Every technology wave calls the role and value of IT into question. More than a dozen years ago it was cloud technology raising the question “Does IT Matter?” Today, digital transformation is calling the role of IT in to question. This requires the CIO and IT to write a new story about themselves and the value they bring to an organization. Before we can talk about the new story, it is important to think about past tales of IT.
Every business has the opportunity to become a digital business. However, some are better equipped to do so than others. Building a greenfield digital organization is admittedly easier for new market entrants who are unencumbered by traditional practices, particularly in comparison to established players with an analog heritage. But large incumbents shouldn’t be discouraged.
Digital is unchartered territory, steeped in unknowns, which can feel uncomfortable for risk-averse CEOs who have always done things in a particular way. But those ways are no longer delivering. Just like disruptors are paving new paths and making up the rules as they go, large incumbents also have the opportunity to do so too. However, they will only succeed if their digital strategy is more than just skin-deep. It has to be an inherent part of business strategy as opposed to just a veneer.
Is your company or industry being disrupted by current technology and market place developments? Maybe, maybe not. Determining what’s noise and what’s a signal is crucial. Overreact and you may send your company off course. Do too little and you could put your company at risk.
I’ve been thinking about the idea of grounded truth since I heard Ed Boyden, Professor at the MIT Media Lab and the MIT McGovern Institute, speak recently about mapping the brain and complex systems. During his talk, Boyden used the term “grounded truth.” It’s a phrase with a simple and powerful definition. Grounded truth is an assumption-free understanding of the world.
A special insert in the April 27th Wall Street Journal Repor features articles about the future of the Internet contributed by a number of noted thought leaders such as Jane McGonigal, Walter Mosely, Tony Fadell and Brian Wong among others. It is recommended reading for people who want to get closer to the mainstream view of the digital future.
A special insert in the April 27th Wall Street Journal Report Report features articles about the future of the Internet contributed by a number of noted thought leaders. It is recommended reading for people who want to get closer to the mainstream view of the digital future. In reading these articles, I saw two important themes emerging: “precision” and “diversity.” Both are critical for our digital future and each presents executives with unique future challenges.
This question re-emerges as organizations complete their initial investments in digital technology. Much of that investment concentrated on applying new technologies to existing products, practices and processes. In that sense digital strategy was much like IT strategy – a process of selecting which technologies you will invest in and where those investments would go. This approach to strategy results in a plan or in the digital world a roadmap. Digital strategy is not IT strategy, and requires a different approach.
The Four R’s
Part 1: Revenue and rules
The Industrial Internet of Things (IIoT) is a powerful and disruptive force, but a force for what, exactly? IIoT uses sensing and communications technologies to digitize the day-to-day interactions at the foundation of your business—between things and core systems and between things and people.
Do some executives really believe it is possible to respond to digital disruption by splitting their organizations in half? The executives who segregate digital from their legacy are doing exactly that. Two decades ago many tried the same technique in response to eCommerce. It did not work then, when digital was largely an Internet channel. It is equally unlikely to work now.
Sponsorship is one of the paradoxes of digital transformation. On one hand digital democratizes information, technology and solutions creating bottom up solutions. On the other, those solutions require strong sponsorship to overcome internal inertia. So what is it to be, bottom up or top down. It is a question that can easily lead a sponsor to think of themselves as a type of digital hamlet – to be or not to be digital. The response, of course, is both.
Many people use ‘disruption’, in the case of digital, to strike fear into the hearts of executives and their business strategies. But the term has lost its meaning and impact from overuse and under definition. The result is a word that often passes through an audience with little impact, other than to check off that the speaker used the term.
Customer experience is on everyone’s lips and in just about every presentation discussing digital. While the focus on customers is correct, and critical to digital success, many digital customer experiences come too close to the same old process enabled by new technology. Many companies use new digital technologies to reduce the impact of stepping on their customer’s toes. Few companies dance with their customers, engaging them in a series of coordinated movements that build trust and engagement.
Many companies walk backward into digital in the sense that they are wrapping their existing processes and operations in a digital wet blanket. But doing old things with new technology doesn’t represent innovation. Upgrading the past with plans to replace it in the near future makes no sense. It merely delays rather than demands organizational transformation.
Digital technologies are fundamentally human technologies. Digital technology raises human ability by creating breakthrough and disruptive levels of high performance. It does this because it increases the information intensity and connectedness of just about everything. If you think about it, mobility, analytics, cloud, social, smart objects all help people accomplish tasks, make better decisions, and amplify their performance.
Consumers get all the attention in digital. It is easy to demonstrate digital’s business impact by showing off a mobile app, digital marketing campaign or sharing economy start-up. Digital looks simple in these situations and also for consumers only.
Nothing could be further from the truth.
Not every dollar of revenue is equally valuable. Some revenue is more valuable to companies than others. Margins, customer relationships, future potential, etc. represent characteristics describing the quality of revenue.
Finding and facilitating revenue quality is an aspect of digital strategy. Many strive for high quality revenue but too often they equate quality with quantity. This leads to the impression that digital lowers revenue quality; particularly new technology that deliver the same old solution.
A prior post discussed the tension between speed and certainty inherent in digital investment. This post concentrates on a response to those tensions – thinking of digital investments as a series of projects too focused to fail. Too focused to fail resolves the tension between the need to know and the need to act creating a way to play the middle against both ends.
Every digital initiative embodies the tension between speed and certainty. Innovation and competition demand organizational agility as customers change the terms of competition. Given the unpredictability of change, executives need to know more before making commitments and investments. At the same time, the pace of those commitments and investments accelerates. The result is either digital proliferation or digital transformation – both problematic to the goal of digital success.
Capability vs. service is one of the subtle differences between feeling digital and being a digital business. It is easy to feel digital by wrapping existing business models in new technology or stamping the word ‘digitize’ on investment proposals and plans. These actions give the illusion of digital leadership often concentrating on the capabilities based on digital technology.
Digital technology presents executives with complex questions about customers, markets, channels and operations. Simple answers like Omni-channel, customer experience, or digital channel offers do not reflect the reality of digital transformation.