Three ways to invest in digital strategies and when to use them
Negative reputation and loss of clients. These are among the main reasons why managers at Czech companies are starting to consider investing into digitization in order to provide better services to their customers. What does a digital business strategy consist of and how can you tell which part of it to pursue?
A digital business strategy consists of three essential parts - technology enablement, digital optimization, and digital transformation. They differ in the level of ambition and technological maturity of the organization. While technology brings some new opportunities for companies – for example, selling a product not only in a physical location but also online – transformation, on the other hand, involves creating new revenue models or dramatically changing the existing ones.
Technological enablement
At this stage, the adoption of a technology allows companies to expand their offer or sales methods. Czech banks, for example, can offer simpler, faster, and more secure login to customer zones, e-shops, or applications, or the electronic signing of documents thanks to BankID, a method of digital identity verification. At this stage, companies are building their technology portfolio and tools that allow them to use digital channels in new ways.
Digital optimization
The moment a company has the technological background to develop innovations, it can start to focus on improvement. The goal of optimization is to get ahead of the competition, operate more efficiently, and pinpoint the differentiation that attracts customers. This mainly means working on productivity and customer experience, which companies are trying to improve with the help of digital tools according to business KPIs. This strategy works best in a stable and ideally growing market.
At this stage, it is necessary to have already mastered technological enablement, especially when the market expects a new breakthrough that may force the company to look for a new business model.
Digital transformation
The need to transform (not only) digital business usually arises when the existing model has been exhausted and a new business model is on the horizon. By the time the market is exhausted, companies should have already addressed the transformation and invested in alternatives that will allow them to react to the market disruption in time and leverage it to their advantage. However, this is still a directed management discipline and the horizon of change and planning within the organization must always be taken into account. Not only guerrillas who come out of nowhere, but even well-established companies that invest in new ideas and optimizations, can become the carriers of disruption.
An example is Amazon, a company that built its business on e-commerce and whose representatives realized that they had a robust IT system that was not fully utilized. So they started offering their cloud platform – at a time when the term cloud didn't exist – to others as a service.
