This presentation is based on research I conducted for Harvard Business Review Analytic Services as well as interviews with dozens of business leaders and CIOs.
5. 5
A presentation in Three Acts
The Digital Threat & the
Need for Responsive IT
The Business/IT
Partnership
The CIO as Digital
Leader
6. Act 1: The Digital Threat
Is digital business a threat to your company?
7. 7
75%Our company’s survival
depends on our ability
to exploit IT
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
n=750
9. 9
#2
Commoditization, drive for cost savings
FACTOR DRIVING MARKET CHANGE
Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014
12. OPPORTUNITY: Changing Business Models
In the 21st century, we will
differentiate our company and provide
value to our customers and
shareholders through trading on
information.
Charlie Peters, Sr. Executive Vice President
Emerson
“
Source: Engaging Boards on Digitization, MIT CISR, 2014
13. 13
38%
The confluence of new
technologies has
significantly changed our
business model/s*
Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014
“ *Scoring 8-10 on a 10-point scale
n=672
15. 15
28%
29%
37%
66%
Redefined product value chain
as service to others
Make analytics capability
available for a fee
Offer internally developed
capability as cloud service
Make products smarter & sell
info/services around them
What’s being commercialized
Q: What types of IT initiatives has
your company commercialized?
Source: Business Transformation and the CIO Role, Harvard Business Review Analytic Services
16. 16
47%
We’ve missed business
opportunities because IT
was too slow to respond
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
“
17. 48% Followers
20% Leaders
32% Laggards
68%
45%
33% Customer
Engagement
64%
45%
25% Employee Work
Processes
62%
36%
29% Product
Offerings
62%
37%
24% Business
Models
59%
40%
22%
Core Business
Operations &
Processes
To what extent is the confluence of new technologies
changing the following in your organization?
IT Responsiveness = Digital Opportunity
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
18. How to be MORE RESPONSIVE
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
19. Act 2: The Business/IT partnership
Digital business requires close collaboration between IT & other parts of the business
20. 60% directly involved
in I.T. decision making
Only 27% work in I.T. function
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
21. 21
90%Collaboration is critical
to exploit I.T. for business
advantage
Digital business
is a team sport
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
22. Changing Roles & Relationships
The lines have blurred. IT is
extending into marketing and
engineering, and they are extending
into areas traditionally owned by IT.
Kathy McElligott, CIO
Emerson Electric
Source: Engaging Boards on Digitization, MIT CISR, 2014
“
23. 23
Working
Together
▪ Job rotations, co-location
▪ X-functional reporting
▪ Blended roles
▪ Business relationship managers
▪ Business IT strategy board
24. 24
Emerson’s
Business IT Strategy Board
Created by COO, CIO, head of strategy
25 leaders meet 4x/year
De facto governance body
Business strategy, with deep dives into specific topics
Ensures alignment, ability to adjust
25. 25
Digital Partnership Assessment
To what extent do you agree with the following:
1. Business and IT leaders at our company trust and respect each other
2. Roles and responsibilities for digital transformation are clearly defined
3. We use a common vocabulary when we talk about digital business
4. We have a digital strategy board made up of senior company leaders
5. We “embed” IT staff in the business (e.g., business relationship managers)
6. The CIO and CMO collaborate on an ongoing basis around digital customer
understanding and engagement
7. We employ a coaching model to help business partners gain digital acumen
Add and double (out of = 100)
Score each question on a scale of 0 (low) to 7 (high)
26. Act 3: CIO as Digital Leader
CIOs are well positioned to lead digital transformation, but…
27. 27
0%
3% 3% 3%
8% 9%
12%
18%
42%
0%
2% 1% 2%
4%
8%
6%
12%
64%
0%
4% 4% 3%
15%
6%
17%
21%
30%
CHRO CFO CMO Other COO CDO LOB leader CEO CIO
All
IT respondents
Gen Mgmt respondents
Who do you believe is
best suited to lead
digital transformation
at your organization?
n=750
CIOs Should Lead
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
28. 28
Build Awareness
• Engage digital experts
• Collect & tell external peer stories
• Take digital field trips
• Form a digital advisory board
• Set up reverse mentoring
29. 29
• Skunkworks innovation group
• Crowdsourcing
• “Speed dating” with VCs, startups
• Innovation days
• Hackathons
• Simulations and prototypes
• Cross-functional innovation board
• Shark tanks
Foster Innovation
32. 32
What Digital Requires of You
Responsive IT Business/IT Partnerships CIO Leadership
In summary…
Simplify, automate, offload Connect at many levels Focus on innovation
Summary
Brian, CTO, luxury brand, Italy
True story, but…
Company under a lot of pressure to develop a high-end digital customer experience
Need to keep up with their well-heeled customers’ changing expectations. Equipped with tablets and smartphones, they want a rich and integrated online, mobile and in-store shopping experience.
