"Ultimately, CDOs are protagonists for the digital transformations that their organizations desperately need to be future-ready. Successful CDOs have learned how to grapple with the paradoxical nature of their roles, somehow turning contradictions into complements. Their lessons are helpful for all kinds of managers and business leaders who are trying to be future-focused and want to be positive forces for technology-enabled change in their organizations."
But what does this all mean? One of those who has attempted to break all this talk about digital transformation down into concrete steps that executive teams can take to boost - or even save - their businesses is Sunil Gupta, a professor at the Harvard Business School. In his book Driving Digital Strategy (Harvard Business Review Press), he argues that in order to thrive in the increasingly digital era, business leaders have to re-examine four fundamental aspects of their operations.
1. Business strategy. They need to ask themselves what business they are in. Staying competitive in this highly challenging environment could, for example, mean changing focus or evolving to become a platform that manages an ecosystem of partners and competitors, he says.
2. Value chain. Traditional distribution has been upended, says Gupta. But reexamining and incorporating new methods can significantly improve efficiency and effectiveness.
3. Customers. Digital technology has changed how consumers search for information and buy products. But it has also allowed companies to collect data about their customers and provided new ways in which they can can acquire them. But technology is not everything. Every brand is looking to engage with customers, but the route to differentiation probably lies in providing special value to customers rather than through relying on social media or the like to reel them in.
4. Organization. Managing a digital transition is not easy - as the CDOs in the Oxford research can attest. Revenues and profits often decline during the transition period before they are restored. Gupta explains how leaders can strengthen the core business while also building for the future.
As he describes in a lecture earlier this year, established companies have typically responded to the arrival of digital technology in three main ways. They have set up separate digital units in places like Silicon Valley or London's fintech base in Shoreditch, or run experiments or simply used technology to improve efficiency in the hope that that will be enough to fight off competition. But all of these approaches are flawed. Setting up a digital unit is like launching a speed boat to turn around a large ship, he says. Often, the speed boat takes off but does little to move the ship. Running experiments risks encouraging a plethora of initiatives throughout the organization that are all designed to solve specific problems but have no synergy. Finally, using technology to drive efficiency assumes that things will fundamentally stay the same, when all the evidence is that disruptors are doing much more than just being more efficient versions of what is there already. They are going about things completely differently, often by not even trying to do a lot of things that the incumbent does.
The answer, says Gupta, is for executives to make digital strategy an integral part of their overall business strategy. "That is, rather than treating digital strategy as a separate exercise, you must embed it into the operations and DNA of your organization, in a way that touches all aspects of your business." Words that CDOs would do well to heed.
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