 "George Westerman")
LEADING DIGITAL: TURNING TECHNOLOGY INTO BUSINESS TRANSFORMATION
Author: George Westerman, Didier Bonnet, Andrew McAfee
Publisher: Harvard Business Review Press
Price: Rs 1,250
ISBN: 9781625272478
Great platforms provide clear information to decision makers. They serve as the bases for advanced analytics capabilities and new digital services. They are both efficient and agile. And they constantly provide new digital transformation options.
But great platforms don't just happen. In complex companies, platforms tend to grow in many directions at once, creating copies, customisations, and offshoots like so many weeds in a garden. Like good gardens, good platforms take constant attention to pull weeds, kill pests, and shape them into beautiful designs. You cannot get a single view of customers, or an integrated view of operations, without strong, top-down leadership.
IT leaders can help shape the platform. They can translate the digital vision into a vision of the technology platforms that will make it a reality. They can establish management tools such as architecture reviews to kill weeds and to move the platform in the right direction. They can adjust technology funding methods to support the right kind of growth. Intel's IT unit, for example, increases the priority of projects that align with the firm's architectural direction. Business unit requests that that build on the company's standards are more likely to be funded than those that don't.
But IT leaders can have limited ability to force change in business practices. The typical CIO has little power, on his or her own, to change the actions of a strong business unit chief. That's where the company's senior-most executives need to play a role. Pages Jaunes CEO Jean-Pierre Remy did this when he stopped funding updates to the systems that supported paper-based books. P&G's digital czar, Filippo Passerini, uses a more positive approach. He promises business unit chiefs that his global services unit can reduce the cost of their purchasing, HR, and other processes by 10 to 30 per cent - but only if they use his standard processes.
Platform issues are not limited to big incumbent companies. Even Amazon.com - a company that was born digital -encountered platform issues. In the 2002 time frame, during a period of rapid growth and innovation, the firm's powerful platform began to suffer from a proliferation of spaghetti and nonstandard designs. It took top-down leadership from CEO Jeff Bezos to fix the problem. Bezos issued a strong mandate that all new development would follow a set of very clear design rules. The letter ended with this admonition: "Anyone who doesn't do this will be fired." Bezos then empowered a senior executive to make sure that the mandate was being followed. Over the next several years, the company's culture of standardization evolved, and so did its platform. Now, more than ten years later, Amazon.com's well-structured digital platform continues to power the firm's evergrowing volume of online sales. It has also made possible new business models, such as Kindle books and streaming video. Amazon.com has also begun to sell cloud-based infrastructure services to other companies, transforming Amazon.com's internal platform into a product of its own.
The same can happen with your platform. Health insurance companies are already using their health claims platforms to create analytics-based products about trends in prescribing and medicine. A logistics company in China is able to sell forecasts of regional demand using the trends it has discovered in its historical sales platform. And as Boeing makes its "airline of the future" a reality, it will have a rich platform, crossing the boundaries of many companies, which it can mine for new information-based services and products. But all of these developments require leadership - to develop the right platform and skills, to keep them properly aligned, and to capitalise on the opportunities that they create.
Reprinted by permission of Harvard Business Review Press. Excerpted from Leading Digital: Turning Technology into Business Transformation. Copyright 2014 George Westerman, Didier Bonnet, and Andrew McAfee. All rights reserved.
Incremental change is not enough in these fast moving digital times, George Westerman tells Ankita Rai
Digital is the new buzzword. Many traditional companies, including big box retailers in India are planning to invest in a digital strategy. What are key learnings from the digital masters like Burberry and Amazon?
Our study of more than 400 organisations shows that digital transformation is not a technology challenge. It's a leadership one. Simply adopting technology is not enough to drive value. Incremental change is not enough in these fast moving digital times.
Among all of the companies we studied, we did not see a single case where digital transformation happened bottom up.
It was always led very strongly top down, whether it was Asian Paints transforming from a set of regional units in India to an integrated and efficient global player, Caesars Entertainment using mobile phones and analytics to place a personal attendant in the pocket of each customer, or Progressive Insurance creating new business models for auto insurance.
Digital masters start with a strong transformative vision of how they will be different in a digital age. They engage their employees to help them understand their place in the vision.
How have the roles of the chief information officer (CIO) and the chief technology officer (CTO) changed?
Technologies like social media, mobility and the cloud are enabling marketing units, product units, and geographies to engage in activities that were once solely the purview of enterprise IT. We are starting to see much more "shadow IT" than ever before. IT units have not helped the situation when they allow themselves to be seen as slower or less capable than business units demand.
These forces are driving CIOs and CTOs to change the way they operate in their companies. They are actively engaging the rest of the company in conversations about what is needed to do digital correctly - the practices of digital masters - and how IT can help. Others are transforming the way IT operates, often by creating a dual-speed IT structure. Still others are taking on a new role - that of the chief digital officer (CDO).
George Westerman
Research Scientist, MIT Sloan School of Management
Research Scientist, MIT Sloan School of Management
