In 1996 Michael Porter, the Harvard Lecturer wrote an article in HBR called What is Strategy? In it, he argues that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. Richard Rumelt is an Emeritus Professor of Business and Society at UCLA Anderson School of Management. Described by McKinsey as “Strategy’s Strategist’. In his 20011 book Good Strategy/Bad Strategy, he reinforces that a strategy is not a goal or objectives. It is the battle plan for action that is designed upon a unique set of attributes or conditions (kernels) that sets an organization apart from its competitors (leverages) and results in exceptional and sustainable profits.
Digital Transformation Strategy
Rumelt tells us that a good strategy has 3 components:
2. Guiding Policy
3. Coherent Plan of Action.
(For more detail on Rumelts Digital Transformation Strategy Kernel, check out this no nonsense book review; Richard Rumelt – “Good Strategy. Bad Strategy”.)
From the organisations we’ve worked with, it’s quite common to see any one of these 3 components missing. Skipping these steps manifest themselves in many ways – but the outcomes for the organization eerily common. Let’s take a look at the pitfalls associated with each component.
What happens if you skip diagnosis?
Random acts of digital, unrealistic desired outcomes, mayhem, uncertainty.
People stabbing in the dark hoping to find something that will yield positive results. You might see isolated parts of the business becoming more ‘digital’. Technology is implemented but people don’t use it, scattered projects are underway but they don’t link to anything tangible, people don’t really understand what they’re doing or how to evaluate efforts.
Best case scenario is improved operational efficiency. Worst case scenario is frustration, complication, and wasted resource.
Either way there is no transformation, just digitised versions of the same processes, products and services.
The aim of the diagnosis phase is to understand the existing situation and the challenges that must be overcome in order to reach a desirable new situation — it gives tremendous clarity and helps keep things on track.
What happens if there is no guiding policy?
In most cases, the business will not meet its strategic objectives. If they are, it’s due to sheer good luck rather than good guidance. Without guiding policy a strategy is little more than a wishlist.
How do you identify a strategy without a guiding policy?
By asking one question — how do you want me to do that exactly?
If you can hear tumbleweed blowing through the corridors you know you have hit the spot.
A note of caution: beware the misguiding policies that might have you wandering up the garden path. How can you tell a guiding policy from a misguiding policy? Well if competitive advantage comes from differentiation a good guiding policy will contain some kind of ‘if this, then that’ statement. If your guiding policy can be applied to any organisation at any time and under any circumstances it probably isn’t all that helpful.
What happens if you don’t have a coherent plan of action?
Not a lot.
Sometimes people go straight back to work and carry on with business as usual. Sometimes people work around the clock and get nowhere. (The phrase headless chickens springs to mind.)
Ultimately it leads to wasted resources — waste of time, effort and investment.
Sadly, this eventually ends in disenfranchised, disheartened, burnout staff.
Nobody wants that.
The good news:
Now that we know what the problem is, we do can something about it.
Download a step-by-step guide to digital transformation PDF