Leading Digital: Turning Technology Into Business Transformation

The handful of companies that are already embracing the digital world are perfectly positioned to pull ahead of everyone else. They'll be the ones who attract the best talent, have the highest productivity, and an engaged and excited workforce. They'll have access to the most up-to-date forecasts and customer feedback tools, so they can make changes to their strategies in lightning quick time.

After studying more than 400 organizations, and conducting hundreds of interviews, the authors made a surprising discovery: companies that took the time and effort to incorporate the newest technology into their strategies were 26 percent more profitable than their industry competitors, and generated nine percent more revenue.

From these averages, you can see that it's definitely worth learning how to take advantage of digital change. And, the authors say the longer you wait, the harder it's going to be.

We should point out that, for the purposes of the book, the authors didn't look at technology companies at all. They skipped over firms like Apple, Facebook, and Amazon, because they're already highly adept at harnessing technology.

The authors were most interested in companies operating in sectors like finance, manufacturing, and pharmaceuticals. The firms they looked at ended up using new technology in highly innovative ways to get ahead in their industry.

"Leading Digital" is going to be most useful for people in a leadership or management role. The changes the authors suggest in the book aren't easy, and they do require a top-down approach if they're going to work.

George Westerman and Andrew McAfee are research scientists at the MIT Sloan Center for Digital Business. Didier Bonnet is a senior vice president of Capgemini Consulting.

So, keep listening to find out four ways you can use technology to transform your customer experience, how to create a digital vision for your organization, and several tips you can use to get your team on board with a digital change.

"Leading Digital" is divided into three parts. Part one looks at digital capability. Here, you learn how technology can help you interact with customers, streamline your operational processes, or create an entirely new business model.

Part two looks at the leadership capabilities that need to be in place for digital change to occur. Here you learn how to create a transformative digital vision, keep that vision in place and working for your employees, and how to build a strong relationship between IT and the leadership team, so you can continue to drive change.

The authors call part three "A leader's playbook for digital transformation." These chapters wrap up the insights you learn earlier in the book, and lay out practical tools and tips to help you make these changes.

Let's first look at the three digital capabilities you can use to set your organization apart. These are customer experience, operational processes, and business models.

Think of these categories as avenues. Digital technology can help transform your organization in one or all of these areas.

Many organizations will care most about the customer experience. And there's a revealing case study that shows how luxury brand Burberry used technology to transform its customer experience, appeal to an entirely new market, and increase profits.

This first case study is a great addition because it helps you see how one organization used social media like Facebook and Twitter, and tools like the iPad, to connect with their customers and create new experiences.

Digital masters who want to transform their customers' experience do four key things.
First, they design the customer experience from the outside in. This means that they spend time understanding customer behavior.

Second, they use technology to increase reach and engagement through smart investments and new digital channels. This can mean investing in user-friendly apps, rich social media experiences, and marketing that encourages this engagement.

Third, they put customer data at the heart of the customer experience. For instance, they use metrics to segment their market and personalize deals.

Last, digital masters work hard to mesh the physical and digital experiences of their customers. So, organizations that have retail stores create user experiences with technology that mirror the look and feel of their physical locations.

The rest of part one looks at the other two capabilities: operational processes and business models. You learn how technology can transform each of these, and you get to see first-hand how organizations are transforming their businesses in these areas using new technology.

We think these case studies add a lot of value to the book, because it can be hard to imagine what's possible with some of these new tools and capabilities. The authors weave in these stories effortlessly, making it easy for readers to envision what they could do in their own organizations.

Part two looks at leadership capabilities. These are the skills and techniques you need to get everyone in your organization moving towards change.

There are four elements here, and the authors devote a chapter to each of them.

One of the leadership capabilities you need is a digital vision, which should reach every part of the organization. It's then up to the employees, once they've bought into that vision, to turn it into reality.

As you might imagine, this isn't easy to do. This is why you need to create a compelling vision that really convinces your team to get on board.

You can focus your digital vision on one of the three capabilities the authors explored in part one: re-envisioning the customer experience, re-envisioning operational processes, or combining the two in order to re-envision your business models.

