5 Key Challenges and Opportunities for CEO while formulating Digital Business Strategy

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5 Key Challenges and Opportunities for CEO while formulating Digital Business Strategy

The CEO is responsible for ensuring the success of the enterprise in this Digital Era, and he in turn depends on his team. Here are the five key (5) challenges and opportunities for CEO while formulating Digital Business Strategy:

1) Innovation:

An enterprise can innovate primarily via product innovation and/or business model innovation. Product innovation is a more widely accepted and relatively easier path to undertake. A good example of product innovation is leveraging digital technologies (e.g. Mobility, Big Data Analytics, Cloud Computing, etc.) such as Apple’s iPhone, iPad, iCloud etc. The business model innovation is just as effective as product innovation in terms of financial results; however, to implement the change requires a lot of time and effort such as Wal-Mart’s Cross Docking System, Toyota’s Production Systems etc. There are challenges in both the approaches, and there are immense opportunities as well. The leadership team needs to choose wisely!

2) Clockspeed:

As the leadership team starts to evaluate each business unit (and their respective offerings), they should have a clear understanding of the clock speed of its respective business units (i.e. high clockspeed equates to industries with very rapid evolutionary rate). This is more important if there are multiple companies within the enterprise portfolio. Measuring the output of each company (or business unit) in terms of Financials (e.g. ROI, net profits, etc.) is not sufficient. Clockspeed needs to be included as one of the key measures, and each new opportunity should be measured against it. As most of the new business opportunities in this digital era may lie in a business industry that may have a very high clockspeed; hence, it is important to consider this factor while assessing the overall health of the entire enterprise portfolio.

3) Competitive Advantage:

As all competitive advantages are temporary, key variables that determines the longevity of the advantage are the clockspeed and your ‘Core’.  The faster the clockspeed, the shorter the time horizon of the advantage and vice versa. There are a few parameters that can enhance the longevity; however, the enterprise has to constantly re-invent itself and revitalize the core over time in order to sustain itself. Hence, the leadership team needs to constantly look for opportunities that can provide a longer term advantage. As per MIT Sloan School of Management professor Charles Fine,  ‘the faster an industry evolves, that is faster the clockspeed – the more temporary a company’s advantage. The key is to choose the right advantage – again and again’.

4&5) Business Capabilities and Organizations:

General Patton once said, “Wars might be fought with weapons, but they are won by men, it is the spirit of the men who leads that gains the victory.” In reference to the enterprise, the weapons are your ‘business capabilities’ and the men are the ‘organizations’.

  • Business Capabilities: One of the keys to winning a war is having the latest and effective weapons at your disposal. Since business capabilities enable your strategy and could be the difference between winning and losing, it is extremely important that you ensure that you have the best business capabilities available. Leadership team needs to ask this question, if they are optimally leveraging Digital Technologies to build ‘best in breed’ business capabilities? In today’s world, one cannot win a war with swords and spears.
  • Organizations:  I’m sure everyone agrees that fortitude of the men (and women) is the single most important factor in winning. Does your organization have resilient and courageous folks? Are they willing to adapt, learn, and deliver the results with the best business capabilities at their disposal?

References: Charles Fine (Fast Clockspeed) 

About the Author

Udey Chaudhry is an Executive Management Consultant, focusing on Digital business strategies and execution, with extensive experience as a Strategy Consultant with top tier consulting firms and successful startups. He is an alumnus of MIT Sloan School of Management.

All opinions expressed by Udey Chaudhry are solely his own and do not reflect the view of any professional organization.

© 2015 Udey Chaudhry All Rights Reserved

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