Archive of: Digital Business
Digital leaders share three common attributes.
- Leadership: In addition to having a formal digital strategy, digital leaders are much more likely to have the CEO leading their digital transformation. But CEOs don’t work in a vacuum; two-thirds of respondents view their CIO as critical to the success of their digital transformation as well.
- Data & analytics: Digital leaders use data and analytics to a much greater degree – both to understand what customers want and to improve operations and forecasting.
- Open to taking risk: Innovation, invention and change all involve risk, and digital leaders are significantly more open to taking risks in pursuit of new digital business opportunities than are hybrids and non-digitals. And they build this into their culture.
New research reveals an alarming reality. Digital disruption is upon us, yet a significant percentage of organizations are doing nothing to increase their digital abilities.
Eighty percent of nearly 800 business leaders surveyed by Harvard Business Review Analytic Services say their industry will be disrupted by digital trends, and most of those said their industry has either passed the tipping point of disruption (28%) or will by 2020 (56%). However, nearly a quarter of respondents to the Microsoft-sponsored research have done little or nothing to become more digital.
I had the pleasure of interviewing Apple co-founder Steve Wozniak onstage at the recent FISConnect conference. He told the audience of 1300 financial services leaders that every company today needs a chief disruption officer -- someone with a personal passion for a new way of doing things -- and that person should not report to the CEO.
For the past two years, I’ve conducted a half dozen or so major research projects on digital business. At the outset, I looked for a definition that we could present to participating executives that would ground the research in something tangible. There wasn’t much out there. Even MIT's Center for Digital Business hadn't pinned this down. So we created our own definition as “the transformation of business models, products and/or operations from the use of information and communications technologies.”
OK, but wow, that was vague — transformation from what — and to what? Do a search today, and you'll find a lot more of the same.
Having completed all this research — survey results from thousands of business leaders around the world and interviews with close to a hundred executives, analysts and academics, my thinking has shifted. Today I define digital business as…
We all know how hard change can be. Whether we like to admit it or not, every one of us performs at least some parts of our jobs on auto-pilot; it's more efficient for our brains to operate that way. That makes it hard to do things differently.
When leaders introduce a significant change without a lot of communication around what will be different, why it's happening (including connecting it to something that matters to each member of the team), and how the change will unfold, they shoot themselves in the foot. They inevitably encounter a lot of friction if not downright resistance to the change. In the best case, this slows things down. In the worst, this has led to multi-million dollar failures.
The chief digital officer was the third most in-demand C-level position this year, according to executive search firm Korn Ferry. The rise of the chief digital officer (CDO) reflects the disruption being felt across industries from digital transformation and the impact this is having on organizations' business models. Well over half of respondents to a recent survey by Harvard Business Review Analytic Services say their organization's business model will be radically different in three years. These changes don't just happen; they need to be led.
I have to admit it — I'm baffled. In all the research I've done in the past year, business leaders again and again say they believe the CIO is the right person to lead digital innovation. And yet, again and again, there's a gap between where everyone — CIOs and their business partners included — think the CIO should be and where they actually are. CIOs just can't seem to break out of the technology service provider role.
In the Harvard Business Review Analytic Services study, "Business Transformation and the CIO Role," 94% of respondents said CIOs would add the most value to the business by either leading business technology transformation or, even better, leading IT-driven business innovation and strategy. Only 6% voted for the CIO to focus on running the IT function to support business operations. And yet the vast majority — 70% — said that's exactly where the CIO spends his or her time.
I've also had a number of conversations lately with strategic CIOs who view their role as helping their business leverage information — they frame the digital opportunity in that context. Sure, they need technology to do that, but that's not where the value lies or how they define their role.
Back in the 1990s and into the early part of the 2000s, we ran an awards program at CIO magazine called the Enterprise Value Awards. This was a unique and truly outstanding awards program that scrutinized the work being done by CIOs and their business partners — and the results being delivered — through the use of information technology. Every nomination had to have a CIO and a business leader as joint sponsors. They had to prove claimed financial value by having the company's CFO sign off on the numbers. Every finalist received a site visit from an experienced reviewer who met in person with company leaders and users of the system to vet the claims being made. These review board members then presented their findings to a blue-ribbon panel of CIOs at a day-long meeting in Boston. The winners were recognized at an annual Enterprise Value Retreat.
I just had my first highlights reel made and I'm pretty excited. I delivered the opening keynote at the Oracle Cloud World conference in Boston in December 2014. Oracle did a great job filming it in the first place, and my friend the very talented videographer Craig Kimberley at Skyprop Media did a great job editing it down to a couple of minutes. This shows both my onstage work and the kinds of (very visual) slides that I create. I hope you like it!
Creating the conditions for and harnessing innovation isn't easy, especially for large organizations. Innovation Accelerators — companies that are committed to innovation across the enterprise — take a managed, structured approach. That may seem contradictory — after all, isn't innovation supposed to be creative and spontaneous? Creative, yes, but if you rely on spontaneous combustion to light your innovation process, your results will be uneven at best.