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.
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.