A digital strategy is not an extension of your current model, but a transformational event that must be understood before it is implemented.
Since the outbreak of COVID19, there has been a rush towards the use of digital platforms for the delivery of products and services, under the premise of implementing a digital strategy for survival.
Leaders must understand that user habits will forever change and it will impact previous economic models. Organizations that underestimate the complexities of a digital transformation, will succumb to old habits and broken models. Models that do not scale and will be unsustainable. The underlying concern about implementing an unproven strategy, is that organizations have long believed that digital adoption is a way to extend their current business model via technology, which is far from reality.
Digital transformation is defining your business and economic model around an enhanced value proposition, with a consumer that has different expectations and a delivery model that must adapt to the new requirements. Let me share an example from one of our customers, as it help put it into perspective and define what success should look like.
Restaurant Industry Example
Restaurants have been hard hit by the COVID19 events, and they are exploring new sources of revenues, specially moving to pick up and delivery. The problem is that some of them approached the new delivery model, as an extension of their previous in-house and limited delivery offering, and it is not working, as their revenues do not cover cost, and they can not replicate a customer experience that they so desire.
Where in the past, the delivery model generated additional revenues, now they have become the only source of revenues. Therefore, the question that they are facing; should they review their offerings to improve the experience of your customers ? or should they try to pursue their old model with some adjustments ? Do they understand that their customers, stakeholders are now different and they need to approach them in a different way ?
The pasta test
Let’s define what I call the pasta test – Imaging that your business is a restaurant, and in that restaurant your most successful dish is a pasta dish. Now, let’s use that dish as a way to understand the changes that have to be made as the organization transforms from face to face interaction to digital.
Start thinking and answering the questions:
- Can you deliver it to your customers while offering the same experience and taste ?
- Will the pasta maintain its texture while it takes 45 minutes to deliver ?
- Will the customer experience be a pleasant one or will be a disappointment ?
- How can you resolve it ? Or do you need to change your menu to adjust to the new reality ?
- Who are your customers ? Are they the same as when you had the restaurant ? or are they from different locations, profiles and expectations ?
- How do you reach them? How do you engage with them ?
- What about your delivery partners ? Do you have the right partners ? and are the incentives properly aligned ?
- What is the financial impact of the new model ? Does it affect your pricing ? Cost ? Profits?
Using the pasta test is just a simple way to test your digital strategy. How do you deliver a valuable experience to your customer, when the tools that you may have relied on are no longer available?.
You can substitute pasta for any of the products or services that you currently provide, but use it to help you walk the process. Understanding the impact of your digital transformation can put the organization towards a path of success, especially in the new normal where digital interaction will become a must for any business survival and growth.
As you look at your business, think about your digital strategy, and when you are designing it, keep challenging your plan with the following question;
Does your digital strategy pass the pasta test ?
About Innovating Partners:
Mark Acevedo and Michael Queralt are key principals at Innovating Partners, LLC. Innovating Partners helps startups and small businesses find a path to market fit, generating new sales and revenue growth.