by Sunil Shah

Who in the C-suite Isn’t Doing Enough to Drive the Digital Agenda?

May 10, 20155 mins

Digitally mature companies are more profitable. Period. Yet the digital maturity of Indian companies isn’t great. Who’s to blame? We spoke to Laurence Buchanan, Partner, EY, to find out.  

According to a studies, there’s a direct correlation between the digital maturity of a company and its profitability. One study showed that digitally mature companies are, on average, 26 percent more profitable than their digitally immature cousins. That makes becoming digital a business impetrative. Yet the digital maturity of Indian companies lags their peers in other parts of the world. Who’s can is that to carry? It isn’t quite that simple. We spoke to Laurence Buchanan, Partner, EY, to get a better understanding.  Who, in your opinion, isn’t doing enough in the C-suite to drive digital transformation?The level of appetite and maturity for digital differs by sector. So, for example, the media, technology retail sectors have probably been at the forefront of digital because their core products and their distribution channels have already been fundamentally disrupted by digital.  Most media companies, just to give you one example, have lived through this journey of digital disruption for quite a few years now. So digital maturity across their C-suite tends to be good.  There are, however, a lot of other industries that are at the beginning of their digital journey.  There’s typically a maturity cycle that companies go through. When a company starts looking at digital, it’s often led by the CMO. But as they get more mature, and the impact of digital becomes more significant to the entire value chain of the organization, then I’d argue that digital action becomes everyone’s job in the c-suite.  As digital matures, it’s really important that it’s not just the remit of one person, it has to stretch across the c-suite.  But like any fledgling initiative, digital needs to be led by one person at the beginning. At the early stages, like we are in India, whose job should it be? Which member of the C-suite isn’t doing enough to push the digital agenda?I agree that it can be a really good idea to incubate digital in its early stages with just one role. Many companies for example, have created the role of the chief digital officer. That role, in my experience, comes in two completely different forms.  In the first, the CDO has a mission and mandate to transform the organization from top to bottom to digital. They are empowered to act as a change agent to incubate digital. They have budgets, resources, and a direct line of reporting to the CEO. It’s a transformational role.  I’ve also seen CDO roles, which unfortunately, don’t have that empowerment. Their role is to look at the operational side of digital: To manage the website, and the mobile apps. To me, that probably not the right level of empowerment; it’s not going to drive that transformational change. There are a lot of different definitions for digital transformation. How would you describe it?Digital transformation is a company’s response to the digital megatrend. Digital is the most impactful megatrend of our time. Everyone’s already seen the explosive growth of mobile, social media, and e-commerce. And we’re just at the start of the digital journey; we’re at just 1 percent of the digital connectivity we will see in the next decade. Digital has a huge impact on the value chain of most organizations. If you look at it, the largest retailer in the world, Alibaba, owns no inventory. The largest hotel company in the world owns no hotel rooms, and the largest media company in the world owns no media. Digital has made a dramatic impact on the value chain of those companies.  How does the digital transformation journey of Indian companies compare to their counterparts in other parts of the world?Digital is moving at different speeds in different geographies and in different industries. India is quite a different market where digital is concerned. For example, India’s Internet penetration is lower than the world average. It’s about 19 percent in India, compared to the world average of 22 percent. But mobile penetration is actually pretty high. What’s interesting in India is that mobile’s share of Internet usage is actually the second highest in the world. So it’s no question to me: India is a mobile first market for digital, which is quite different from other mature markets.  The Indian government’s digital initiative is one of the largest and most ambitious conceived by any government. It aims to radically improve access to broadband connectivity, and access to digital services. If that’s executed successfully, it’s going to have a real transformative effect on Indian citizens and a whole range of industries that will leverage that connectivity.  Where could the execution of the government’s digital initiative falter?To me, any large program, a program of that huge ambition and scale, has a lot of potential obstacles. First, there’s a challenge around infrastructure; just laying the pipes and cables and ensuring connectivity in rural communities. Then there could be a challenge around adoption and education. Part of the challenge of digital is changing the way people live their lives; the way they access information, and access and use services. Laurence Buchanan leads EY’s digital offerings for the EMEIA region. He specializes in Digital Transformation, Customer Experience and CRM and is rated among the top independent digital influencer.