Muni Prabaharan, IoT Business Consultant, Tech Mahindra

Digital technology has been churning markets and disrupting companies, especially in the last few years, so key stakeholders are still struggling to enact and deliver on digital transformations. Here is an independent point of view, with respect to digital strategy.

Why is digital strategy very important for companies?

They are directionless, when they do not have a clear strategic goal for what they want to achieve in digital. in terms of gaining new customers or building deeper relationships with existing ones. The market dynamics will be different from traditional business with different types of customer profiles and behaviors, competitors, propositions, and options. If they are not devoting enough resources to digital or using an ad-hoc approach with no clearly defined strategies, then existing and start-up competitors will eat their digital lunch and gain their market share.

A clearly defined, customer value-proposition-tailored, different target customer base will help to differentiate their service, encouraging existing and new customers to engage initially. Knowing customers well enough and using feedback tools to identify the weak points helps address them. They should be agile enough to catch up or stay ahead. If we look at the top brands, they are all dynamic – trying new approaches to gain or keep their customers.

That is why companies require a well thought-out strategy.

Hence, the equation:

Digital Strategy = Digital (Transformation) + Strategy ≠ IT Strategy => Digital Edge Strategy

The important piece of the equation is digital strategy. What does it mean today? In one of John Godfrey Saxe’s stories, there was a situation between few blind men and an elephant. In the tale, one of the blind men felt the elephant's body and thought the animal was similar to a wall. The other felt its trunk and said it was like a tree.

In today's organization, the same applies. There are many ideas and initiatives about what a digital strategy is. A marketing executive will perceive it as social media and web channels, an IT person as cloud, an operations executive as data analytics, an R&D executive as online products, and a financial person as online revenue channels.

Let us try to understand what strategy means, I prefer to use the well-known chemical analogy of elements and compounds. A compound (strategy) is a combination of two or more elements (activities).

What is digital transformation? 

New technologies such as AI, robotics process automation, and the internet of things (IoT), are technologies that can navigate in a dangerous direction. Because when it comes to digital transformation, digital is not the answer. But transformation is.

Technology does not provide value to a business. Instead, technology’s value comes from doing business differently because technology makes it possible. This idea of focusing on transformation instead of technology extends to industries ranging from food to mining.

With these pieces of information, a strategic focus on digital sends the wrong message to a business. It means that, we do not need a digital strategy. We need a better strategy, which should be enabled by digital.

Which type of strategy and when?

It changes as the business requirements change. How predictable is your market? How flexible is the market? The recommendation is, to have some mix of positional (long-term position), leverage (where we have some influence on how the market moves), and opportunity strategies (hard to predict when they will come or how long they will last).

The key is that there are always trade-offs between the chance of success and reward. Otherwise, the position is not sustainable.

What is the hardest thing about strategy?

Strategy forces us to make decisions and obviously cut off options. It resists the urge and to do. It is observed that, this happens by getting distracted by competitors. Every product, service, or feature we add to our business has a cost of some kind. Trade-offs are a critical part of making sure our strategy is sustainable, because they protect from competitors trying to overlap multiple markets.

Due to this force and urge, many people fall into the trap of trying to copy a competitor's strategy. But this is not recommended for a number of reasons. Like a chemical reaction, different quantities of the same elements combined in different ways can produce very different results. When people try to copy a strategy, they are really just copying an element or activity. Even if we think we know what a competitor's strategy is from the external, it can be very hard to copy successfully unless you know all of the individual details.

It means that, when competitors copy each other, the only winner is the customer. Over the long term, the more competitors converge, the more they look like each other and customers fall back on price to help choose between options. This drives prices down and squeezes margins.

Why does digital strategy not equal IT strategy?

Most IT strategies consider technology in isolation. So a company may have a business or IT strategy in place that incorporates digital technology, but it does not merely imply that it is a digital strategy.

For example, a company may be working on a cloud strategy, social strategy, or mobile strategy. Today’s customer-facing solutions rely on ubiquitous digital connections in which individual technologies (cloud, NFC, mobile, big data, etc.) merge to deliver a customer experience that looks and feels like our natural behavior. There should be more connections between people, places, information, and things.

Is digital edge different from digital automation?

Yes, it is. An organization that focuses its strategy on digital transactions based on automating, which substitutes physical resources for digital will only feel digital.

But actually a digital edge is a performance edge, when organizations looking to create revenue from digital technology need a strategy that is more powerful than digital substitution. They need to create a digital edge, where digital information and physical resources combine in new ways to create value and revenue. Also, it results in business innovation rather than business disruption.

When enterprises are seeking a digital edge, then they should transform processes, business models, and customer experience by exploiting the pervasive digital connections between systems, people, places, and things.

But, the nature of digital technologies like mobile, social, and analytics is different. These technologies compliment rather than compete with existing or traditional systems and information, enabling greater leverage with less disruption.


An assessment with a 360-degree approach is very important to build the strong foundations with respect to digital (IoT) and its strategy, where it consist of prime elements like leadership, strategy, culture, business models, product and services portfolio, business process change, team expertise, value chain processes, market customer access, delivery, deployment, and governance.

One of the best approach is, to take incremental steps (level 1, level 2, etc.), rather than having a digital strategy fully rolled out or in production.

So the question arises where to invest to achieve digital velocity. This is customer journey/digital touchpoint mapping.

Also, successful digital strategies concentrate on specific business outcomes rather than implementing grand strategies. This gives the effort a clear and manageable focus.

All of the above is to say that there is no unified theory of digital transformation as of yet. But these are steps along the way, but the important thing is there is no one right way to become a digital enterprise, and the journey will be gradual. The key to an effective and sustainable strategy is to focus on the integration of activities (elements).

Today if these aspects are not part of the agenda, then it is time to consider a different approach. Digital density will continue to grow exponentially in the near and long term. Revenue sits on the table for those companies willing to explore how to conglomerate their physical and digital resources in innovative ways for the customer and business.


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