Geoffrey Moore: Digital strategy potential and pitfalls

ATN-300InsightaaS: I’d guess that everyone reading ATN knows who Geoffrey Moore is – his Crossing the Chasm had a profound impact on business strategy across both industries and years, and continues as a reference point for explaining market behaviour and supplier strategies.

In the LinkedIn post featured today, Moore uses a finding from some McKinsey research to highlight some of the ways that digital strategy benefits – and does not benefit – overall corporate strategy. The research highlights the extent to which digital activities are expected to contribute to corporate growth by supporting four objectives: creating new business or tapping new profit pools, building competitive advantage in an existing business, shoring up an existing business and keeping pace with competitors, and cutting costs to improve operating margins.

Moore believes that “this is a trick question, because two of the four are good ideas that promise high returns, and the other two are bad ideas that are doomed to failure.” As an example, he states that it “is crazy” to believe that it’s possible to build competitive advantage in an existing business via digital strategies. “Pundits love to talk about how businesses have to learn to disrupt themselves,” Moore says in the post, but “this is a bit like advocating self-surgery as the key to lower health care costs. It is not only an unnatural act, it is unhealthy.”

In 2015, we’ll read much about how digital strategy is the answer to a very wide range of questions. It’s helpful to find the odd commentator – especially one as respected as Moore – willing to point out that “digital” is a strategy, not a panacea.

Hat tip to John Morris for highlighting this on LinkedIn.

Okay, this theme song [ed: this refers to the title of the post, which is “Let’s Get Digital! Digital!] has gone so viral they are playing it on elevators now. But that doesn’t mean the average established enterprise’s efforts have Nailed it! This walk the walk stuff is so much harder than the talk the talk part.

But our friends at McKinsey have shared some interesting data that can give a leg up on efforts that may be stuck in neutral or going sideways.Here’s the data:

The survey listed four strategic objectives, but in my view this is a trick question, because two of the four are good ideas that promise high returns, and the other two are bad ideas that are doomed to failure. So, before going any further, can you pick out the two pairs?

One good idea is to use digital disruptions to create new business or tap into new profit pools. The latter idea is particularly good because established enterprises typically already have access to these profit pools, they are just not taking proper advantage of it. When they do, their customers give them a high five, the revenues pick up, margins get even better, and there are smiles all around.

Getting into new businesses with a new technology that is unfamiliar to you is a so-so idea. It is possible, and it may be the right thing, but this is not your organization’s sweet spot…

Read the entire post on LinkedIn: Link


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