A Process and Checklist for Digital Strategy Development

1. By Ed Terpening with Aubrey Littleton
Altimeter, a Prophet Company
August 16, 2016
CRAFTING A
DIGITAL STRATEGY:
A Process & Checklist for
Digital Strategy Development
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EXECUTIVE SUMMARY
Brands face an ever-increasing array of digital disruptions, including social media, digital
transformation, Big Data, omni-channel customer experience, and the Internet of Things (IoT)
— to name a few. Brands can adapt and thrive to remain relevant in this complex connected
world by building a digital strategy.
The best strategy answers the right questions. To help you create one, we’ve taken the world
of digital planning and broken it into manageable steps. For each step, we’ve created a list of
questions strategists should answer to make their strategy an effective plan. Alongside these
questions, we’ve included insights from 11 digital strategists to provide real-world examples
of the process in action.
The world of digital strategy is broad. To keep focus, our digital strategy process is designed
for customer-facing functions—such as sales, service, and marketing—as opposed to back-
office functions—such as IT, supply chain, or operations.
TABLE OF CONTENTS
Executive Summary 2
Introduction 3
Digital Strategy Development Barriers 5
Digital Strategy Development 6
Catalyst 7
Leadership Champion 8
Team Building 9
Research & Benchmark 10
Strategy Co-creation 12
Strategy Synthesis 14
Alignment 17
Summary 19
Endnotes 21
Ecosystem Input 23
Author Bio 24
About Us 24
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INTRODUCTION
DIGITAL TRANSFORMATION &
DIGITAL STRATEGY
Much has been written about digital transformation as an approach to rethink business models in
the digital era, but these approaches don’t always come with an actionable strategy. This report
provides a bridge between business transformation and an actionable strategy for implementing
it by defining a process and a set of questions a digital strategy should answer.
The challenge of connecting digital and business transformation was a recurring theme in our
research. Businesses are intimidated by the thought of transforming their core products or value
proposition into digital form. They forget that digital can simply be a tool to meet business
objectives in new ways. Claudia Gorelick, US Business Design Director of Accenture Interactive,
takes the view of digital as a business enabler. “Uber’s founders did not create a digital company;
they created an unprecedented transportation and communication service that users experience
primarily offline,” says Gorelick. “In a similar way, Amazon is not a digital company; it is brilliant
at distribution and data and enabled by digital.” The strategists we spoke to are seeking this
balance between being a good digital business and using digital to meet business objectives.
Here then is the distinction we make between the broad world of digital transformation and the
targeted impact of digital strategy:
Digital Transformation Digital Strategy
The realignment of or new
investment in technology, business
models, and processes to more
effectively compete in an ever-
changing digital economy.
A plan of action to achieve
business objectives using
digital technologies.
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WHY DEVELOP A DIGITAL STRATEGY?
Business leaders are increasingly aware of how the digital era impacts their bottom line — as
either a new opportunity or a threat to business continuity.1
Case studies of one-time industry
leaders like Kodak and Blockbuster remind them that there is no immunity to technology
disruption.2
In-house experts espousing “digital for digital’s sake” thinking may intimidate
leaders, making them hesitant to explore an area they are less comfortable leading. But that
is not sustainable and leads to silos of digital experience. The best digital strategy aligns with
goals that cross silos and leaders.
For example, pursuing growth can be a key
driver for creating a digital strategy that
crosses departments. In retail, while total retail
sales only grew 2.2% in the first quarter of
2016, ecommerce sales grew 15.2%.3
Based
on that stat, brands focused on growing their
marketshare (in an otherwise slow-growth
economy) would shift their focus to increasing
digital sales. This requires a firm-wide digital
strategy, not just one that applies to a
single department.
How consumers connect digitally to each other and the brands they favor is now a centerpiece
of a business strategy. The emergence of the web was just the first step in connecting people
to people and people to brands at massive scale. Whether developing mobile, always-with-
you apps or more intimate IoT4
connected devices, brands have an abundance of options
for connecting with and understanding the digital consumer. Building a digital strategy gives
brands a place to start in their fight to remain relevant in the digital economy.
Building a digital strategy
gives brands a place
to start in their fight to
remain relevant in the
digital economy.
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DIGITAL STRATEGY DEVELOPMENT BARRIERS
In order of frequency, we heard the following barriers from strategists in our interviews:
Alignment. Digital can be used as a tool by any business function in isolation to meet its
objectives. But in order to use digital to solve problems that cross business lines, consumers, and
geographies, different departments need to align. This is no easy task. Without alignment, data
is created in silos across each digital touchpoint, which makes it difficult to see, understand, and
optimize the customer experience.
Skills. Consumers adopt new behaviors at rates faster than most businesses can adapt. We
were told of senior leaders that haven’t used digital products they offer their own customers,
which can lead to a lack of empathy and understanding for the environment their customers
live in. Without digital training and a holistic brand point of view, organizations can miss the
opportunities digital provides and risk being disrupted.
Silos. Historically, siloed hierarchies within organizations have served business well. While the
autonomy inherent in silos is powerful, without proper planning, it can lead to a disjointed digital
experience and uneven brand perception for customers. As Bennet Harvey, Director of U.S. West
Coast Digital Strategy at Wipro Digital, told us, “Many companies are realizing that top-down
organizations can’t drive significant improvements in customer experience,” but then again,
completely breaking silos — as Zappos attempted with its shift to a holocracy — isn’t easy either.5
Metrics. The path from digital initiatives to measurable business results can be a complicated
route. For example, the mix of owned, earned, and paid media and engagement across
platforms and devices complicates sales attribution and our understanding of customer
experience. Without a strong measurement culture, lack of proof metrics can slow the adoption
and spread of digital.
Resources. Assuming alignment, a strong business case, and success metrics are in place,
budget barriers remain. For many brands, unfortunately, digital innovation is funded as an
R&D cost center — prone to cuts during challenging economic times. It is only after meeting
leadership objectives that digital budgets become predictable year to year.
Culture. Some businesses have a culture of deliberateness that is a requirement of their industry
but not suited to the pace of digital change. Examples include pharmaceuticals and financial
services, where consumers expect an extra degree of caution. While there are successful
disruptors in these industries, they often find themselves fighting an uphill battle without strong
leadership support to back them up.
Regulations. Violating regulations can result in fines and negative publicity. However,
governments are often behind the curve in understanding technology’s impact on consumers,
and so they struggle to either reinterpret existing regulations or develop new ones for the digital
era (such as the Digital Millennium Copyright Act).6
In addition, strategists struggle to interpret
existing regulations and regulatory guidance is rarely as specific as it needs to be.
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HOW TO WORK WITH US
No matter where you are in your digital planning efforts, we provide options to engage with
us, ranging from engaging individual Altimeter analysts to our global consulting team via our
parent company, Prophet Brand Strategy. Offerings related to digital strategy, include:
• Education – Presenting within your organization or at an event to make the case with
leaders or key brand stakeholders. Connect the dots between business objectives, key
brand, communication, and digital moves.
• Advisory – You may work with our industry analysts for advice as needed on your approach.
• Strategy consulting – You can engage our global consulting team across our digital
transformation offerings (including digital strategy, planning and roadmaps, digital
customer experience, digital readiness, business model innovation, digital marketing
planning), as well as brand and customer experience and growth acceleration offerings.
To learn more about Altimeter’s offerings, contact sales@altimetergroup.com.
www.altimetergroup.com | @altimetergroup | info@altimetergroup.com
To download this report in full at no cost, please visit our website at:
http://www2.prophet.com/crafting-a-digital-strategy
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AUTHOR BIO
Ed Terpening
Industry Analyst at Altimeter, a Prophet Company
Ed Terpening (@edterpening) is an Industry Analyst at
Altimeter focused on Social Business and Digital research.
As former VP of Social Media at Wells Fargo, Ed led the
charge to develop the first social media team of any national
US bank. He founded CNET’s first Online Community Team,
where he added user ratings/reviews to CNET.com and “Talk
Back” to NEWS.com. He is a founding member company of
SocialMedia.org.
Aubrey Littleton
Researcher at Altimeter, a Prophet Company
Aubrey Littleton (@aubreylittleton) is a Researcher at
Altimeter. He supports Altimeter’s broad research mission
and advisory efforts, working with analysts to understand
the ever-transforming digital world. His research is currently
focused on social business, employee advocacy, and digital
transformation at large.
ABOUT ALTIMETER, A PROPHET COMPANY
Altimeter is a research and consulting firm owned by Prophet Brand Strategy that helps
companies understand and act on technology disruption. We give business leaders the insight
and confidence to help their companies thrive in the face of disruption. In addition to publishing
research, Altimeter analysts speak and provide strategy consulting on trends in leadership, digital
transformation, social business, data disruption, and content marketing strategy.
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Altimeter, a Prophet Company
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