Crafting Digital Strategy with the Digital Positioning Model

Written by David Crouch

The first step of any improvement initiative should be to craft a vision of what “better” looks like if the organization is successful in executing on its plans.  The same applies to digital improvements.  Too often, organizations rush to embrace the latest technologies without understanding how they could change the relationship with customers or impact (positively or negatively) operational performance.  This faddish approach to technology investment leads to an unbalanced portfolio, inefficiencies, and wasted resources at best.  In some cases, this technology-centric and overly optimistic attitude may lead the organization in exactly the wrong direction with negative financial and other ramifications.  Similarly, an extremely reactive approach can exacerbate threats or lead to missed opportunities.  An acute manifestation of this occurs when an organization suddenly perceived an existential threat precipitated by a competitor that is employing a new digital business model or using new technology to great effect to transform the industry or market.  The reactive organization, out of fear, often rushes to emulate a competitor’s digital models and technologies without articulating a clear strategy.  Playing “catch up” is rarely a winning strategy.  The greatest risk is complacency – not having a digital vision or digital strategy.

Digital Strategy as a Window

It can be useful to think of digital strategy as a window.  Organizations can “look out” beyond themselves and craft a vision for what the industry or market will look like if they are successful.  Organizations can also “look in” by transparently considering their own operations or inner workings and corresponding strategies to improve.

When crafting a digital vision, some organizations (primarily business-to-consumer organizations) will “look out” and ask questions like:

  • What markets to we serve?
  • What products and services do we currently provide to the market? Are they valuable?
  • What opportunities are there for growth or disruption? What threats do we face?
  • What capabilities do we have that open new avenues for us in existing or new markets?

Other organizations (primarily business to business organizations) strategize by “looking in” and asking:

  • What do we need to do to continue doing business?
  • What do we need to do differently?
  • How do we manage the risk associated with each opportunity?
  • How do we monitor and control our journey?
  • How can we improve operational efficiencies?
  • How can we reduce costs?
  • How do we get where we want to be?

While the “window” method has its merits and has certainly contributed to the success of organizations over time, the current Digital Revolution has rendered it insufficient. It’s time for a new paradigm.

The Digital Positioning Model (Digital Diagonal Chess)

The literature on digital emergence tends to focus on organizations (from a variety of industries) that have dramatically influenced their respective industries and even transformed their markets.  Although there are no industry-standard digital models, so-called maturity models predominate.

For example, in “Leading Digital: Turning Technology into Business Transformation,” Westerman promotes a model called “Four Levels of Digital Mastery.”  This, in turn, was based on a digital maturity model created by a consulting firm. 

In the “Four Levels” model, organizations are assessed based on two dimensions: digital capabilities and leadership capabilities.  This is further organized into quadrants: “Beginners,” “Fashionistas,” “Conservatives,” and “Digital Masters.” “Beginners” have little experience with digital technologies and have low leadership capabilities.  “Fashionistas” are digitally savvy but lack mature leadership capabilities.  “Conservatives,” on the other hand, boast strong leadership capabilities but lag in their use of technology.  “Digital Masters” enjoy the best of both worlds since they have both mature leadership capabilities and are adept at using technology in new ways.

The “Four Levels” model is one competent way of understanding the high-level capabilities (strengths and weaknesses) of a company in the digital era.  This maturity model suggests that all organizations should aspire to be masters of both leadership capabilities and digital technologies.  Some other similar maturity models suggest that organizations start their digital journeys by using technology to improve operational efficiencies, then progress to re-shaping the customer experience, and inevitably make a play to redefine the industry and reframe the entire market.  Indeed, some authors go so far as to suggest that an organization is immature and has not fulfilled its digital destiny until the market is fundamentally transformed.

However, a quick glance at the world as it is suggests that many companies never accomplish nor even aspire to achieve such comprehensive digital mastery.  What about the business-to-business company that is less concerned about reshaping the customer experience and is more interested in reducing operational costs?  What about the manufacturing company that wants to redefine the way the industry works but does not care about revolutionizing the market? How about the company that wants to be second with every technology adoption but first-to-market with innovative products?  What can be said for organizations that manage to do “just enough” with internal operations but focus more on recasting the market at large?   A new paradigm is needed: the digital positioning model.

What is the Digital Positioning Model?

The digital positioning model is a visual metaphor that encompasses forty-nine recommended activities to improve the digital capabilities of an organization focused around four positions:

  • Customer Experience,
  • Operational Excellence,
  • Industry Transformation, and
  • Market Transformation

Graphically, it resembles the game board of diamond chess.  The digital positioning model is perhaps the first visual model to synthesize the domains of digital business with IT service management.

Using the digital positioning model, an organization can assess current digital positioning strengths and capabilities as well as areas of weakness.  It can also be used to indicate where focused improvements can bolster a digital position or to plot a path from one digital position to another.

 

The Four Major Positions

The four major positions of the digital positioning model are Customer Experience, Operational Excellence, Transform Market, and Transform Industry. In the center of the model is the Zone of Confluence, which includes nine activities that support all positions in the model. The Zone of Confluence activities are:

  • Link business cases, critical success factors, and key performance indicators to the digital roadmap
  • Financial management aligned with digital roadmap
  • Establish strong IT-business relationship
  • Use common digital platform
  • Understand IT operational costs per capita/per unit
  • Develop digital vision and cascaded goals
  • Coordinate digital activities across teams
  • Establish digital roles and responsibilities
  • Use analytics to make decisions

What the Digital Positioning Model is Not

First and foremost, the digital positioning model is not a maturity model.  For some organizations, taking a “snapshot” of current digital maturity serves as a revealing starting point.  But in isolation, maturity models have limited utility and can even prove misleading.  In fact, to a large extent, the digital positioning model was crafted as a response or alternative to “traditional” maturity models.

Likewise, the digital positioning model is not, strictly-speaking, an assessment model.  Although it can be used to help assess organizational capabilities at a high level, it does not indicate the degree to which an organization has accomplished any of the forty-nine activities or what combination of activities the organization should undertake.

As with the ITIL framework more broadly, the digital positioning model is not a standard and does not include a prescriptive set of steps to take to improve.  The steps to improvement and the order in which they are taken are largely dependent on current organizational capabilities and on which position(s) the organization chooses to pursue.  Nor does the model propose a comprehensive set of “canned” recommendations.  The forty-nine activities in the model are simply suggestions.  Other activities that are not included may be more germane for a given organization.

Finally, the digital positioning model is not a substitute for larger organizational strategy.  With the exception of fully digitized organizations (where the business strategy and digital strategy are the same), the overall organizational strategy is broader than digital strategy.  In other words, some organizations are successful despite having low digital and technological capabilities.

Originally published October 10 2018, updated December 12 2019