refresh the transformation plan.
Technological progress can be linear or discontinuous. In industries with slower-moving technologies, traditional top-down strategy development approaches work. But planning three years out can set you up for executional failure if changes in technologies and market dynamics shift more rapidly. In these faster-moving, more unpredictable industries, you will need a Fast Execution Needs Fast Strategy to planning, one that balances strategic alignment from above with market insight from below.
As with any organizational transformation, maintaining a strong center will be critical. That’s where program management lives, ensuring process standardization, data management, and talent acquisition. A transformation office, led by a chief digital transformation officer, can keep up the momentum, rigorously tracking progress against detailed goals, milestones, and metrics—and signal when it’s time to adjust course.
Not all digital transformations succeed. Those that do reflect a robust digital strategy that follows the five simple rules we’ve just described. They’ll ensure you get the most out of your people and digital investments by aligning them with the critical moves that drive competitive advantage and superior results.
Managing Director & Senior Partner
Romain de Laubier
Managing Director & Partner; Asia-Pacific Chair, BCG X
PA Product Director - DSR
About Boston Consulting Group
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- Assess the strategic impact of Digital : ...
- Set your Digital Goal High: ...
- Company's VEV( Values, Ethics and Vision) : ...
- Execution & Action Plan: ...
- Adopt Digital transformation :
- Uncover your needs.
- Develop the strategy.
- Execute the strategy.
- Evaluate and optimize.
- Seize the opportunities.
- Choose a leader to own your digital strategy. ...
- Assess how digitization currently affects your business. ...
- Explore the technology landscape. ...
- Apply these new technologies to your business to identify opportunity areas. ...
- Set ambitious goals and place big bets on your digital strategy.
We help clients pinpoint emerging opportunities, find unexpected value, and create new businesses by harnessing the full power of digital. We provide clients with proprietary, sector-specific research and insights on what drives value in the digital economy.What are the 5 types of simple rules in strategy? ›
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The five stages of change are precontemplation, contemplation, preparation, action, and maintenance. Precontemplation is the stage at which there is no intention to change behavior in the foreseeable future.What are the five digital? ›
FiveS Digital - Customer Experience (CX), Data Annotation, RPA, Chatbot, BPO, Contact Center Services & Solutions.What are the 5 domains of digital transformation according to David Rogers? ›
He stated five vital domains of digital transformation plan which is: customer, competition, data, innovation, and value.What is a digital strategy example? ›
Here are some examples of how brands use social media as a digital strategy: Repurpose blog posts, videos and infographics from your website on social media to reach new audiences. Provide voucher codes and discounts for your company's products that social media users can share widely.
A digital strategy, sometimes called a digital media strategy, is a plan for maximizing the business benefits of data assets and technology-focused initiatives. A successful digital strategy requires a cross-functional team with executive leadership, marketing and information technology (IT) members.What makes a good digital strategy? ›
- Define Your “Why?”
- Create Your Brand Story.
- Define Your Goals.
- Develop Audience Personas.
- Create a Journey Map.
- Identify Key Channels.
- Develop a Content Strategy.
- Draft a Content Calendar.
The framework outlines the four pillars of digital transformation we see today: IT uplift, digitizing operations, digital marketing, and digital businesses.What is Ikea's digital strategy? ›
Like many modern businesses, IKEA's digital strategy relies on customer data. However, the company understands the concerns around it and thus launched the Customer Data Promise to help customers understand, provide control, and the ability to make decisions about their data – for psychographic data.What is the 5 step process for strategy? ›
- Step 1: Determine where you are. ...
- Step 2: Identify your goals and objectives. ...
- Step 3: Develop your plan. ...
- Step 4: Execute your plan. ...
- Step 5: Revise and restructure as needed.
5C Analysis is a marketing framework to analyze the environment in which a company operates. It can provide insight into the key drivers of success, as well as the risk exposure to various environmental factors. The 5Cs are Company, Collaborators, Customers, Competitors, and Context.What are the five stages of strategy making? ›
- Determine your strategic position.
- Prioritize your objectives.
- Develop a strategic plan.
- Execute and manage your plan.
- Review and revise the plan.
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The High Five strategy is a reading comprehension learning strategy that consists of five steps, namely activating background knowledge, questioning, analyzing text structure, creating mental images, and summarizing. This strategy is believed to be able to improve students' reading comprehension skills.What are the 5ps of the transformation process? ›
The constituents of the 5P model are: 1) Plan, 2) Process, 3) People, 4) Possessions, and 5) Profits.
With a little help from Mark's change management model, the 4Rs: reflect, review, reconnect, reboot.What are the stages of digital transformation? ›
- Business as usual. During the business as usual stage, the company operates normally. ...
- Present and active. At the present and active stage, interest in digital transformation begins appearing. ...
