fbpx

Prevent turf wars by selecting one digital leader

Due to both the “strategic importance” and the “organizational challenge” of the digital transformation process, a procedural question naturally arises:

Who should lead the digital effort? Here are a few options:

A. A new senior executive position of Chief Digital Officer (CDO) to lead the digital AXA, GE, CVS, Michelin, Caterpillar, and Starbucks are among the leading organizations that chose to appoint a CDO.

B. Other organizations have decided to designate one of their top executives or board members to serve as the Digital Leader or even assign the title of VP Digital, in addition to their other duties.

C. In some organizations, the CEO is leading, personally take charge of the digital transformation effort.

As the digital transformation evolved, additional positions with the name “digital” began to appear – despite the different focus in their role. One example is the use of the title “digital manager” for a marketing manager who is assigned responsibility for marketing and advertising in the digital channels (the website, mobile, social media, email, etc.) Digital channels are currently attracting more attention and resources at the expense of established channels (newspapers, radio. TV). The marketing digital manager usually receives responsibility for a specific area – marketing and advertising in digital channels, and not overall responsibility for leading the organization’s digital transformation

Let’s look briefly at two findings from the report “A New Class of Digital Leadership” survey published in June 2017 by Strategy &, a subsidiary of PWC. This study was based on responses from 2,500 managers who serve as digital leaders in a wide range of companies, business sectors, and countries. The survey indicated that

  • 19% of the organizations had a designated digital leader in 2016, up from only 6% a year earlier.
  • About 60% of the digital leaders identified in the study were appointed to their position since 2015 – that is, the process has accelerated in recent years.

Another survey shows the distribution of officers responsible for leading the digital transformation. The survey was conducted in April 2017 by The Economist’s research unit for British Telecom and included 400 CEOs in multinational corporations in 13 countries.

  • In 47% of the organizations that participated in the survey, the CIO was placed in charge of the digital transformation;
  • In 26% of the organizations, the responsibility was assigned to the CDO, and
  • In 22% of the organizations, the CEO decided to personally lead the process.

Neutrally, there is no correct or incorrect answer here. Each organization should choose to implement this idea of designating a Digital Leader in the way best suited for its business objectives, organizational structure, work processes, organizational culture, and relevant personnel.

Yet, one thing is clear: Someone must assume OVERALL responsibility for the digital transformation effort because it is a strategic mission that encompasses the entire organization – avoid the turf war (for example between the CDO and the CIO) and select ONE leader.

The key challenge of the Digital Leader — Balance HIGH-END strategy with LOW-END Bits and Bytes

Organizations must understand the evolving digital galaxy and prepare to operate in it. The digital age offers an abundance of business opportunities and risks. The option of “sit and do nothing” will work, at best, for a short time. At some point, somewhere, others are already working on a business idea, a new digital technology or both, and those developments are liable to disrupt your organization’s current business model. It pays to be paranoid in this context.

Furthermore, Organizations sometimes use the term “digital transformation” only because it’s trendy and evokes the image of an innovative organization.

One of the mavens in this field, Rob Llewellyn, warns organizations about a phenomenon he calls “the great digital illusion.”

“Change fixes the past, while transformation creates the future.” Engaging in simple projects is a good way to start cultivating capabilities, but does not provide the infrastructure for withstanding competitive pressure or for future prosperity.

Herein lies the great challenge: doing both the high strategy and the daily grind of the digital. Mastering both the high-end strategic mindset and low-end bits and bytes mindset – this is the key to digital mastery.

We tried in this book to review a wide range of aspects and issues relevant to digital transformation in order to ensure that readers are familiar with the background and theory required for action and results. And herein lies the great challenge: doing both the high strategy and the daily grind of the digital age. Mastering both the high-end strategic mindset and low-end bits and bytes mindset – this is the key to digital mastery.

Bon digital voyage!

Are You Ready For the Vampires of Your Industry?

