In the 21st-century digital transformation, strategy is probably a subset of an enterprise’s business strategy. Digital technologies help speed up business processes, improve efficiency and performance, and add to shareholder value if well executed.
Let me explain how business strategy and digital transformation strategy work with a real-life example.
Sam Walton, the founder of Walmart, built the first Walmart store in 1962 at Rogers, Arkansas. This was a pre-digital age. Walton understood the needs of the Southern customer, who was hardworking with limited income. His customers wanted merchandise at bargain prices.
His business strategy was to source merchandise cheap, sell these at discounted margins and keep the margins down to a reasonable level. His competitor’s strategy was to maintain a high store margin. The focus was on profit. Walton’s store strategy was to build store margins through economies of scale.
Walton also understood the importance of the store manager. He picked his store managers from competing stores, watching them perform over extended periods of time before making the offer.
As the store network grew, Walton’s maintained a ledger to monitor store performance rigorously. With the advent of the digital age, Walton was one of the first store chains in Amazon to build a communication and monitoring digital network. He was the first to use supply chain and logistics applications to increase productivity gain and rising efficiency.
At the core, the business strategy of sourcing cheap, selling cheap has endured. Technology today is used to add wings to the business strategy.
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