The Oxford Dictionary has two primary meanings associated with Strategy. The first is below. The second has a military context. This is understandable as many management concepts still in use today originated from the military.
Definition of Strategy: a plan of action designed to achieve a long-term or overall aim. Definition
It makes sense that a Business Strategy is therefore a plan of action designed to achieve a long-term or overall aim for a business, or an organisation. Their names may vary from Business Strategy to Corporate Strategy, Organisational Strategy or something else. However, most of us know what these look like even if their name may vary. It is usually developed, or at least lead by the Chief Executive, and it may have extensive input from the Board.
An ICT Strategy can take a number of forms. In many organisations it is a response to the needs of the Business Strategy. That is, it defines the ICT plan of action designed to achieve the ICT related aims of the business. It is usually developed by the Chief Information Officer (CIO) or an equivalent role. The Chief Executive is often consulted and involved to varying degrees depending on the organisation and on the Chief Executive. The Board could also be involved, although in my experience it is rare for most Boards in Australia to play an active role in the preparation of an ICT Strategy.
In my view, this approach to the development of strategy has been a big weakness for many organisations. It is based on a flawed assumption. And that assumption is that ICT can only form an output from Business Strategy. By definition, that means that ICT is not a useful input into Business Strategy. This is flawed thinking, and has been for many years. ICT has the potential to impact on Business Strategy. And this effect is becoming more pronounced with each passing year. For instance ICT innovations are allowing new entrants to enter existing markets, the creation of brand new markets and the creation of new business models and industry structures. ICT is changing our expectations (as clients and potential clients) for how we interact with organisations. If you have any doubt, you would know that you and most of your friends use ICT daily to buy, consume or research various products and services. If you still have doubts, read Marc Andreessen’s article, Why Software Is Eating The World at WSJ Article Link. I have put some direct quotes from this article below.
Despite this flawed assumption, Business and ICT Strategies have largely been developed in this way for many years. In more recent times, and perhaps for only the past five years, the Digital Strategy has come along. It primarily came out of marketing departments who realised that there were more digital marketing and advertising options that they were having to consider. But beyond that, they also realised that customers wanted to interact with their companies in multiple ways, including digital and online ways. In some cases they also saw their own market share being eroded by these new entrants that were capitalising on Digital approaches to doing business, and these Digital approaches were being very successful.
Hence we have seen the rise of the Digital Strategy. While its development may be lead by the Marketing Department, it is increasingly becoming of major interest to Chief Executives and Boards. There have been enough company failures caused through being blindsided by Digitally enabled alternatives that it is worth them taking a keen interest. This also means that the Digital Strategy is taking on a broader view, not just a marketing view but a broader strategic view of the organisation, and considering things such as industry structures, competitor behaviour, organisational capabilities, organisational structures, and many aspects of an organisation’s business strategy.
This evolution of the Digital Strategy is now becoming what the ICT Strategy could have been, and perhaps in some rare cases, has always been. The Digital Strategy is now becoming an input into the broader strategic view of the organisation, helping to inform the Board and Executive team, and providing an input into the entire organisation’s strategy.
A word of warning: Be careful assuming that the above descriptions apply in every organisation though. In some cases ICT and Business Strategy formation does happen in concert with each other, but this is rare. And in some cases a Digital Strategy remains a marketing only view although this is becoming less common as a broader view evolves of what a Digital Strategy should be.
Can all three strategies sit side by side? The easy answer is yes. But over time, it is natural that they could merge. For instance, would Amazon or Google or Netflix or Apple or Skype have a Digital Strategy and a Business Strategy. I cant say for sure, but I don’t believe that they would think of strategy in two separate domains in this way. In most organisations, it will be useful to have a Digital Strategy. It will introduce new ideas and concepts and challenge the existing organisation and hopefully have a positive impact on the overall strategy for the business.
Overall, the emergence of the Digital Strategy having a whole of organisation view, and even taking an industry and marketplace view, is a good thing. It helps organisations to see the opportunity and risk that is in front of them. The view of many commentators is that eventually every company will have to become a technology company or they will no longer be around. If that is true then the sooner you start this evolution the better off you will be. And if a Digital Strategy helps get you started then that is great news.
Mark Nicholls - Practice Lead IP//Digital, Chair Go Digital Queensland, Chair AIIA Queensland.
Excerpts from “Why Software Is Eating The World”
- More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense.
- The world's largest bookseller, Amazon, is a software company
- Largest video service by number of subscribers is a software company: Netflix
- The most dominant music companies are software companies: Apple's iTunes, Spotify and Pandora
- The fastest growing entertainment companies are videogame makers—again, software.
- And the fastest growing major videogame company is Zynga (maker of games including FarmVille), which delivers its games entirely online.
- The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.
- Photography, of course, was eaten by software long ago. It's virtually impossible to buy a mobile phone that doesn't include a software-powered camera, and photos are uploaded automatically to the Internet for permanent archiving and global sharing. Companies like Shutterfly, Snapfish and Flickr have stepped into Kodak's place.
- Today's largest direct marketing platform is a software company—Google.
- Today's fastest growing telecom company is Skype, a software company
- LinkedIn is today's fastest growing recruiting company.
- If you still need convincing or want to read more, read the entire article.