Some of the company’s competitors are starting to deliver.
Brian’s colleague, Katherine, the chief marketing officer, wants to hire an outside agency to create the new digital technology platform. Brian believes it’s better to keep the project in-house.
The decision about which way to go will be made during this month’s executive team meeting in the company’s board room.
The boardroom
Katherine’s case
Brian’s response
Phillip’s skepticism
Brian’s idea
Katherine’s dismissal
One of central dilemmas of digital business
Meet the needs for sophisticated development on the one hand and amazing customer experience on the other. How will they bridge that gap?
WHAT SHOULD BRIAN PROPOSE NEXT?
2-3 MINUTES DISCUSSION
…………………………………………………………………………………………….
What Brian actually proposed: co-locating developers w/marketing creatives
His appeal to Katherine to work together
Pleased at Katherine’s positive response – she’s intrigued – teams will learn new things – create something unique
Discussion of costs and logistics, Phillip’s decision
Brian’s excitement tempered by Katherine’s affect.
This is not going to be easy.
We’ll leave Brian and his colleagues for now….
750 business & tech leaders
Global but mostly NA & Europe
All industries, size cos (skewing to large)
65% put this in top 3
Today’s consumers are mobile and tech-savvy. They expect to be connected, to have access to information and to be able to conduct transactions anywhere.
Companies investing a lot in this
45% put this in their top 3
Consumers can access products and services from literally millions of vendors — from independent eBay sellers to main-street stalwarts. It is easier than ever before to find exactly what they want at the best possible price. This is having a commoditizing effect on a whole host of products and services and putting significant cost pressures on companies.
Differentiate AND offer a competitive price
Not all about retail, or B2C
Digital affecting all businesses
125 year old diversified global manufacturer
~$25 billion in sales
150 countries
Ed Mosner at G2i
Corporate buyers transitioning to online purchases.
Amazon supply
Digital customer journey
Research & find
Decide & quote
Purchase
Support & service
Cyber security
Opportunity: new products & business models
Sensors, IoT
Simulation technology built into plant control systems to predict and prescribe
Home HVAC monitoring to detect, decide, act and learn
Only 2 direct reports – CIO & CMO - plus whatever LOB is currently in transformation
Emerson is not an isolated case
Companies that really focus on technology enabled business innovation higher at 40%
Smart products
Consumer: cars
Industrial equipment: manufacturing control co.
Services: real estate
Cloud services
Mostly IT but also healthcare
On average, 47% of respondents said their organizations had missed out on new technology-enabled business opportunities because their IT department was too slow to respond. (only 27% of leaders v. 64% of laggards)
On the flip side, companies with highly responsive IT departments have been able to successfully leverage new technologies (mobile, social, etc.), seize new business opportunities, and make the transition to digital business much faster than their competitors.
Showing top box scores, 8-10 out of 10
So what can IT leaders to be more responsive?
Some of the things that came up in our in-depth interviews
Simplify Infrastructure
Focus our teams on innovation
Leverage Partners – and make sure their partnerships are strong
Exploit the cloud
Enable Innovation across the entire enterprise
Collaborate, Collaborate, Collaborate (segue to next slide)
Stat
Good or bad. Shadow IT
22% primary IT decision-makers
38% involved in IT decisions
28% decision influencers
How involved are you in making information technology (IT) decisions for your area of responsibility within your organization?
n=750
We have always pushed IT to understand the business. Now it is the business being pushed to better understand technology
Remember Brian co-locating developers with marketing creatives?
X-functional reporting & blended roles
Addidas
Emerson
AmEx
BRMs
Are you doing any of these things?
What is your digital partnership score?
What is your most important initiative to increase collaboration and partnership?
ambassadors, advocates, interpreters
42% of respondents believe the CIO is the best suited member of the C-suite to lead digital transformation. That’s more than twice as many as chose the CEO (18%).
Responses of general managers are less clearly defined. While CIOs still lead at 30 percent, there are also strong votes for the CEO (21 percent), LOB leader (17 percent), and COO (15 percent).
There is little support for having the CMO or CFO lead digital transformation.
Raise company’s digital IQ
Little direct authority…
WHAT SHOULD BRIAN HAVE DONE DIFFERENTLY?
[discussion]
He had been so focused on coming up with the best solution that he hadn’t thought through the impact of his approach.
Proposed working much more closely with Katherine and her team but hadn’t discussed the idea with her before he presented it in the meeting.