Manage Strategic Risk with Digital Strategy

Strategic Risk & Digital Disruption

What is Digital Disruption?

When middle market companies hear digital strategy, they often think of SEO, social media marketing, or other aspects of today's digitized business world. However, at the board or enterprise level, a digital strategy should really be more focused on the strategic risks to the business from disruptive technologies. A truly disruptive technology innovation can impact an entire marketplace, and any board of directors or C-level executive team that isn't actively watching the threats and opportunities provided by disruptive technologies is creating a great deal of strategic risk for the organization.

Over the past 20 years, entire industries have been wiped out or left almost unrecognizable by disruptive technologies. While consumers are often then winners of technology-based business innovation, businesses that miss the mark on digital strategy often fall quickly by the wayside. Examples include:

Disruptive technology drives dramatic market changes.

Disruptive technology drives dramatic market changes.

  • Travel agencies, decimated by online travel systems like Expedia, and direct-to-consumer websites operated by airlines and hotel chains.
  • Physical media rentals, displaced by streaming media from Netflix, Amazon, and Hulu. The legacy Blockbuster model has been thoroughly replaced, and the innovative RedBox model that replaced it may soon follow.
  • The taxi industry, economically struggling against Uber and Lyft in almost every market where ride-hailing operates.

In each case, companies failed to manage the strategic risk posed by new business innovations and disruptive technologies in their industries.

How a Digital Strategy Helps

An effective digital strategy guards against losing market share to new and disruptive business models The right digital strategy also creates opportunities to increase mind share and accumulate market advantages through business innovation.

A strong digital strategy driving business innovation reduces strategic risk.

A strong digital strategy driving business innovation reduces strategic risk.


Digital strategy is a joint responsibility between a company's board of directors and the executive officers of the company. The board often provides oversight and guidance, but ultimately it is the CEO, the CIO, the CDO, and other members of the C-suite who must define the strategy and implement it effectively.

In companies that lack a Chief Information Officer or a Chief Digital Officer, defining and leading a digital strategy can be difficult, and may distract the CEO and COO from other aspects of the business. In such cases, insourcing a fractional CIO with a background in digital transformation, risk management, or IT-driven business innovation can be a cost-effective alternative to hiring another full-time executive for the role.

More Perspectives on Digital Strategy

Digital strategy is a broad topic. Here are some suggestions for additional reading on how disruptive technology impacts the boardroom and the business in sectors ranging from high-tech to manufacturing.

Board of Directors Perspectives

Investment & Industry Perspectives