by Marco Antonio Cavallo

Strategic guidelines for CIOs to lead the digital age

Jun 05, 2017
Business IT AlignmentC-SuiteIDG Events

In this new era of industrial revolution, senior executives cannot afford to ignore the importance of digital innovation and its impact on the business environment, the management of organizations and the entire value chain. From IT and operations to how companies compete, they must manage where innovation comes from and how organizations engage with consumers.

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Credit: Thinkstock

It’s safe to state that digital innovation has already paved the way for everyday technologies, such as the laptop computers, the Internet, mobile phones and tablets, social media and cloud computing, and it keeps bringing more new technologies, such as the most recent arrivals that include 3D printing, immersive computing, virtual reality (VR) and augmented reality (AR), while Artificial Intelligence (AI) and robotics are beginning to reach their long-promised and over-hyped potential. Whenever it is stated that, from a technological perspective, such innovations are quite disruptive, it must be understood that the way digital innovation has transformed the way companies do business and the way is influencing every aspect of human activity is a true and ongoing revolution. The new digital world is drastically changing how people live, communicate, manufacture, produce, learn, collaborate and make decisions, even the most critical ones, in a way that is breaking down traditional barriers to entering markets, such as access to capital for innovation, distribution, customers, information and talent.

In many different aspects, the word “digital” fills a vacuum. By translating the technological changes faced by the business community, the term “digital” may make them more tangible, however, no standard form or meaning of “digital” has yet emerged, for it serves a variety of applications. The shift in understanding and in capabilities required to successfully address digitalization goes way beyond a simple technological question, as it requires most aspects of the organization to be challenged, including the functioning of boards and C-suites, and that is a frightening task, unprecedented both in scope and speed in the history of management and governance of organizations. The point is, there is no digital solution or definition that will suit all initiatives within organizations. According to an INSEAD survey, these are the 10 most important digital-related initiatives organizations currently have and how those are defined:

1. Collaboration

Implementation of digital platforms aimed at facilitating collaboration with suppliers, partners and/or customers

2. Cost Efficiencies

Digital initiatives aimed at reducing an organization’s costs

3. Customer Engagement

Initiatives primarily focused on allowing an organization to engage more frequently, or differently, with consumers using digital as a facilitator

4. Data Management & Analytics

Initiatives aimed at facilitating the gathering and manipulation of internal or external data to improve an organization’s strategic decision making

5. Customer Experience

Implementation of new initiatives, processes, and digital platforms and tools aimed at creating, managing and/or measuring cross-channel customer experiences

6. Digital Marcom

The use of various digital techniques, channels and platforms to build a brand, communicate and/or promote an organization, its products or services

7. Sales & Marketing

Creation of new digital sales & marketing initiatives, or digitizing the organization’s existing sales, marketing and customer service processes (excluding communications)

8. Digital Transformation

A fundamental transformation of the organization across the value chain and its functions, impacting the business model and all touch-points with consumers, suppliers and collaborators

9. Administrative Solutions

Initiatives aimed at digitizing the organization’s administrative activities

10. Business Model

Strategic initiatives aimed at changing the organization’s business model, from its operating model to its infrastructure, including what it sells, to whom, and how it goes to market

For leaders contemplating their digital journey, it’s necessary not only establishing the necessary technology, needs and expectations, but mainly understanding and measuring the impact of digital transformation on the strategy that their organizations decided to set and follow for their businesses. Therefore, here are some suggested guidelines for that.

Digital business strategies are continuous processes

Not too long ago, there were not so many sudden major business trends, while strategic choices were limited and discrete. There was a good time window for organizations and their boards to formulate their core strategies, which would shift their focus for a few years to implement them, as well as review them. In this environment, the approach to the strategy phases could be repeated every five years or so. The impact of digital is changing the business reality faced by executives within organizations, once major trends are arriving rapidly, creating multiple strategic choices and hypotheses, while the window for the decision-making process is shrinking just as rapidly given the constant trend overhauling and products/services time to market.  

The time when executives could dedicate months to define a five-year strategy, validate all assumptions before spending the rest of the five years overseeing its executions is in the past. Executives would better benefit by adapting their process of strategy development as suggested below given the deep and irreversible changes within the business environment brought by digitalization:

  • Continuous engagement: the strategy formulation process must be continuously reviewed and engages by the board of organizations, once one-off approvals won’t be enough given the speed of market changes.
  • Continuous examination: continuously understanding the external market trends and confronting it with the internal capabilities is a necessary continuous process to ensure the strategy’s efficiency
  • Merging formulation and execution: scanning, evaluating, formulating and implementing a strategy are increasingly a seamless, continuous and simultaneous process.
  • Cross-level collaboration: all levels from different departments within the organization must understand and validate the different phases of formulation and execution for any strategy to be efficient.
  • Strategic digital enablement: executives must go beyond merely predicting the next big technology trend or managing different digital initiatives, but also embrace digital opportunities across all dimensions of the business, so their organizations can understand their full strategic potential.

The strategy formulation and execution processes are no longer step-by-step processes, but they became continuous exercises, involving constant engagement of the board, as well as two-way communication across different hierarchic levels and functional structure to achieve its full efficiency potential.

Think business first when facing technology disruption

Any organization operating in today’s market, within any given industry, geography or segment faces a near-constant and imminent technological disruption that can either empower or derail a CIO’s corporate IT strategic plan. Whenever CIOs are planning and deciding on how to respond to new disruptions, they should first consider the business impact those and carefully taking all aspects in consideration before adopting and implementing any new disruptive technology, and challenges will vary from industry to industry.

In today’s digital market, CIOs ensure that they’re investing in the right technology to drive their business forward by strongly and deeply understanding how their businesses operate, how people work and consumers utilize their businesses. Within organizations, new technologies and innovation are coming from everywhere, not only from IT anymore, so, by having a truly firm understanding of the business, how technology works within the business and how it affects everybody that’s using, CIOs will have the necessary information to build an efficient and appropriated strategy that aligns new technologies with their businesses’ needs, mitigating possible investment issues. It’s a fact that CIOs will not be accurate and efficient until they have that core understanding, so they can better decide and plan when to implement new technology and test it, or if the right path is to keep up with the investments made in technologies already tested and simply enhance those rather than jumping into a new one. No wonder that CIOs must pay attention to the large number of disruptors in the market, for some of these technological disruptions are truly good and useful for their businesses’ needs, but they must to make sure that those doesn’t disrupt their businesses as well, and that mistake can be fatal.

Understand the level of engagement in the key areas of digital transformation

Whether an organization has a digital strategy in place or not, strategic CIO must understand that certain changes and actions are necessary for this organization to properly become digitally enabled. It’s true and predictable that most organizations are highly engaged in some aspects of digital transformation, but interestingly there has been reported in many research notes and surveys that there is a discrepancy among the level of engagement and actual organization-wide engagement in digital.

This is very well reflected that a recent INSEAD study, in which 65 percent of respondents informed that their organizations are changing their business models due to changes in the business environment caused by digital transformation, but in contrast to that, when asked what their key digital initiatives were, only 9 percent of respondents mentioned having initiatives for such changes. In this same study, another interesting finding was that all respondents reported a high level of confidence in their engagement within the key areas that are responsible for digital transformation, except for technology and people training, yet only 5 percent had previously indicated that they were actually engaged in digital transformation. Such findings show that there is a great focus on business processes over marketing and communications initiatives, but a great difficulty of navigating complex scenarios that include people and technology. No wonder changing an organizational culture is always a challenge, but degree to which people play a crucial role in digital transformation is also a very important topic to be watched, once companies need people that like changes more than the average human being to be successful in this new digital environment, once this is now a fast-paced and ever-changing environment.

With that said, CIOs must understand that the level of engagement that organizations have towards digital transformation does not reflect the same levels of the key areas and, by understanding these differences, they can more accurately address issues and difficulties from each key area in order to better promote the benefits of digital transformation and become what organizations currently need the most: a true digital agent.  

Boldly explore new markets

Technology increases the ability of companies to explore and innovate, but most of a company’s activities are still quite focused on playing to its market strengths and exploiting its core business competences, which is widely accepted by stakeholders and boards as the proper approach to produce the expected return on investment, but that is not enough anymore.

In today’s unpredictable and fast business environment, companies must not only to stick to its core business but also to expend considerable effort on exploring new business models and revenue streams to better diverse their revenue sources and mitigate potential loss risks. In order to be successful in this new business exploration, organizations must rethink themselves and move away from the established management techniques and continuously engage in acquiring new capabilities, therefore shifting from a traditional “plan-to-execute” mindset to one that also plans to evaluate, learn and adapt. This necessity of exploration through continuous learning and experimentation pushes CIOs and other members of companies’ boards into a point of accepting higher levels of uncertainty, ambiguity and risk. They must make sure that the company will not rest on its comfort zone, whether these are core business, key skills or established positions. These executives must look beyond traditional KPIs to avoid becoming trapped in repeated behavior or short-term thinking, which will make the fail.

Finally, the future of business is digital, and in order to survive and be successful, companies will have to digitalize themselves entirely, their processes, their language, their mindsets and their interactions. Leading that is not an easy task for anyone. However, turbulence brought by the digital age offer a unique opportunity for those who lead and govern organizations through this transformational process, as the digital economy brings unparalleled business opportunities for all companies in every single industry, introducing unpreceded innovations that will turn business into a more transparent, collaborative and customer-centered activity than ever. By leading digital transformation, CIOs have the opportunity of achieving levels of innovation, competence, effectiveness, leadership and responsibility that can bring an unseen positive impact on companies’ business success and their impact on modern society. CIOs can efficiently lead the greatest disruption in both leadership and governance in the entire history of business, it’s all in their hands.