The importance of strategic alignment in digital product development

By 21 February 2022Blog

The importance of strategic alignment in digital product development

During the more than 25 years that we have spent developing new digital products and services, we have noticed that there is a lot more to it than just designing and implementing a new digital system. When you introduce a new digital product, it automatically triggers cascading changes in many areas and processes within the organization. So, how do you nudge that change in the right direction and make sure that everything and everyone is perfectly aligned so that the digital product becomes a success?

When we introduce changes to existing systems and processes, alignment is critical as these components are often complex and integral parts of your business that you can’t simply switch off or re-arrange. The core of the business depends on more than just the product, and impacts how people interact with your product or service. The intangible relationships and conceptual models that people build in their minds are the direct result of interactions that they have had with a brand.

The most important factor for the success of your digital product

In our experience, one factor determines the success of a digital system. It is not how fast a product is brought to market or even the user experience.The critical factor that determines the success of an organization and their products/services is alignment, i.e.all aspects that are associated with realizing the digital strategy of the organization.

The genesis of alignment begins in the design school of strategy. It focuses on the extent of fit between an organization’s internal structure and its external affairs – with external factors driving internal processes. Strategic alignment, on the other hand, focuses on aligning an organization’s decisions and activities in such a way that they support the achievement of its goals, and its mission and vision – focusing on lining up internal decisions with external conditions. Alignment is a critical factor in creating new, sustainable propositions. We often see that this factor is underestimated and that companies are mostly fixated on building and integrating (new) technology. ƒAdditionally, when new propositions are developed, when silos have to be broken or an existing supply chain is up for discussion, it’s paramount to align teams, data, tech and processes seamlessly.

lost humanWhy is strategic alignment so important?

Due to increasing uncertainty and complexity of the business landscape, organizations nowadays need to be innovative, flexible and fast to keep up with the competition . Because of this, applying practices of strategic alignment can be very complex, rendering organizations struggling to find the right fit.

In fact, this study shows that alignment is the secret sauce used by the top 10% to meet their goals and that 80% of the differences between organizations’ performance can be explained by their level of strategic alignment.

Traditionally, every product or service depends on varied pillars, such as product design, engineering, sales, marketing, business or research. Every organization at any scale has teams or individuals representing these pillars and are critical to the success of the product or service. However, how do we prioritize and identify the best approach to address each of these pillars synergistically? What do we align exactly? What are the components or principles for alignment? Can one method work for all? Who has ownership over bringing about alignment?

Strategy is no longer a siloed, team-focused effort. The continuously shifting landscape calls for the need for companies to contextualize and adopt strategic alignment as a core component of their practice. In today’s increasingly agile and complex world, classic alignment models based on the notion of competitive strategy or resource-based views are not sufficient. There is a need for new, flexible and systemic capabilities in leadership, technology and processes. As the role and importance of digital and information systems in contemporary organizations increase, we need new perspectives in managing, operating and innovating IT-based business models. This calls for the augmentation of existing practices to embrace the multifaceted nature of alignment and its adaptive capabilities [1].

At INFO, we have identified four key themes organizations need to focus on in order to accelerate and bring sustainable change for strategic alignment: processes, teams, software solutions and data. In this series of blogs, we’ll deep-dive into these four themes and principles of alignment, based on our experience working with organizations of different scales, and explore what alignment means to different organizations.

What does alignment strategy mean to different companies?

We were curious about the vision of other organizations on the importance of alignment in digital product development and how companies deal with challenges of alignment in their day-to-day business. This blog series will focus on how organizations like Just Eat Takeaway.com, VanMoof, NOC*NSF and Philadelphia Zorg, address challenges around alignment and what it means to them. We interviewed them to find out, among other things, how they define alignment, what challenges they encounter and what valuable alignment tips they have for others in similar positions.

We start off this blog series by talking to Martijn Hazelaar, Head of Digital at VanMoof (Dutch eBike brand) and finding out how they brought about alignment within their organization through a structured approach towards data.

 

 

[1] Rashidirad, M., Syed, J., & Soltani, E. The Strategic Alignment between Competitive Strategy and Dynamic Capability and its Impact on E-business Value.

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