“Value Vampires” sounds quite frightening!! As a matter of fact, there is a good reason to be frightened of them. This is the new breed of digital companies that are sucking the profit pool dry of the incumbent’s companies, companies challenged by the digital economy. Often, the “value vampires” provide products and services cheaper than yours, their global reach is unmatched, and their consumer experience is better than yours.

“Value Vampires” is a term introduced by Prof. Michael Wade, an innovation and strategy professor at the IMD business school and the Director of the Global Center for Digital Business Transformation. He names “value vampires” companies like Uber, Airbnb, and Amazon, companies that have managed to be “winners of everything” due to their digital platforms. These companies scale quickly and almost without any limits; they expand their business from one area into new areas (e.g., Uber expanded from taxi hailing to food deliveries, Amazon from books selling to selling almost everything, to cloud computing, e-book readers, and much more).

The customer experiences and the prices they offer are unmatched, sometimes even free of charge, their service levels are better, they disrupt the markets in which they operate and drive down the profits of almost all the market leaders. Sometimes the market leaders surrender and close their business (e.g., Borders, Blockbuster, and others).

The “value vampires” wipe billions of dollars from the revenues of the incumbents in many industries. An example of a “value vampire” is WhatsApp – they sucked billions of dollars from the revenues of the mobile operators in a very short period. They use the platform business model that competitors can’t match; they have a global presence making it very easy for customers to reach them.

For “value vampires,” even the sky is not a limit!

As Prof. Wade says “Not only is Uber cheaper than most taxi companies they are competing with, but the quality is also better because the way you can hail them via an app, and their service is good. They also offer platform value in that you can hail an Uber almost anywhere in the world via the same app. They use their network to introduce other services.”

A link to the interview of Prof. Wade’s by the Norwegian business magazine Kapital: https://bit.ly/2GTJpeuProf.

Wade is also the author of “The Digital Vortex,” a book we have cited in Chapter 8 of our e-book “Doing Digital“. The book introduces the concept of the digital vortex, a tornado-like behavior of the digital force that is impacting all type of industries.

The combination of the tornado-like behavior and the arrival of the ‘value vampires’ is the perfect example of why companies must make their digital transformation a strategic move, and start their digital journey as soon as possible. This journey is challenging not just due to the need to transform the business employing digital technologies. It is challenging also because of the need to transform your organization into an innovative and agile business, that offers new value to its customers and can respond quickly to the new attackers.

To understand the challenge of becoming an agile organization, we invite you to download our article from Cutter Consortium’s web site (requires registration) at the following link: https://www.cutter.com/offer/agilifying-your-organization-6-steps-get-started

Don’t wait for the ‘value vampires’ to arrive at your market.

Start your digital and agility journey ASAP.

MIT Researcher Dr. Westerman: You Need a Strategy for the Digital Era

Dr. George Westerman, a Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy, wrote an interesting article “Your Company Doesn’t Need a Digital Strategy”, published by MIT Sloan Management Review on its 2018 Spring issue.

As Westerman writes “…. the focus on technology can steer the conversation in a dangerous direction. Because when it comes to digital transformation, digital is not the answer. Transformation is….In the digital world, a strategic focus on digital sends the wrong message. Creating a “digital strategy” can focus the organization in ways that don’t capture the true value of digital transformation. You don’t need a digital strategy. You need a better strategy, enabled by digital

Technology by itself don’t bring value. The value they bring comes from the ability of organizations to do business differently, more effectively or optimizing the value in the eyes of the customer. As he writes ” Analytics is not about databases and machine language algorithms — it’s about understanding customers better, or optimizing maintenance processes, or helping doctors diagnose cancer more accurately. IoT is not about RFID tags — it’s about radically synchronizing operations or changing business models”.

Here is the link to the article.

In our book “Doing Digital” we referred to this article in chapter 3 paragraph 11 and emphasized how important it is for the organization to understand that digital technologies are enabling technologies and enable the business to reimagine and rethink the way they do the business.

