Implementing a Digital Strategy in Five Fundamental Steps

January 20, 20177min

In our work with clients we see commonly recurring pitfalls that often lead to failure in digital implementation, including: unrealistic expectations of technology; believing a new technology system will fundamentally transform the organizational culture and employees will simply adapt; creating a constrained environment by, for example, shooting down ideas too quickly; and failing to adequately consider employees before embarking on change. We look at how these problems can be overcome by focusing on five fundamentals that are often neglected in the “new world” of digital.

Step 1 – The approach

Companies can easily become focused on delivering large-scale, three-year plans (e.g. major enterprise IT projects). Invariably, this involves detailed, upfront program specification and extensive “left-to-right” planning, leading to outcomes that directly undermine the ability to turn strategy into successful execution. Some common pitfalls include: costly, lengthy, monolithic projects with an inverse relationship between budget and chance of success; and danger of irrelevance by the time the “solution” is delivered. In combination, these factors can lead to a mentality of “we know what we need to do, if only you would let us get on with it.”

The most successful companies use data analysis and insight from adjacent industries to continually assess and then regularly revisit whether to invest further, pivot or stop. Once a trajectory has been agreed, they adopt a “right-to-left” planning approach with agile delivery.

At ADL, our own internal manifestation of this approach is a short Phase 0 (rapid analysis focused on a clearly bounded “exam question”); Phase 1 (to prove the “art of the possible”); and a Minimum Viable Solution (MVS) (to answer the exam question and build momentum through rapid iterative enhancements to the solution).

Step 2 – Design before technology

Putting technology before design, which is effectively setting the “how” before the “why,” and failing to address underlying organizational and communication structures, will simply widen the gap between strategy and execution, and between anticipated outcomes and reality.

A “design first, technology second” approach is much more effective: consider the underlying purpose of the strategy and carefully design it, with the employee or customer in mind, to take into account the functional (i.e. technically required) and non-functional requirements (i.e. how people actually will use the technology) before defining how best to implement the solution.

Step 3 – Shared language

Programs and projects are typically defined by language and nomenclature that aims to set goals and targets, define activities, and identify and manage risks. The shared language used is an important factor in determining how the team perceives values and priorities, and how it behaves in relation to risks and outcomes. Language can also leave little room to move sideways or explore new  ideas, which can lead to promising opportunities being discarded too early and failing ideas persisting.

Step 4 – People

Implementing change is hard because organizations are composed of people, who have different perspectives, incentives and motivations. Often referred to as the “soft” side of delivery, it is invariably the hardest. In our experience, companies that do not obsessively consider employees before and during each stage of strategy execution are likely to fail.

Step 5 – Flexible implementation

Traditional “best-practice” approaches assume we can precisely predict the outcomes of strategies and projects through detailed “left-to-right” execution plans. Yet this rarely goes to plan, as “best practices” are almost exclusively designed for closed systems, where all the inputs can be controlled and managed. In reality, digitally enabled strategy implementation, especially in large companies, takes place in complex open systems. These open systems comprise interactions from a diverse range of individuals, acting with a degree of autonomy and unpredictability. Trying to oversimplify such a system to implement a rigid, deterministic strategy is destined for failure.

Instead, companies need to identify and acknowledge when a system is open, with strategic plans that assume emergence and uncertainty. Management should maintain a clear view of the desired outcome and goals, but focus on delivering the next part of the plan rather than adhering to the longer-term program, while providing “invest, pivot or stop” decision points when new evidence challenges the initial strategy.

This evidence should include internal data analysis combined with an external and forward-looking focus on similar and adjacent industries. This type of adaptive approach, which we refer to as “next practice,” has been shown to be far more successful than the traditional best-practice approach.

Successfully implementing a business strategy is usually a lot more challenging than developing it. Advances in digital technology are frequently perceived as a “silver bullet” that can ensure effective delivery of anticipated change. However, digital can also expose a company’s inner contradictions, reveal hidden pockets of poor performance and even lead to perceived core capabilities becoming seen as critical weaknesses.

Wrtten by Greg Smith, Mandeep Dhillon, Laurie Guillodo, Xabier Ormaechea and Carl Bate from Arthur D. Little

Interesting links:

Arthur D. Little

Arthur D. Little

For almost 130 years, the Arthur D. Little name has been synonymous with technological ingenuity and innovative thinking. Arthur D. Little’s management consulting services were traditionally sought after not only by corporations but also by state bodies, federal agencies and governments worldwide. Its project work focused on corporate finance, environmental risk, information management, operations, strategy and organisation, technology and innovation, and a host of other services to maintain the competitiveness of its clients.

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