By Samista Jugwanth
In today's fast-paced world, organisations operate in a VUCA environment (volatile, uncertain, complex, and ambiguous). This concept encapsulates the unpredictable nature of our current reality. The unpredictability we face is not just a matter of probability; it's about the divergence and spread of the multiple possible futures that could unfold.
Digital tools and technologies provide the agility and adaptability required to navigate such an environment. They offer unprecedented opportunities to streamline processes to increase profits, engage customers to expand market share, and drive innovation to create new and better products/services.
THE ROLE OF A DIGITAL STRATEGY IN MANAGEMENT
To maximize the benefits of these digital tools, a strategic approach that integrates digital capabilities into every aspect of the business is required. By leveraging digital tools with a clear strategy, businesses can turn volatility into opportunity, uncertainty into innovation, and complexity into simplified processes, ensuring resilience and sustained growth.
Before diving into the process of formulating a digital strategy, it's essential to understand why a digital strategy is necessary for various types of organizations (businesses, nonprofits, NGOs, etc.). A digital strategy outlines how your business can leverage technology to improve performance, achieve strategic goals, and create new competitive advantages.
A well-crafted digital strategy serves three primary objectives:
Enhancing Reputation and Brand: Digital tools and platforms can be used to strengthen your brand's presence, reach, and reputation in the market.
Building New Revenue Streams: By adopting digital technologies, businesses can explore new markets, offer innovative products or services, and create additional revenue streams.
Optimizing Existing Work Streams: Digital transformation can lead to improved efficiency, cost savings, and better resource management.
USING STRATEGIC FORESIGHT METHODOLOGIES
This is where strategic foresight comes in. Unlike traditional strategic planning, which often focuses on predicting the most probable outcome based on current trends, strategic foresight is about exploring a range of possible futures. By examining current drivers, signals, and trends, strategic foresight allows us to anticipate potential outcomes with varying degrees of probability. This approach enables organizations to adapt to and mitigate risks while also identifying opportunities for growth, innovation, and efficiency.
Using a consulting firm that specializes in water infrastructure, here’s an example of how strategic foresight can be used to develop a digital strategy tailored to an organization’s needs.
STEP 1: Determining factors affecting your preferable future of work
The first step in using strategic foresight to formulate the digital strategy is to determine your preferable future of work. This involves understanding the drivers that will shape both what you work on, and how you work.
These drivers are influenced by the specific geography, socio-economic context, and political climate in which your business operates. To identify these variables, we can use the STEEP framework, which considers Social, Technological, Environmental, Economic, and Political factors. This framework encourages divergent thinking and can be applied individually or in group brainstorming sessions.
In a session run with consultants working in the water infrastructure sector, the examples of drivers are indicated in the table below:
Table 1: Step 1- Use the STEEP Framework to identify relevant drivers
SOCIAL | TECHNOLOGICAL | ENVIRONMENTAL |
Urbanization Increase in Level of Service provided Pandemics Biophilic design preferences Public awareness & perception Criminality | Smart Infrastructure Water efficient devices Alternate water sources Automation | Climate Change Pollution Urban Heat Islands Placemaking – rise of public spaces Climate refugees Emerging Contaminants |
ECONOMICAL | POLITICAL | |
Urban Agriculture Privatization Blockchain and Fintech Platform Services Rising demographic dividend | Refugee camps Water rights, e.g. Ethiopia vs. Egypt Age of infrastructure Poor governance Developing economies |
STEP 2: Drawing out potential workstreams
Once the drivers are identified, the next step is to draw out potential work streams. These work streams must take into consideration both the drivers effecting your market, as well as those that effect how and what is delivered. It is preferable in a group setting to mind map this exercise. Mind mapping is a useful tool for this purpose, helping to visualize how different drivers intersect and influence each other.
The output can then be summarised into a table that will serve as the foundation for the next step in creating a digital strategy. If the group is comfortable with working directly in tables, one can leave out the mind mapping step.
An example of a how the drivers above can be summarised into a Work Opportunity Framework is indicated below:
DRIVERS & SIGNALS | WORK OPPORTUNITY |
Urbanization, Increase in Level of service Climate change: reduction in surface water Age of infrastructure Automation | Non-Revenue Water (NRW) Projects Globally, the World Bank is pushing for performance-based contracts for contractors (combination of design and small construction and maintenance teams) to reduce water leakages in areas. The consortium gets a share of the value of water saved. Currently South Africa has a NRW of between 30-40% - there is high opportunity for us to run a programme management function to reduce this. |
Urbanization Urban Farming Climate Change: Droughts & Floods | Agri-tech Due to rise in population in urban centres, food supply requirements are higher. Also, given climate change (variable weather patterns, droughts, floods and pests), crop spoilage is high. Almost 60% of a crop is lost before it reaches shops. The future is vertical farms in factories, where all parameters are monitored and automated (nutrients, water, light, etc.) and in house processing is completed within the factory. Given our agricultural engineering expertise, our process capabilities, we can design these facilities for high-end food crops. |
Step 3: Understanding Potential Digital Capabilities and Tools
Given the rapid pace of digital innovation, it's crucial for your team to understand the potential digital capabilities currently available to them. This requires a brief introduction to the latest digital technologies, allowing your team to imagine the possibilities before moving on to the next step.
