‘All things digital’, is no longer hearsay. The digital wave has swept the major industries along with its tide and even suctioned in sectors that were hitherto non-technological. The transformation is widespread and has often been triggered by disruptive ideas and the visions of the new leaders who have made it to the top. For organizations to grow, it is imperative that the top management, the leadership team and most importantly the CEO needs to know about digital transformation, to make decisions that support organization-wide digital acceptance.
According to International Data Corporation’s (IDC) Worldwide Semiannual Digital Transformation Spending Guide, the worldwide spending on the technologies and services that enable the digital transformation (DX) of business practices, products, and organizations is forecast to reach $1.97 trillion in 2022. But to make the predictions really work, the otherwise digitally stagnant organizations too must partake in a journey that can be reformative and renovative at the same time. While the need for a digital outlook is often customer driven in many industries like Information technology, banking, manufacturing etc., sectors related to hospitality, retail etc. aren’t far behind. In the words of Eileen Smith, program director with IDC’s Customer Insights and Analysis Group, “Industry spending on DX technologies is being driven by core innovation accelerator technologies with IoT and cognitive computing leading the race in terms of overall spend.” In spite of the growing push, many executives still feel that “unicorn” business models like Uber may not be applicable to their businesses and many fear the risk involved in jumping into something new without a strong financial backup. But, as written in a Forbes article, CEOs need to be aware of and vested in digital innovation in their capacity as stewards of their enterprise. Why so? Three main reasons Why & What CEO needs to know about digital transformation, listed in the article are:
- The fear of losing access to digitally-enabled customers
- The fear of disruption by digital competitors
- The struggle to find new growth in new markets and channels.
Fair and square. If these aren’t reasons enough, being future-ready is an aspect that most CEO’s envisage. In the words of Chris White, CEO of the Americas for Signify, “Everyone’s talking about it and knows about it, but very few CEOs actually have a bona fide digital strategy. They know they need to get on with it.” But, what do CEOs need to know about digital transformation to helm the course of change?
Here are some key points (in the words of some highly successful CEOs themselves).
Digital Transformation isn’t Just a Fad to be Followed
As Malcolm Frank, Chief Strategy Officer, Cognizant, rightly points out, “digital transformation does not work when it’s technology-led, when companies try to blindly emulate what they see out there among the FANG gang (Facebook, Amazon, Netflix, Google), saying ‘let’s be the Amazon of our space, let’s be the Uber of our space,’ while not knowing how it’s applicable to their business.”
Before jumping on to the bandwagon, CEOs must understand the organizational outlook towards technology, the objective of digitalization and the core purpose too. It is a CEO’s role to understand and rank the tasks in terms of establishing the digital innovation vision and strategy. The question as always remains: Do you want to be a digital disrupter, or do you wish to just blend in?
Digital Transformation Applies for All (Big and Small)
It is a common misconception that digital transformation applies only to larger companies with the infrastructure to handle the change. That, however, isn’t the case, digital transformation depends on the industry, the customers and the benefits it can bring in. The hurdles to digital transformation, irrespective of the size of the organization are lack of skills, insufficient training, non-participation of the organization as a whole, issues with handling legacy technology and undermining the importance of change management.
Regardless of how out of place technology may seem in certain industries, it is often the vision of the CEO that takes it places. Take for instance the example of Coldwell Banker, the first national real estate brand to put its listings on the internet. As its CEO, Charlie Young, puts it, “There’s been a lot of disruption in our industry that’s been driven by technology, and it’s very common for players to enter this industry, or even long-time companies, and say that they’re a technology company first and foremost. But we’re a real estate company, and we utilize technology to solve problems and to enable our agents to better serve customers.”
Focus on the Six Pillars
There’s an interesting article on Forbes, by Daniel Newman, that discusses the six pillars that drive digital transformation. Those are the core aspects that any CEO must focus on, beginning from culture, customer experience, people, innovation, change, and leadership.
Building an organizational culture that supports digital transformation requires the acceptance of the entire leadership team, the employees, the IT infrastructure and the customers too. Innovation and change come in later, which involves directing the team of change-leaders, thinkers, and doers to discover new ways of operating-new processes-new products-that can empower the customers and improve the business.
Look at the Business Impact and Not Just the Tool
AI, Big Data, IoT is cool terms and many organizations are using it well to their advantage. But a CEO must be aware of the business benefits the value proposition that the tool brings in, and not just look at it superficially. Think in terms of how the technology can be used, how can it be integrated into the processes to get the best possible outcomes and also the ROI. And just if you are interested to know, Digital Transformation Is Possible Without the Big Budget Spends.
Chris White, CEO, Signify, has committed the company to achieve a product line portfolio that is 100 percent connected or connectable to the Internet of Things or otherwise digitally plugged in by 2020. One of his major efforts so far has been to expand Philips’ home-lighting products to also include Philips Hue, “digitally enabling” the commodity light bulb and “turning it into an experience” for mood alteration, home protection and other extended functions of lighting.
While the process may be challenging, the key as White notes, “is not to throw too many people under the bus. You try to bring in talent to accelerate the journey toward certain digital imperatives while bringing internal employees along on that journey.”
Barbara Humpton, CEO, Siemens USA, puts culture as a major priority in digital transformation. She states that, “As we restructure the company and create operating companies that are almost like pure plays in their markets, everyone has a digital component, and so the key question for leadership assignments is: What is the digital quotient of the leader? Not everyone gets it.”
What CEO needs to know about digital transformation is that there is a shift in the market that has been triggered by digitalization and that as an organization, it is imperative to find ways to embrace the change in a way that it satisfies the customers, improves the business and gives a competitive edge too.
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