- Does your organization have a smooth system for making big technology decisions?
- Does your digital capital set you apart from your competitors?
- Could a chief digital officer improve your results?
As digital technologies become ubiquitous, organizations need to put their digital capital at the heart of their business.
“In too many companies, digital technologies are just added piece by piece and without any consistency or sense of direction,” says George Westerman, research scientist at the Center for Digital Business at the MIT Sloan School of Management in Cambridge, Massachusetts. Many large organizations use multiple digital platforms in their different business units, with different rules and technologies from a huge range of vendors.
“Companies need to create a coordinated, unifying digital vision,” he says. “There are only a few companies, which we call Digital Masters that are managing technology in a different way. They have created a digital vision and are capturing the digital advantage and, as a result, they are on average more profitable than their competitors.”
In the “post-digital” age, every organization has installed the basics, says Bill Allison, global technology services leader at consultancy Deloitte in Los Angeles.
“The question now is how to differentiate and dominate your market on the back of that,” he says. “IT decisions today go well beyond questions of cost and automating the back office. It’s not about reducing the cost of the plumbing anymore, it’s about creating business advantage quickly.”
Rob Mettler, digital business expert at PA Consulting Group in London, sees three categories: Digital Dabblers, Doing Digital, and Digital Differentiation. The first group has a website and some social media but no transactional digital services. The second group has digital strategies, carries out e-commerce, delivers services online and may have digital channels. However, it is only the third group that has truly transformed itself: its corporate strategies are digital, it has reorganized around digital to create revenue in new and existing markets and innovate products and services, while ensuring cyber security.
Mr. Mettler says that while most organizations aspire to Digital Differentiation, they are in the Doing Digital category. “There’s still too much focus on technology, and not enough creating new propositions for the new wave of consumers and making the essential changes to culture, governance and leadership needed to transform,” he says. “Companies need to re-imagine the ways they interact with increasingly connected consumers and the propositions they deliver to them. They need to move from doing digital today to thinking about how they reconfigure themselves to survive and thrive in an increasingly connected and digital tomorrow.”
Who Leads Your Digital Business Strategy?
In the post-digital environment, in which digital technology pervades all areas of a business, a lot of the power and responsibility may seem to be slipping away from the chief information officer (CIO) and further into the realm of the chief marketing officer (CMO).
As organizations have woken up to the need to manage these forces, a new job position has emerged: the chief digital officer, or CDO. At certain multinational organizations, it is this person’s responsibility to lead and design a digital business strategy, using an organization’s digital assets to improve client service and create new revenue streams.
Whereas chief information officers and chief technology officers are more concerned with procurement, cyber security and back-office technology, the chief digital officer is a strategic position focused on exploring how organizations can use their digital capital, such as customer data, to boost revenue.
“Digital technology is now having a significant impact in all areas of business, whether through the new sales channels opened up by the global internet, the ability to use data analytics to gain better insight into customer needs, or through tighter coordination up and down supply chains,” says Jim Norton, a London-based IT policy adviser and past president of the BCS, the Chartered Institute for IT. “The key catalyst is that vital individual who understands both the fundamentals of a particular business and what new technology is capable of delivering. The CDO name may be a fad, but the position will persist.”
Not everyone sees the need for a new C-suite position. Ashley Friedlein, CEO and co-founder of London-based Econsultancy, says that while this role can accelerate an organization’s digital transformation, it should be a temporary one.
“In many ways the appointment of a chief digital officer is an admission of failure and a sticking-plaster to cover up a bigger problem,” Mr. Friedlein says. “In the early part of the 20th century, many companies had a chief electricity officer position, but that soon became obsolete. Likewise, the CDO has to be an interim position that will disappear as digital becomes suffused and dispersed throughout the business.”
- Build your organization’s digital vision
- Focus on propositions, not the technologies that play a part in implementing them
- Prepare for digital disruption