The 6 types of digital strategy

August 7, 2017 Stephane Castellani

I would like to promote today the recent survey from the Harvard Business Review that identifies 6 types of digital strategy that I’m summarizing below.

The offensive types of digital strategy

Here is a list of 3 types of digital strategy that aim at targeting new demand, new supply or new business models.

1/ The platform play

A digital platform consists in bringing together on the same platform both customers and suppliers of the business value chain, in order to create a network effect. Check out this article if you want to know more on what is a digital platform.

A typical example is Accor opening their online hotel booking platform to independent hotels offers a good case.

According to the HBR survey, only one third of companies have engaged to some degrees in platform strategies.

2/ New marginal supply

This model consists in creating new revenue streaming by tapping into new market opportunities with low operational margin. Leveraging digital technology allows to operate a model with minimal cost and become profitable, while the legacy model was making this profitability impossible to achieve.

A typical example is Ikea who are offering a online reseller options for their own customers, allowing them to sell used, branded products to each other.

According to the HBR survey, 13% of incumbent firms were using this type of digital strategy, often combined with a platform digital strategy.

3/ Digitally-enabled products and services

This 3rd type of digital strategy consists in adding digital technology on existing products.

A typical example is Nike self-lacing shoes or P&G’s Oral-B connected toothbrush.

According to the HBR survey, 55% of companies are using digital technology to rebundle their products or services to better serve their existing customers.

The defensive types of digital strategy

Those 3 following types of digital strategy are defensive in nature, since they are aimed at improving what the firm already does, and therefore not a source of differentiation.

1/ Rebundling and customizing

This type of digital strategy consists in using digital technology to customize their existing services or rebundle them.

A typical example are the online newspaper allowing their audience to customize their reading lists according to their areas of interest.

According to the HBR survey, 60% of companies have adopted this digital strategy model.

2/ Digital distribution channels

This type of digital strategy consists in facilitating access to their products and services by leveraging the new digital distribution channels.

E-commerce web sites of retailers are a typical example of this model.

According to the HBR survey, almost 60% of companies have invested in digital distribution channels.

3/ Cost efficiency

This type of digital strategy consists in using digital technologies to reduce costs, typically through automation or cost scaling.

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