“The main thing that has caused companies to fail, in my view, is that they missed the future.” Larry Page - CEO of Google
We have already entered into the permanent cycle of change as market dynamics and business rules are constantly changing, dictated by digital movement. As a CEO, you must re-write your traditional company’s strategy with the digital ink, and for that you must first accept that the change is upon you. It will help you to be better prepared to transform your traditional business and keep up with the digital disruption to avoid a Kodak-like moment. Provided below are our suggestions that will help you as the CEO to embrace the reality of Digital Transformation and prepare for the future:
- Digital Transformation is an ongoing journey to transform business. Transformation has become a permanent state and your business must respond to disruption which will always be around (when one phase of disruption ends, another begins) – Period! We believe “Digital Transformation is more than technology. It means innovation to connect technology, data science, devices, design, and business strategy to change a business process or customer experience. It means putting the customer, device, organization, or business process at the center of real change in how we engage, create, build, and buy by connecting the physical world to the digital – code – world."
- There is no one-size-fits-all Digital Transformation strategy. While the base definition remains the same (as highlighted above), the strategy required to execute digital transformation will vary. Organizations are different in terms of their business type, the markets in which they operate, and the clients whom they serve, making it difficult to define a one-size-fits-all strategy. You need to develop your own strategy.
- Lead from the front. You are the owner of business transformation in your firm and you have to make a compelling business case for the change. You have to convince the board, get the required investments in place and sensitize the idea both internally and externally.
- Adopt the speed and agility of a startup. The digital environment has lowered the cost of setting up a business significantly, allowing new companies to establish their businesses overnight. Per Forrester Research, “digital disruption will see 10 times the number of innovators, who will have 100 times the power to disrupt and this all at a cost that is 10 times less than in the traditional world.” If you observe them carefully, you can learn a lot from innovators - how they are challenging the traditional business models.
- Run a dual agenda moving forward. You need to run a dual agenda in order to maintain a good balance between traditional business and new capabilities moving forward: 1) Maintain and expand your legacy business which brings in money and value; 2) Identify business areas which are vulnerable to new competitors and will be most impacted by digital and invest in those areas.
- Hire a Chief Digital Officer. If you are thinking of giving the extra responsibility of leading digital transformation to your CMO or CIO, it will not work. You need to transform your business and it can’t be done with half-baked responsibility. Either you should have your CMO/ CIO give up their current role or you should hire someone new to lead the change. The success of your digital transformation strategy (and maybe your job) will depend on the new role of Chief Digital Officer (CDO). The CDO will act as an extension of you to connect with internal and external stakeholders, act as a change management agent, enable a digital-ready culture, and formulate and execute your digital strategy.
- Encourage data-driven culture. Data is the holy grail of businesses. Successful companies are putting data at the center of their strategy and winning in the marketplace. We call this the Code Halos phenomenon and it is reason behind the success of Google, Netflix, Uber, Alibaba and other digital disruptors. Look at how Disney World is leveraging the power of data through MagicBands. Data driven culture will compliment your digital transformation strategy.
As a CEO, you must understand that digital development is shaping the future of your industry, your business and your own role. If you decide to embark on a digital transformation journey, it will require determination, money and time, and you must step up to take this challenge. The present CEOs who understand this will be the CEOs of tomorrow.
Digital transformation is your future, so handle it well.
All the best!
Our upcoming research - Digital Transformation in Asia Pacific, scheduled to be published in August’15, will provide interesting data and in-depth coverage on trends, opportunities, and challenges around digital transformation for CEOs globally. Follow me on Twitter @mbahl for latest updates on the research.