The OMC Approach - Towards a method for digital business strategy formulation

Digital business strategies provide an answer for organisations to the technological developments that have occurred over the past decades. The traditional paradigm of business and IT strategy alignment has shifted to the perspective where business and IT strategies are fused into one transfunctional, organisation-wide strategy; the digital business strategy. The concept of digital business strategy has been the subject of several scientific studies. However, limited scientific research was conducted on the practical formulation of such strategies so far. This study aimed to address the caveat by standardising and codifying the OMC Approach, an approach that supports digital business strategy formulation that is currently applied in practice but is in need of more in-depth scientific research. To that end, this study consisted of three parts: (1) a literature review was conducted to gain more insight on the context of digital business strategies and their formulation, (2) a reference method for the OMC Approach was constructed to standardise and codify the approach, and (3) situational models were created to support future projects applying the OMC Approach. The literature review showed that several definitions and expression were used for the concept of digital business strategies. Due to the inclusion of organisational and digital aspects and its appearance in multiple studies, this study adopted the following definition: “A digital business strategy is an organisational strategy formulated and executed by leveraging digital resources to create differential value”. Despite the existence of numerous frameworks for traditional business strategy formulation, no frameworks for the formulation of digital business strategy were found. Hence, this study proposed the OMC Approach, which facilitates the interactive development of the Operating Model Canvas (OMC). The OMC is based on the Business Model Canvas and the Value Chain, and shows all business activities, channels, and actors of an organisation. Five retrospective case studies were conducted in this study. A comparison of their activities and subsequent deliverables together with input gathered during an expert validation session resulted in the reference method for the OMC Approach. Two core principles of the method were identified: (1) the usage of the client’s documentation and conduction of interviews as main source of input for the OMC and (2) the interactive workshops during which the client can develop a shared vision that provides the foundation for the fusion of business and IT. In addition to the method, a reference model was developed that shows the generic elements and their positioning of the OMC. The situationality of the OMC was also studied by comparing the OMCs of the five cases. It was found that the industry of the client affects the OMC and creates variability in the primary and supporting business activities. Five situational models were created in addition to the reference model to complement the model in specific situations. The development of the reference method and the situational models evoked curiosity on the role of the OMC Approach in the context of digital business strategy formulation. The literature review showed that the most important challenges of such formulations were the onboarding of the entire organisation, the design of a fast decision-making-supportive organisation structure, and the development of competitive value propositions. It was found that the OMC Approach can support each of those challenges. Onboarding the entire organisation is realised by developing an integral digital perspective during the workshops. Organisationdesign is initiated by visualising all required business activities for the organisation on the OMC. New value propositions are conceptually developed during the workshops as well, and their implementation is supported by modelling the required business activities on the OMC. Additionally, it was found that on one hand the OMC Approach realises the fusion of business and IT departments by generating a shared vision between the two, and on the other hand supports the fusion of their activities by integrally modelling them on the OMC. The OMC Approach is therefore proposed as a framework that supports digital business strategy formulation.