Last week, we discussed why tech-driven companies are poised to survive, thrive, and outperform competitors in today's globally uncertain economic environment. Today, we'll define five business environments and corresponding business strategies to support your organization's digital evolution.
A mature business strategy is a prerequisite for a successful digital evolution. Whether you’re relying on in-house capabilities to lead digital initiatives or you’re partnering with digital consultants, you need to ensure beforehand that your business strategy is tailored to your market environment. A course offered by the Boston Consulting Group, University of Virginia defines five business environments and corresponding strategies.
Each organization is positioned uniquely within the five environments listed above. The first step to defining a successful business strategy is for a company to determine its position and closely monitor it to see if that position changes.
In unpredictable, malleable, and harsh environments, digital evolution enables companies to adapt and survive because it allows innovation to emerge in improving processes and customer experience. In more stable environments, digital evolution enables companies to be aggressively disruptive and gain competitive advantage. In every scenario, digital evolution allows companies to provide new differentiators by quickly ideating, testing, and going to market with MVP concepts.
Because technology has made every market exponentially more competitive, the companies that continue to achieve success are those that are self-disruptive rather than those that wait for competitors to disrupt them. This means creating a balance between maintaining core business success and seeking new innovation opportunities.
Image courtesy of McKinsey Digital
There are three ways to achieve this balance: proactively refocusing an existing team on innovation opportunities to capitalize on opportunity windows, creating a separate innovation lab attached to the main business, or collaborating with a third party, like a partnership, to introduce innovation.
It’s important to remember that the customer is at the center of every initiative, whether that initiative is related to improving the core business or pursuing innovation opportunities. Companies can design products and services that are truly customer-centric by relying on design thinking-informed frameworks and methodologies, including service design, design sprints, and design ops.
Next week, we'll cover how to improve core business offerings and identify high-ROI innovation opportunities through design services. Want to know now? Download our free whitepaper for your complete guide to organization-wide digital maturity.
Ideas based on materials from the “Digital Transformation” course offered by Boston Consulting Group, University of Virginia. Coursera. Accessed 9.16.2020.
Why digital strategies fail, Jacques Bughin, Tanguy Catlin, Martin Hirt, and Paul Willmott. McKinsey Digital.