It’s no secret that established companies must transform to remain competitive in a digital era, and the first step of that digital transformation journey is to articulate a clear vision of how the company will better engage with customers and solve their problems.
However, this is a major challenge for most companies, said Jeanne Ross, a principal research scientist at the MIT Sloan Center for Information Systems Research, in a session at the 2018 MIT CIO Symposium. But without a clear digital vision, companies can’t design a coherent, executable business strategy.
Company leaders are bombarded by new technologies, including social, mobile, the cloud, the Internet of Things (IoT), artificial intelligence (AI), blockchain, and biometrics.
CISR studied each of these technologies as they emerged, and came to one conclusion: “Calm down about the hype,” Ross said. “To get value from this technology, you need to first be a well-run company.”
SEE: IT leader’s guide to achieving digital transformation (Tech Pro Research)
Take data and analytics, Ross said. “You can collect data, analyze it, and get insights from it, but if you’re not well run, you can’t take advantage of it,” she added. “So skip it.”
However, the fact remains that the convergence of these technologies is fundamentally changing how business gets done, and the opportunity to add customer value, Ross said. If companies can’t understand that, they will continue to compete as if it’s the 20th century, while other companies continue to move into the 21st, she added.
“We used to talk about avoiding the Kodak moment,” Ross said. “Now, we worry about our Uber moment–the day we realize we didn’t take advantage of these technologies and somebody else came along and did.”
Taxi companies understood that they could give rides, Ross said, while Uber understood that in a digital economy, it could give rides, tell you who the driver was, when they will arrive, how much it costs, and remove the hassles of payment. “They understood the possibilities of digital technologies,” Ross said. “When we understand what tech can do for us, we start to define a digital vision.”
The CIO’s role: Inspire business strategy
In doing this, IT shifts from enabling to inspiring a business strategy, Ross said. While the CIO was tasked with enabling business strategy in recent years, it’s no longer enough, she added. Going forward, CIOs will have to inspire new value propositions and sources of revenue that can be tapped through technology.
In particular, CIOs can take advantage of the massive amounts of data, unlimited connectivity, and large processing power now available to uncover new digital opportunities. “These are the capabilities we have,” Ross said. “We need to be inspired by them, to go beyond who we were.”
SEE: The Power of IoT and Big Data (Tech Pro Research)
Companies have been digitizing since the 1990s, Ross said, adding tools like CRMs to become more efficient and standardized. But while this is a transformation, it is not truly a digital transformation, because it is not creating new value. Digitizing aims for operational excellence and installing discipline around core transactions and back-office processes, while true digital transformation means allowing rapid business innovation, and empowering people to experiment, release, and constantly enhance new digital offerings, Ross said.
Several companies have undergone successful digital transformations, Ross said. While Amazon is a digital native, when it launched in 1994, its value proposition was as a book retailer. Today, its digital value is in personal convenience.
Schneider Electric is another example, Ross said: The company is more than 100 years old, and started with electrical equipment manufacturing. Today, it creates intelligent energy solutions.
A digital offering is the confluence of a customer solution and a great experience, Ross said. “If all you’re doing is what you’ve always done but you added a customer app, you are not digital,” she added.
Therefore, the vision has to come from customer relationships, Ross said. “You need to understand your customer’s lives, their businesses, how they get stuff done,” she told TechRepublic before the session. “And as you get closer and closer to your customers, you imagine little things you could do for them, things that would make their lives easier and then you start experimenting.”
The challenge for larger companies is that you typically evolve into a digital vision by learning and experimenting, rather than through big strategic initiatives, Ross said.
Once you have your digital vision, you must remember that it is only a north star: You may end up pivoting in a different direction as you find out which offerings take root and which do not, Ross said.