The authors say that most organizations focus their vision on the customer experience, at least in the beginning. They include some digital visions from other organizations to help give you a better sense of what these look like.

For instance, the CEO of Burberry, Angela Ahrendts, focused her vision on creating multichannel coherence. She said, "We had a vision, and the vision was to be the first company who was fully digital end-to-end." Ahrendts wanted customers to have total access to Burberry "across any device, anywhere."

So, how do you create your own digital vision?

The authors say it's not a formulaic process. You need to create a vision that builds on your strengths, engages your employees, and can evolve over time. You also need to decide what benefits you want to see, and what your end point looks like.

Start by identifying your strategic assets. It helps to use the acronym VRIN, which stands for valuable, rare, inimitable, and non-substitutional. For an asset to be truly strategic it needs to fulfill each of these elements.

Your digital vision must also be transformative. You need to define a clear intent and outcome, and make sure that the vision can evolve over time.

This evolution is particularly important. Your vision needs to be specific enough so that your team has plenty of direction, but flexible enough so they have freedom and are able to change it in the months and years to come.

The authors have some handy tips that can help you get started. First, get familiar with the new digital practices that can be an opportunity or threat to your industry or organization.

Next, look at your bottlenecks or headaches – those that you experience, as well as those that your customers come up against. These should be caused by the limitations of old technology. Think about how you could use technology to resolve these problems.

Part three of the book pulls together everything you've learned so far so you can come up with a plan to move forward.

The authors created a useful compass that organizes all these lessons and makes it really easy to move through each of the steps. Just like a directional compass, their digital transformation compass is divided into four sections to help guide your way.

These compass directions are specific actions you'll take to get started.

The first step is to frame your digital challenge. Next, focus your investment. Your third step is to mobilize your organization. This step can be challenging because, as many readers will know, it's not easy to get people to buy into large-scale change. Your last step is to sustain the transformation.

One of the biggest problems in mobilizing your team, which is why the third "direction" in the compass is communication. According to the authors' surveys, 64 percent of employees in the organizations they studied feel senior leaders didn't adequately share their vision for digital transformation with everyone.

There are several ways you can overcome the challenges of communication and awareness.

For example, signal your ambitions. Create a value proposition for this change, and make sure it's meaningful for individuals, and the roles they play.

Next, send clear signals of what's to come. These can come in several different forms.
For instance, you could set a specific metric. One French company did this by telling its team that the organization would shift from having roughly 30 percent of its business online to having more than 75 percent online in four years.

Another type of signal is visible branding. Makeup brand L'Oréal did this when the CEO told everyone that 2010 would be the firm's "digital year."

You also need to explain the benefits of this change clearly. To do this, put yourself in your employees' shoes. Ask yourself, "What's in it for me?"

Make sure you communicate how this is going to improve the way they do their jobs. And, adjust your message depending on who you're speaking with.

For instance, if you're talking to your finance department then you'd want to focus on how these digital tools will increase the accuracy of their financial reporting. If you're talking to your marketers, explain how these tools will help them get more refined data for their marketing projects.

There are many other tips in this chapter that will help you get your entire team on board for this journey.

This last part of the book is, we think, the most valuable. These lessons can be found throughout the entire book, but having them all condensed and organized in one place is really helpful.

So, what's our last word on "Leading Digital"?

We think this is a practical book that can be of real use to organizations. Technology is changing so fast that it's hard for non-tech organizations to keep up. And, it's not always easy to see how you can harness the opportunities of all these changes.

The possibilities are endless. But, if you don't have leaders in place who are willing to explore them, you're going to get left behind. And the longer you wait, the harder it's going to be to catch up.

We really like that the book is so accessible. You don't have to have a degree in IT, or be involved in tech in any way, to understand the concepts and lessons in here. The authors also did a great job of creating a sense of urgency. You really get the sense that this is something you need to start working on now. And, once you're finished with the book, you'll have the knowledge and tools you need to start integrating more technology into your organization.

"Leading Digital" by George Westerman, Didier Bonnet, and Andrew McAfee, is published by Harvard Business Review Press.

That's the end of this episode of Book Insights. Thanks for listening.