Digital Mastery Today: Companies Still Struggling with Digital Transformation

Why Companies are Struggling with Their Digital Transformation? 
Revisiting MIT and Capgemini’s Research After 6 Years

 

Capgemini, the global consulting company, published in 2018 a new and updated research “Understanding Digital Mastery Today: Why Companies are Struggling with Their Digital Transformation”. This is an updated version of previous joint research of Capgemini and the MIT Center of Digital Business Initiative, published in 2012 and named “The Digital Advantage: How digital leaders outperform their peers in every industry.” This research was the foundation of one of the most popular books on digital transformation and written by Dr. George Westerman, Dr. Didier Bonet and Dr. Andrew McAfee titled “Leading Digital: Turning Technology into Business Transformation” published in 2014.

Prof. Sivan & Raz Heiferman presented the Digital Mastery framework in chapter 10 of their e-book “Doing Digital” published in Hebrew, the chapter that described the Digital Maturity concept. The Digital Mastery framework is based on two capabilities required to succeed in the digital transformation: digital leadership and digital capability. Based on those two capabilities, the original research mapped about 390 organizations on a two-dimensional matrix and divided the organizations into four categories:

  • Beginners
  • Conservatives
  • Fashionistas
  • Digital Masters

The main goal of the new research was to provide an updated view of the state of digital transformation by using the same research methodology. 757 organizations participated in the 2018 research.

The updated report presents a cautious picture – the progress after 6 years was small and slow. In the customer experience area there was real progress but, in other areas like business processes, the progress was slow (if at all). Companies are still struggling with issues like defining a clear vision for the digital age, digital governance and IT-Business alignment.

The conclusion of the updated research is that slow progress has been made in 6 years of digital transformation. The main findings were:

  1. Companies are facing difficulties in adapting the new digital technologies due to the dizzying pace of the introduction of new digital innovations (e.g. artificial intelligence, IoT, automation).
  2. Organizations might have been over-optimistic in 2012 and, now they understand better the magnitude and challenges of the digital transformation.
  3. There are many business models disruptions in many industries, which are challenging the current business models and value chains.
  4. The expectations of customers, employees, and markets are rising and put significant pressure on the organizations.

So how could companies cope with these difficulties? Here are some tips from our e-book on the required activities to make sure your organization will transform successfully:

  1. Board of directors and executive management commitment – the top leadership of the organization must be committed and engaged to the digital transformation. This is a significant transformation, and as such should be steered by the top leaders. The vision and strategy should be defined and well understood by all the stakeholders. A digital roadmap should be defined and executed. Chapter 11 in our e-book defines the methodology and the steps an organization should follow.
  2. A Digital Leader should steer and lead the journey – the organization has to define clear responsibility for leading the journey. It could be a CDO, CIO or somebody else. Chapter 13 in our book explains the different alternatives for such a position.
  3. Your employees must be full partners of the digital transformation journey – Chapter 10 in our e-book elaborates on the Digital Maturity topic and emphasize the importance of employee engagement. We consider this engagement as the key to a successful journey. The management and the CDO should invest in sharing with the employees the message of the importance of this transformation, opening a two-way channel so they can understand the “why” and the “what.”
  4. You have to upskill your employees – trained and digitally skilled employees are key to a successful transformation. You have to invest in your human resources to make sure they understand the new technologies and business processes.
  5. Make sure data and analytics are a top priority in the transformation program – leveraging the data and using advanced analytics to convert the data into insights, is key to digital transformation. Chapter 7 in our e-book is dedicated to the importance of data and analytics in the digital era.
  6. You have to invest in your organization’s digital culture – digital culture is an important ingredient of the digital transformation. By digital culture, we mean agility and flexibility, innovation, and open culture. Chapter 5 in our e-book is devoted to innovation and how an organization should make innovation as a part of its DNA.
  7. Using advanced technologies – part of the digital transformation requires the use of technology to improve the customer experience and internal business processes. Chapter 2 in our e-book is devoted to present some of the advanced technologies that are part of what we call the “third digital age.”

To summarize, to follow the digital journey, successfully, organizations should mobilize their leadership, culture, talents, technologies, and processes to make sure they succeed in their transformation.

You can find Capgemini research here (registration required for the full report download).