By Jochen Ditsche

What is digital business building?

Digital technologies influence business models across multiple industries, creating new developments, blurring sectors and producing fluid digital ecosystems. The rapid pace of this change requires the managers to adopt an agile approach that puts the digital business building at the center of their business planning. This publication outlines the steps and drivers of digital business building — going beyond the theoretical approaches, it interviews “digital change” decision-makers, providing hands-on insights from digital practitioners.

Preparing for digital business building

The first step of the digital business building must include an honest assessment of the company’s current situation and capabilities. Are they willing to disrupt and potentially cannibalize their existing business? Do they have staying power to cope with long periods of little impact on revenue? Do they have entrepreneurial capabilities? How much risk are they willing to cope with? The second step must involve addressing technical issues — whether the company prefers passive investment to active business building, their clear strategic focus, or if it wants to rely on external support as opposed to building internal competencies. Finally, the company must transparently plan all the phases of a digital business building project, with an agile approach at its center.

What can businesses learn from practitioners? Five key areas of a digital business building

Combining Roland Berger’s wealth of experience with insights of successful digital practitioners, we outline five key areas that significantly impact digital business building:

1. Decide what is in scope and what is not. Keep or improve existing assets and/or develop completely new models based on a careful analysis of desirability, viability, feasibility, and strategic fit.
2. Cultivate people and skills. Foster a culture of adaptability and agile approach, encourage risk-taking and emphasize implementation.
3. Get the funding right. Consider that corporate-backed start-ups face different investment and capital flow conditions to their self-funded counterparts. This is where effective governance becomes crucial for digital companies built by large corporates.
4. Flexible governance. Governance should be lean and give freedom to start-ups, yet ensure touchpoints for interface management and incentives for stakeholders.
5. Provide support in the right areas. The parent company can provide the venture with strong advantages: from branding, insights, and access to customer or partners and industry knowledge to intellectual property, patents, and functional support.

Building on the key areas above, there are several drivers to the success of digital business building process:

1. Innovative thinking must be incentivized, along with clear effort for top digital talent;
2. Transferring the ownership can greatly affect how involved and motivated employees are;
3. Small and cross-functional teams are a key reason start-up drive innovation well;
4. KPIs should expand beyond traditional financial metrics alone; clear internal vision, yet one that allows some space for pivoting the strategy as required.

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