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Offense or defense? Which is the best digital strategy?
According to organizational theorist and management consultant Geoffrey Moore, both strategies involve digital transformation. An offensive play requires a very aggressive form of transformation and often results in a dramatic "J" curve, which can be a difficult trajectory for publicly held companies. A defensive play, on the other hand, focuses on sustaining innovation while moving forward.
When you look at all these digital assets, as managers and executives with an opportunity to invest, the question arises, “Should we be playing offense or should we be playing defense?” And actually both are good alternatives. Let me give you a sense of each one.
So when you play offense what you’re saying is, “I’m going to use digital transformation to disrupt my sector – my competitive set. I’m going to get ahead of the game. I’m going to use digital to differentiate.
I think I can do this better than they can. I think I can do it faster than they can. I’m going to bring the modern world to my customers, or perhaps a new group of customers, before anybody else does.” That requires a very aggressive form of transformation. The CEO has to make a total commitment to this. You go through what we call in Venture a J curve, so you actually lose money before you make money. In publicly held companies that can be a challenge but, “The game is worth the candle,” as they say. So if you want to play that game, play hard and play fast.
I think for most companies who have an established book of business and an established group of customers, playing defense might make more sense. Now, playing defense is not being defensive. Playing defense is saying, “I’m going to use the new technology to modernize my operating model, to take my existing generation of customers, my existing ecosystem, forward into the future.” I’m already differentiating with these customers. They already prefer me. My ecosystem already knows how to work with me. The question is: how do I take advantage of all these digital assets and carry everybody forward with me?
The reason we call that “playing defense” is you’re not trying to attack anything. You’re trying to sustain innovation inside a community that frankly needs to be brought along a bit. You might be under attack. You may have gotten the original wakeup call from some disruptive innovator coming into your sector and putting you on notice saying, “If you don’t change your operating model, people are eventually going to defect.”
Now, this is also a form of transformation. It’s a little bit slower, it’s a little bit more deliberate, but you still have to get through it quickly and it still has a J curve. You still go down before you go up, so it’s important that you do things rapidly and you stay very focused on it going forward. But if you do that, the customer at the end of the day would rather stay with you than switch. And what you have to do is just keep up with the trends.