Updated: Apr 24, 2020
Most digital strategies don’t reflect how digital is changing economic fundamentals, industry dynamics, or what it means to compete. Companies should watch out for five pitfalls.
The processing power of today’s smartphones are several thousand times greater than that of the computers that landed a man on the moon in 1969. These devices connect the majority of the human population, and they’re only ten years old.
In that short period, smartphones have become intertwined with our lives in countless ways. Few of us get around without the help of ridesharing and navigation apps such as Lyft and Waze. On vacation, novel marine-transport apps enable us to hitch a ride from local boat owners to reach an island. While we’re away, we can also read our email, connect with friends back home, check to make sure we turned the heat down, make some changes to our investment portfolio, and buy travel insurance for the return trip. Maybe we’ll browse the Internet for personalized movie recommendations or for help choosing a birthday gift that we forgot to buy before leaving. We also can create and continually update a vacation photo gallery—and even make a few old-fashioned phone calls.
Then we go back to work—where the recognition and embrace of digital is far less complete. Our work involves advising the leaders of large organizations. And as we look at this small device and all the digital change and revolutionary potential within it, we feel the urge to send every CEO we know a wake-up call. Many think that having a few digital initiatives in the air constitutes a digital strategy—it does not. Going forward, digital strategy needs to be a heck of a lot different from what they have today, or they’re not going to make it.
We find that a surprisingly large number underestimate the increasing momentum of digitization, the behavioral changes and technology driving it, and, perhaps most of all, the scale of the disruption bearing down on them. Many companies are still locked into strategy-development processes that churn along on annual cycles. Only 8 percent of companies we surveyed recently said their current business model would remain economically viable if their industry keeps digitizing at its current course and speed.