What is a digital strategy?

This article originally appeared in the Bookseller on 2nd May 2014.

This year, I was honoured to be asked to be a judge of the Bookseller Industry Awards. It was intimidating, sitting alongside the organiser of the Man Booker Prize and The Bookseller editor Philip Jones, providing my perspective on who was successful in publishing in 2013.

I decided early on that my focus would be on two areas: digital and innovation. Digital because most of my work lies in the areas where technology meets communication and entertainment—particularly in video games. Innovation because I believe that successful businesses are those that figure out how to learn faster, better, cheaper than the competition.

This led to a conundrum. As the judges were considering who had been successful in 2013, it turned out that the entrants had very different views of what a “digital strategy” was. Some of them seemed to have different views about what any sort of strategy is.
In the deliberations, I gave my view of what a successful digital strategy looks like, and my criteria for judging if people were pursuing one. Here—with the benefit of more time to think about how to express it—is how I would go about evaluating a digital strategy.

My starting point is drawn from Good Strategy, Bad Strategy (Profile) by Richard Rumelt, the best book on strategy I have read. Rumelt defines a bad strategy as one full of jargon and flim-flam. With a bad strategy, it is hard for anyone to know what you are trying to achieve and whether you have achieved it.

The heart of a good strategy is applying an organisation’s resources in a way that will amplify its affect. It is about the smart application of its skills, finances, logistics and everything else at its disposal coherently at a single point, or at a limited number of points.

Rumelt suggests that you start with a diagnosis: state what you think the problem is. Not everyone will agree with you, but at least everyone will know the problem that you are trying to fix. If you miss out this step, people may well understand the specific tactics you are employing—they may even execute on them well. But they won’t know why you are asking them to do something, and they won’t know how to deliver on your objectives in a way that maximises the impact of the other initiatives you are pursuing. If people disagree with you, it is better that they spend time trying to help you figure out if your diagnosis is wrong, rather than sabotaging the efforts you are making to treat the issue.

Follow the diagnosis with a guiding principle. Having identified the cause, set out the main high-level approach you plan to take to address the issue. Then add a layer of specific actions: the tasks and behaviours that people within the organisation will undertake or adopt in order to implement the strategy.

This three-pronged approach is very powerful. Instead of having an incoherent set of actions—all of which are full of buzzwords and jargon but achieve little—you provide the organisation with a clear statement of what is wrong, what you think you need to do to fix it and the individual steps you are implementing to change things. It enables people who disagree with you to disagree about the effectiveness of the actions, the logic of the guiding principle or the accuracy of the diagnosis, rather than blending the three into corporate infighting.

If you can blend in some of Eric Ries’ Lean Startup (Portfolio Penguin) thinking—showing how even the biggest organisations can reduce the time and cost of validated learning—you have a very powerful approach.

To my mind, the ideal digital strategy for a publishing business in the 21st Century is as follows.

The diagnosis is that the lock on distribution has evaporated. Digital has not eliminated the desire some consumers have to own physical products, nor has it rendered them obsolete. It has made the long, tortuous chain from writer to reader, via agent, commissioning editor, general editor, copyeditor, publisher, salesperson, book-buyer and bookseller, much, much shorter. The democratisation of technology, marketing and distribution has made it much easier for anyone, irrespective of talent, to layout, promote and sell their books.

Publishers no longer have an ability to determine which books get published and which books don’t.

The guiding principle is that publishers have to adapt to a changed competitive environment. They have to ensure that both writers and readers value what it is that they offer. At the heart of that, to my mind, lies a massive challenge: as a product goes digital, costing tiny amounts to reproduce to 100% accuracy, it becomes increasingly tougher to maintain high prices. So publishers need to build relationships with end users. They need to build audiences that writers want access to—directly, not just via retailers. And they need to identify those users that are willing to spend money on books and a range of other things connected to their reading hobby.

The specific actions come in three parts:

  • Find an audience, probably using free books.
  • Earn the right to talk to them again, and figure out what they really value, probably using technology.
  • Let them spend lots of money (and I do mean lots) on things they really value, which will probably include both physical products and experiences, such as live events.

You may disagree with my diagnosis, my guiding principle and my specific actions. But at least I’ve broken down for you my analysis of the situation and my proposed solution. Now you can argue with the principle, or with the treatment—hopefully, as a result, you can come to a better understanding of the challenges facing your particular organisation, and how best to address them.

Nicholas Lovell’s The Curve (Portfolio Penguin) is out now in hardback and e-book. The paperback was released last week

Nicholas Lovell