In the previous three articles we have completed most pieces of the digital puzzle. We've developed an understanding of the departure point for a digital strategy from both the customer and organisational point of view and we've identified the right digital model option and the capabilities required to make it work.
Then we determined how to source and orchestrate a mix of in-house and vendor-sourced capabilities to create the best customer outcomes. Now it's time for the main challenge – bringing this strategy to life and putting it to action.
Going back to our superannuation case study, we often see funds resorting to one of two extremes when it comes to this last step. Some, having an understanding of a broad direction, rush to get their loosely defined programs going.
With unclear accountabilities, ballpark budgets, lack of tangible targets and benefit objectives these programs are sometimes branded as 'agile' as an excuse for lack of planning.
Others can get stuck in detail – rigorously planning each step, hotly contesting budget planning and target setting, inevitably delaying implementation.
In our experience to be a success the strategy should provide enough clarity on the target state and transition pathway to enable execution. However, it should not be set in stone, allowing flexibility to adjust the course if circumstances require.
To be actionable the target state should clearly articulate all the elements we've looked at during the diagnostic including customer experiences and the capabilities required to deliver them.
The capabilities, including the 'spikes', should be structured within a target operating model and choices made on whether to build them in-house or to procure from vendors.
Lastly but equally important, the benefits and desired customer outcomes should be clearly defined. If the company does not align on what 'good' looks like in terms of objective metrics, the delivery will focus on effectively 'churning' tasks regardless of whether they help achieving end-state goals.
Another critical but often overlooked factor in developing a digital strategy is to define cultural and behavioural shifts required for it to succeed.
Take for example a superannuation fund which decides to transition to a fortnightly release cycle for its digital channels. This shift to agile delivery may imply abandoning quarterly design authority meetings in favour of weekly management stand-ups.
It may also require substitution of part of traditional work in siloes in favour of cross-functional project teams. Even formal quarterly trainings can be repackaged into weekly brown-bag knowledge sharing sessions.
Equipped with the digital target state vision, the company can proceed to defining a program of work.
Digital programs consist of initiatives should collectively deliver the target state. However easy this may sound, structuring and sequencing a coherent program is not a straightforward task.
It involves prioritising initiatives by balancing capital constraints and change capacity, accounting for dependencies and risks as well as setting up governance mechanisms including accountabilities for execution and target metrics.
Development of a digital program is as much an art as a science. One of the key drivers of design complexity is its iterative nature.
Once the initiatives are costed, the delivery can be prioritised based on the organisation's investment capacity and benefit impact. However factoring in dependencies, risks and change constraints may require adjustments to sequencing which will in turn demand reassessment of investment and benefit delivery profiles.
Once all parts of the program fit together and accountabilities are assigned the company can progress with implementation.
We find the digital programs that built buy-in and momentum as part of strategy formulation, progress into implementation more effectively and deliver results faster.
That is why in supporting our clients we work closely with the leaders and teams which will be executing the change.
A good indicator of program momentum is when the client (whether internal or external) does not require a formal hand-over or explaining of the deliverables – they just go ahead and implement as planned.
Having stakeholders fully aligned on the objectives, initiative suite and accountabilities is a hygiene factor for any digital transformation.
Every company's digital journey will differ – in choice of model, ambition, sourcing approach, etc. but one thing is certain – the target state is not static. Starting a three-year transformation hoping the program will play out exactly as planned is at the very least naïve.
In a rapidly changing digital environment the leadership should be open-minded and ready to course-correct at every juncture.
Going back to our musical analogy, it may require changing of repertoire, instruments or musicians. Failure to respond to changing environment is like an orchestra playing blindfolded with earplugs.
Unfortunately, not every company gets it right – one major financial service provider pushed on a five-year program to build world class scanning capability even when it became apparent paper is a rapidly declining channel for them, making investment obsolete.
At Strategy& we believe digital strategy is the critical first step in setting a company on a course to success. Our PwC colleagues will argue execution is equally important.
In reality, winning the digital battle in a highly competitive financial services industry requires both. This series provided an insight into the tools and methodologies Strategy& uses in helping our clients win.
Maxim Sharshun is Engagement Manager at PwC Strategy&