On Leading Digital

I recently finished reading Leading Digital – Turning Technology Into Business Transformation – by George Westerman, Didier Bonnet, and Andrew McAfee. This book was graciously offered to me by Capgemini during the recent CIO Perspectives event in Houston. As the title and introduction summarize the core of this book is: “Our most fundamental conclusion is that Digital Masters— companies that use digital technologies to drive significantly higher levels of profit, productivity, and performance—do exist, but they’re rare. For reasons that we’ll explain here, most firms fall short of digital mastery. That’s the bad news, and it’s why we believe you’re probably not ready to survive and thrive in the second machine age.  Here’s the good news: the reasons that companies fall short of digital mastery aren’t mysterious or too numerous to list. In fact, the reasons are pretty easy to categorize. Companies that struggle with becoming truly digital fail to develop digital capabilities to work differently and the leadership capabilities required to set a vision and execute on it. The firms that excel at both digital and leadership capabilities are Digital Masters.”

Below are key excerpts from the book that I found particularly insightful:

Digital Masters excel in two critical dimensions: the what of technology (which we call digital capabilities) and the how of leading change (which we call leadership capabilities). These are two very distinct dimensions of digital mastery, and each plays its own role. What you invest in matters, to a point. How you use those investments to transform your company is a key to success. Neither dimension is enough on its own. Each is associated with different types of financial performance, and each provides only partial advantage. Taken together, they combine to give Digital Masters a clear advantage over their competitors.

On Creating a Compellinq Customer Experience:

Put customer experience at the heart of your digital transformation.  Design your customer experience from the outside in. Increase reach and customer engagement, where it matters, through new digital channels. Make data and analytics the lifeblood of your customer experience reinvention. Seamlessly mesh your digital and physical experience in new ways. Keep on innovating—it’s never over. Every digital improvement in customer experience will open up new possibilities.

On Exploiting the Power of Core Operations:

Free yourself from old assumptions of the predigital age. Look for bottlenecks and inefficiencies in your processes, and consider whether new digital technologies can help you rethink your operations. Consider how each of the six levers may help you improve operations. If you can’t address both sides of a paradox at once, start with standardization or control. This may open up possibilities to address other levers. Consider examples from inside and outside your industry. As with customer experience, a strong digital platform is essential for operational transformation.

On Reinventing Business Models:

Constantly challenge your business model with your top team. Monitor the symptoms that drive business model change in your industry—for example, commoditization, new entrants, and technology substitution. Consider how you might transform your industry before others do it. Consider whether it is time to replace products and services with newer versions if your present offerings are under digital threats. Consider creating brand-new digital businesses using your core skills and assets. Consider reconfiguring your delivery model by connecting your products, services, and data in innovative ways to create extra value. Consider reinforcing your presence in your current market by rethinking your value proposition to meet new needs. Experiment and iterate your new business model ideas.

On Crafting Your Digital Vision:

Familiarize yourself with new digital practices that can be an opportunity or a threat to your industry and company. Identify bottlenecks or headaches—in your company and in your customers—that resulted from the limits of old technologies, and consider how you might resolve these problems digitally. Consider which of your strategic assets will remain valuable in the digital era.

On Engaging the Organization at Scale:

Lead the engagement effort to energize your employees to make the digital vision a reality. Use digital technology to engage employees at scale. Connect the organization to give a voice to your employees. Open up the conversations to give everyone a role in digital transformation. Crowdsource your employees to co-create solutions, and accelerate buy-in. Deal with the digital divide by raising the digital IQ of the company. Deal with resistance by being transparent and open about the goals.

On Governing the Transformation:

Look internally (e.g., IT, finance, HR, and capital budgeting) for effective governance practices. Consider which digital decisions must be governed at the highest levels of the company, and which can be delegated to lower levels. Place somebody in charge of leading digital transformation, whether that is a chief digital officer or another leader. Identify governance mechanisms, such as committees and liaisons, to assist in governance. Examine whether you need a shared digital unit, including the resources it would have and the roles it would play. Adjust your governance models as your company’s governance needs change.

On Building Technology Leadership Capabilities:

Assess the state of your IT-business relationships: consider trust, shared understanding, and seamless partnership. Assess your IT unit’s ability to meet the skill and speed requirements of the digital economy. Consider dual-speed IT approaches such as a unit within a unit or a separate digital unit that combines IT, business, and other roles. Focus your initial investments on getting a clean, well-structured digital platform; it’s the foundation for everything else. start building the right digital skills. Challenge yourself continually to find new things you can do with your IT-business relationships, digital skills, and digital platform.

In conclusion:

Our research has shown that Digital Masters enjoy superior performance, which should be reason enough to get leadership teams interested in the concepts presented in this book. But there’s also another, even more fundamental, reason: when it comes to the impact of digital technologies on the business world, we ain’t seen nothin yet. The innovations we’ve discussed in previous chapters, including social networks, mobile devices, analytics, smart sensors, and cloud computing, are certainly powerful and profound. They’re reshaping customer experiences, operations, and business models. The pace and impact of these innovations have been nothing short of astonishing, but they’re just a prelude for what’s to come. Technology’s role as the endless agitator of the business world will not only continue, but will accelerate—exponentially.

A recommended read in the IT strategy space.

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