- Formalized. ...
- Strategic. ...
- Converged. ...
- Innovative and adaptive.
The five Ds of digital marketing is digital devices, digital platforms, digital media, digital data, and digital technology. In order to create and carry out more effective business strategies, 5D promotes effective engagements between organizations and their target audiences.What are the 5 most commonly used digital skills? ›
- Handling information.
- Problem solving.
- Being safe and compliant online.
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A child's starting point at birth can be positively moulded and shaped by the quality of the environment through the five domains – physical, cognitive, social, emotional, and language.What are the 6 D's of digital transformation? ›
This growth cycle takes place in six key steps, which Peter Diamandis calls the Six Ds of Exponentials: digitization, deception, disruption, demonetization, dematerialization, and democratization.What is the first stage of a 5 stage digital strategy framework? ›
5 stages of planning a digital marketing strategy with examples. The 5 stages of strategic digital marketing planning are: Plan > Reach > Act > Convert and Engage.What is the role of digital strategy? ›
Digital strategy focuses on using technology to improve business performance, whether that means creating new products or reimagining current processes. It specifies the direction an organization will take to create new competitive advantages with technology, as well as the tactics it will use to achieve these changes.What is a digital strategy statement? ›
A digital strategy is a written plan that clarifies your online goals and helps you put the right technology and processes in place to achieve these goals. Your online goals relate to your overall marketing objectives and what you want your business to achieve online.
Data, tech, and people: the three digital marketing pillars.How many types of digital strategy are there? ›
The six types of digital strategies.What are the 4 C's of digital? ›
The 4Cs are Customers, Cost, Convenience, and Communication. Digital marketers argue that these 4Cs are much more valuable than the 4Ps.Which of the 4 elements of digital transformation is most important? ›
CUSTOMER BENEFIT HAS THE HIGHEST RELEVANCE
But despite all the company internal focus, digital transformation initiatives should not ignore the most important goal: to offer real value to (potential) customers.
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Namely, Change, communication, engagement, adoption and ownership of the end solution across the solution provider, programme team, support partners, stakeholders, end users and our supply chain partners (Tier 1 to Tier 4).What is Nike's digital strategy? ›
Nike's strategy focuses on delivering a consistent, seamless, and premium experience, both digitally and physically around model brand and multi-brand. To enable this, Nike has tailored a suite of apps.What is digital business strategy model? ›
A digital business strategy is a policy that improves business intelligence and performance by creating new products and streamlining internal processes. It's used to define organizational directives and specifies how new competitive advantages are manipulated using technology.What is brand for digital strategy? ›
What Is a Digital Brand Strategy? Brand strategy is all about developing a unique identity that distinguishes your business from competitors, using brand positioning and awareness to build customer loyalty. Digital strategy is all about the assets, tools, budgets, etc. that it takes to make this happen.What are the 5 A's of digital marketing? ›
There are five elements to this commerce marketing maturity framework: audience, ads + assets, access, attribution, and automation.
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- Pillar #1: A Strong Website.
- Pillar #2: Compelling Content.
- Pillar #3: Search Engine Optimization.
- Pillar #4: Email Marketing.
- Pillar #5: Social Media Engagement.
Content needs to be viewed at least five times for it make a mark, and in many cases, it's more than that. But 5 times is the basic rule of thumb.What are the 5 C's of marketing? ›
The 5Cs are Company, Collaborators, Customers, Competitors, and Context.What are the 5 C's of marketing explained? ›
The 5 C's of Marketing Defined. The 5 C's stand for Company, Collaborators, Customers, Competitors, and Climate. These five categories help perform situational analysis in almost any situation, while also remaining straightforward, simple, and to the point.What are the 4 D's of digital transformation? ›
Diversity, Decentralization, Destination, and Deontology…What are the 3 layers of digital strategy? ›
A complete DT model is a three-layered design: data, process, and business model. The data layer is necessary to digitize data sources by using technologies for easy-management.What are 5 step marketing process models? ›
The steps of the strategic marketing process (mission, situation analysis, marketing plan, marketing mix, and implementation and control) are different than the process for a specific marketing effort.What are the 5 steps in the five step model of the marketing process? ›
The marketing process is a sequential process that can be divided in five stages: planning, strategizing, programming, engaging and capturing. These phases must all work together to deliver superior value to your customers so they will come back for more.What is digital marketing strategy? ›
What is a definition of digital marketing strategy? A good definition of digital marketing strategy is that it is a strategy put in place by a brand to align with set objectives and goals to attract a specific type, or types, of customer using a combination of marketing techniques.
In contrast to other marketing models, the 7 Cs Compass Model considers both the marketing strategies as well as the segment to which the strategies are being targeted. The seven Cs are Corporation, Commodity, Cost, Communication, Channel, Consumer and Circumstances.