To build this understanding, consider the following:
Investigate the potential applications of various digital technologies.
Identify the skill sets required to implement these technologies.
Understand the software and hardware requirements necessary for adoption.
This step is critical because it lays the groundwork for determining which digital capabilities are essential for your business's future work. To avoid this step being highly theoretical, this research must be completed by someone who has technical aptitude when it comes the use of digital tools. It is important that they present this shopping list to the business strategy team in a clear and consistent manner – focusing on value proposition for each tool, the risks attached, as well as what are the practical requirements.
If it is possible, short demonstrations or links to educational videos should also be shared with the group. This is extremely important especially if your business strategy team members have low experience in the field. Having knowledge of this part, will aid them in making relevant decisions.
Step 4: Identifying Required Digital Capabilities
The final step in this process is to shortlist the digital capabilities that are essential for delivering on the preferable future work identified in Step 2. This involves setting clear goals for each capability, including performance expectations, assigning project sponsors, and defining timeframes for implementation.
Creating a digital strategy involves more than just selecting technologies; it's about ensuring that these technologies align with your business's strategic objectives and values. The process of digital transformation should be guided by a clear understanding of the current status quo, the digital capabilities required to achieve your preferred future work, and the steps necessary to integrate these capabilities into your operations.
Table 3: Step 4- Match Work Opportunities to Digital Capabilities Required
WORK OPPORTUNITY | DIGITAL CAPABILITIES REQUIRED |
Non-Revenue Water (NRW) Projects |
|
Agri-tech |
|
💡Pro-tip: This method is best completed as two facilitated workshops.
Workshop 1 will contain Steps 1 and 2, and can include an ice breaker, as well as a short progress recap of the business. Workshop 2 will start with a recap of the outcomes of Step 2. This will be followed by Step 3 given in a presentation format by a resource well versed and able to take queries. After which Step 4 can be completed by small break-out groups. Workshop participants should be diverse in terms of age, gender and hierarchical level as it will lead to more comprehensive results.
IMPLEMENTING THE DIGITAL TRANSFORMATION PROCESS
To successfully implement your digital strategy, it's essential to follow a structured digital transformation process:
Define the Status Quo: Start by identifying the current state of your business, including existing work streams, digital capabilities, and areas for improvement.
Select Preferable Future Work Streams: Choose the work streams that align with your business values and profitability goals.
Determine Required Digital Capabilities: Identify the digital tools and technologies needed to support these work streams.
Develop the Digital Strategy: Create a comprehensive plan that includes transformation targets, specific actions, and performance metrics.
Monitor and Adjust: Periodically assess the status quo to ensure that your digital strategy remains aligned with your business goals. Use these assessments to revise your digital strategy and targets annually.
Implementation Process Flow:
LESSONS LEARNED
When developing and implementing your digital strategy, it's important to learn from the experiences of others. Here are a few key lessons:
Collaborative Development: The digital strategy should be developed by a diverse team, with each component driven by a technically capable leader. A single point of contact is not sufficient to cover the breadth of digital initiatives.
Comprehensive Skills Assessment: The digital skills of your team should be thoroughly and honestly assessed and included in your strategy. This ensures that your team will be empowered to handle the demands of digital transformation.
Clear Communication: The digital vision for your business must be well-developed and communicated effectively across all levels of staff. Engagement and buy-in from the entire team are crucial for successful implementation.
Adequate Resources: Innovation requires investment. Ensure that sufficient resources — staff, budget, and time — are allocated to investigate, develop, and test new digital initiatives.
Appreciate Complexity: Digital transformation is a complex process that requires careful planning and integration. Mitigate potential challenges by fostering representation, engagement, and feedback throughout the process.
CONCLUSION
Using strategic foresight to formulate your business's digital strategy allows you to anticipate future challenges and opportunities, ensuring that your business remains competitive in an increasingly digital world. By following the steps outlined in this article — understanding your future work, exploring potential digital capabilities, and implementing a structured digital transformation process — you can create a digital strategy that not only meets your current needs but also prepares your business for the future.
The key to success lies in continuous learning and adaptation. Regularly revisit your digital strategy, assess your progress, and make adjustments as needed. By doing so, you can ensure that your business remains agile and ready to thrive in the face of whatever the future may bring.
Samista Jugwanth is a professional engineer, Technical Director at Zutari and a futurist who merges design-led thinking and strategic foresight methodologies into traditional engineering design to maximise positive environmental, social, and economic impact in projects.
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