What is a digital business strategy?
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.
Digital business strategies maximize the benefits of data assets and technology-focused endeavors.
They combine the expertise of cross-functional teams with IT, marketing, and members of executive leadership teams. Successful strategies should:
- Be transformative
- Leverage new technologies
- Cultivate digital teams
- Make data-driven decisions
- Be customer centric
Why is a digital business strategy important?
Digital business strategies help organizations make strategic decisions and implement technology to disrupt processes and spark transformation initiatives. Most importantly, it gives businesses direction and access to ever-changing models that foster and encourage innovation.
In recent years, technology has melded with business to become more than just hardware or software.
Digital programs are becoming more prevalent and are penetrating wide areas of business that are becoming increasingly reliant on IT innovation.
As businesses seek to adopt digital transformation initiatives and move into the realm of digital-first, the term ‘digital strategy’ is now used interchangeably with ‘business strategy’.
Digital business strategy types
There are two types of digital business strategies: the offensive and the defensive.
Offensive strategies include:
- The platform play – This strategy brings together customers and suppliers of the business value chain on the same platform. It utilizes integrated platforms to create influential networks that spark innovation and creativity.
- New marginal supply – This strategy creates new revenue streams by exploring markets with low operating margins. It enables businesses to operate a model with limited costs, potentially increasing profitability.
- Digitally enabled products and services – This strategy emphasizes using digital technology and services to repackage products or services to better serve existing customers.
Defensive strategies include:
- Customizing and repackaging – Here, a business employs digital technology to customize and repackage existing services, e.g., an online publication that allows audiences to customize reading lists.
- Digital distribution channels – This strategy encourages access to products and services by leveraging new distribution channels. It’s typically used by retailers operating e-commerce stores.
- Cost efficiency – This strategy uses digital technologies to lower costs through processes like automation and cost-scaling.
Creating a digital business strategy
Digital business strategies are continuing to rise in importance.
Because people are spending more time online, budgets across multiple departments are shifting towards digital.
Creating a successful digital business strategy can be achieved through the following steps:
- Explore landscape and analyze results
- Use strategic mapping techniques
- Define target audience
- Build and develop a content strategy
- Choose tactics and channels
- Set KPIs, objectives, and benchmarks
Digital business strategy examples
The emergence of disruptive technologies, such as artificial intelligence (AI), machine learning, data analytics, robotic process automation, and the Internet of Things (IoT) have enabled businesses to streamline their digital business strategies.
- New York Times
The New York Times transitioned comfortably into the world of digital by taking small strategic steps and adapting to new technologies. In 2013, they enforced an innovative subscription paywall model for their online content. This allowed them to deliver the quality journalism their customers expect, whilst simultaneously generating new revenue sources.
Adobe’s early transition to the creative cloud allowed them to move their entire product base online in 2013. According to their 2018 financials, the company achieved a record quarterly revenue of $2.20 billion in its second fiscal quarter, representing 24% growth year-on-year. Adobe then shifted its priorities to focus on helping businesses adopt creative digital transformation strategies, which continue to unlock massive potential for future growth to this day.
Digital transformation and digital business strategies
Digital business strategies and digital transformation are closely linked. Any transformation plan requires a digital strategy that incorporates your business’s current situation and goals.
Successful digital transformation strategies must transcend traditional areas of functionality and business processes authorized by IT departments.
Your digital business strategy should address particular problems inside of your organization and generate applications and solutions to achieve optimal outcomes.
Meanwhile, your digital transformation strategy should reinvent business processes from the ground up so you can take advantage of new technologies, methods, standards, instruments, and talents.
The benefits of implementing digital business strategies are vast and include the ability to gauge market share and estimate demand for digital services.
It helps businesses to fully understand the dynamics of the online marketplace, which includes customer behavior, customer profiles, and competitor analysis.
Digital business strategies increase a business’s agility and advance their digital transformation.
Integrated speed-to-market initiatives and continuous improvement strategies allow businesses to accommodate innovation and adaptation whilst providing a continuous, measurable pathway to improvement.
Published: April 10, 2022