Developing an IT, technology, or digital strategy often helps an organization build-out or update their overall business strategy. This focus on strategy can be a critical success factor not only for IT, but for the business. With the convergence of business and IT, looking strategically is equally important for both the business and IT. Rather than enabling the business strategy, many IT executives help the business to create and define the business strategy.
Strategy is Important
The strategy paints the vision for the future. Strategy can be a key factor in an organization’s performance, impacting both the growth and profitability of an organization. Research by The Conference Board has shown that 70% of public companies experiencing a revenue stall and attribute the primary cause to be poor decisions about strategy. Research on 750 bankruptcies during a 25-year timeframe showed the number one factor behind the bankruptcies was bad strategy, not poor execution of the strategies (Elevate by Rich Horwath). Rich Horwath goes on to say that a strategy can have a positive and significant effect on a firm’s performance, influencing both the growth and profitability of a firm. In today’s fast changing environment, having a faulty strategy (or no strategy) could get a company in trouble in months, rather than years as in the past.
Each goal for the business should have clear strategies. Strategies should reflect how the company will achieve a competitive advantage. The strategy will look into the future and identify how the organization will apply (or exploit) industry trends and technologies. Strategies should drive everyone’s daily activities to provide focus for the organization.
Creativity is a Catalyst for Change
Many companies go through the motions of what they call strategic planning, but executives continue to allocate resources and priorities the same way year after year. The process of planning and filling out forms takes the place of true creative thinking. Often, no new thinking or new insights are introduced as a catalyst for change in the planning process, and the company often settles for incremental growth, at best. Without challenging the status quo or adding new thoughts about the market, customers, competitors, there is no real catalyst for change.
For any company or individual, it is much easier to take the path of least resistance, or status quo rather than forcing change. Taking for granted basic assumptions would never allow breakthrough company models (like Uber challenging the basics of the medallion requirements that had been established for cabs). True passion about the basic vision and mission helps companies challenge the status quo and helps the company focus on true unique differentiated value.
Innovation Requires a Strategic Lens
We are in the age of disruption. We have heard the saying that we have to re-invent our business before someone else does. Innovation requires a strategic view. Breakthrough products and services would never take place with continual incremental improvements, as it requires looking at problems with a different lens. Unfortunately, many companies spend millions of dollars on projects that solve yesterday’s problems rather than tomorrows. For example, projects to improve tools for the sales representatives rather than facilitating the ability for the customer to order directly, or improving the cash collection process rather than the bold move to go cashless.
Incremental View Creates Silos
Many companies improve their IT environment with small steps and incremental projects, addressing the areas that are most out-of-date or causing the most pain for the business. Often times, an incremental focus can lead to different parts of the organization addressing their needs independently, creating islands of fragmented systems, siloed business processes, a cumbersome and complicated environment with interfaces and redundancies.
Digital disruption is requiring that companies look strategically at their entire systems environment and modernize the whole environment and the majority of the business processes with a focus on the customer experience. There is no longer a segregation between front-end customer facing and back-end in-house systems. Digital is requiring information from the entire integrated environment. A digital focus can highlight weaknesses in an overall IT environment with disconnected systems, bad data, incomplete information, and slow processing.
Taking a long-term view of your entire IT landscape will help you achieve the lowest long term cost of ownership as well as insure your systems meet the business needs in the immediate future as well as in the years to come. Taking a strategic view can allow you to prioritize projects that provide the greatest value to the business based on the business goals and competitive landscape, rather than the functional area that is screaming the loudest. It also promotes the ability to implement enterprise tools that can benefit many areas of the business rather than point-solutions. A clear roadmap and architecture or blueprint for the entire modernization effort can be developed with proper dependencies, scope, and priorities.