We’re all online. And we’re spending more and more of our time there. Strategy must change because of online.
Online is everywhere. It is impacting practically everything we do; from how we interact with friends, to how we buy things, to how we deal with our health and taxes.
Online is not something that can be neatly separated from the rest of the organization. It affects every aspect of the organization, from its employees to its customers. So, for that reason, you don’t need an online strategy. You need a single organizational strategy that is heavily influenced by online.
Online is about service. For example, we go online to get service and support for something we own. We also buy products through a process of self-service, and increasingly we buy services online. (Microsoft Office, for example, used to be a product, now it is an online service.)
Products thrive on the complexity sell. Services offered in an information-overloaded world thrive on the simplicity sell. The route to simplicity is through rapid, continuous, incremental improvements. Get it out there as quickly as possible and then quickly improve it based on customer feedback.
To develop strategy you need to have an in-depth understanding of your strengths. You need to understand your competitors and industry. But you also need to understand your customers and the society within which you operate. Online is making customers and society bigger and more powerful players, so they now play a much more central role in strategy development.
The customer isn’t king anymore. They’re dictator. They are going to get more demanding and powerful. That’s why your strategy needs to be centered on them.
Strategy is hard. “Most companies do not have a strategy,” Freek Vermeulen, Associate Professor of Strategy and Entrepreneurship at the London Business School, states. He thinks most organizations cycle between drifting and reacting. “To be emphatically blunt,” he states, “most companies and their top executives do not have a good rationale for doing the things they are doing and cannot explain coherently how their actions should lead to superior performance.”
A. G. Lafley, former CEO of Procter & Gamble and Roger Martin, Dean of the Rotman School of Management agree. Authors of a book on strategy, Playing To Win, they believe a great many companies do not have a strategy and that managers often confuse strategy with having a vision or a plan.
How do you know an organization has no strategy when it comes to online? They talk about being for everyone. The website is full of content that is never updated and never removed. They want to be in all markets and deal with all audiences. They want to answer everyone’s questions. They are unable to make choices, to prioritize. "The essence of strategy is choosing what not to do," Michael Porter, a pioneer in strategic thinking, has stated.
"People think focus means saying yes to the thing you've got to focus on,” Steve Jobs said at the Apple Worldwide Developers' Conference in 1997. “But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things." And as Southern Company CEO Tom Fanning emphasizes, “Your greatest indicator of success is how many ideas you kill.”
This is an excerpt from Strategy & Online: