The seven rules for digital business and digital transformation

Digital business transformation is one of the hottest board room topics in this year’s strategy planning cycles.

Organisations around the world believe that they must begin the transformation process but many remain uncertain how or where to begin. Early efforts to create a chief digital officer role works for media, advertising, and entertainment.

Inside other industries, early findings show chief information officers and chief technology officers assuming this role. Regardless of role, digital business transformation requires a broad bench of digitally proficient leaders.

Seven rules emerge from Constellation’s latest engagements and interactions with the Digital CXO Research Board members. Lessons learned should serve as a catalyst to move from the discussion phase to the planning phase.

• Rule 1: Digital disruption is more than just a technology shift. It’s about transforming business models and how organisations engage.Early leaders keep sight on the prize – business model transformation through disruptive technologies. The goal is to create transformational business models.

• Rule 2: We move from selling products and services to keeping brand promises. Time to market, pricing, and product differentiation are not enough in a digital world. The high margins will come from delivering, elevating, and reinforcing brand promises.

• Rule 3: We serve five generations of customers and workers, by digital proficiency, not by age. Forget millenials, Gen-X, Gen-Y, baby boomers and others. How we communicate, the values we share, and how we interact with technology stem from our digital proficiency, not our age.

Design for access, not ownership, in order to survive R 'Rayquot; Wang, Constellation Research

• Rule 4: Data is the foundation of digital business. Every touch point, every click, every digital exhaust is relevant insight. The backbone of digital comes from the broad array of data that moves into information. This information surfaces up patterns that drive insight. Insight drives the ability to take action. The data to decisions cycle provides the foundation for digital.

• Rule 5: If 20 per cent of your revenue is not an insight stream by 2020, you won’t have a digital biz model. Expect the insights stream to provide a source of revenue. What data can create differentiated customer experiences? What data can be brokered? How will you use insight to build new business models.

• Rule 6: You need more than a chief digital officer to infuse digital into your organisation. You need a broad bench of digital CXOs.While a chief digital officer can lead the charge, a broader bench of digital CXOs must arise.

• Rule 7: We must invest in digital artisans. Short of having every leader emerge as the chief digital officer, the new war for talent will focus on attracting, developing, and retaining digital artisans. Concurrently, a market will develop for those who can spread the digital business gospel and infuse digital artistry into organisations.

The existing leadership structure in most organisations is ill-equipped to drive the change required for dominating digital disruption. Here are some lessons learned:

1. Culture proved to be the biggest challenge. Building the right team, leadership, and values for success is not easy.

Budgets are growing on the business side and IT has all the pain and compliance. R quot;Ray Wang, Constellation Research

2. Journey maps proved to be unwieldly. Prepare for everything to be contextual. Lifecycles cease to exist. Think in continuums. Expect composability to address mass personalisation.

3. Technology is moving way too fast. Pace of change is fierce. Always something faster, better, and cheaper ahead. Design for access, not ownership, in order to survive

4. Budgets are all over the place. Realise there’s never enough money, but prove ROI and you’ll be funded. Budgets are growing on the business side and IT has all the pain and compliance.

R “Ray” Wang is the principal analyst, founder and chairman of Constellation Research, which focuses on disruptive technologies.

Copyright © 2014 IDG Communications, Inc.

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