What Does It Mean to Digitize a Company?
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Transcript of What Does It Mean to Digitize a Company?
Just How Digital Is That Company?Thomas H. Davenport
Babson College/MIT/Deloitte/International Institute for Analytics
Forbes/Teradata Digital Revolution Summit
October 3, 2016
1 | 2016 © Thomas H. Davenport All Rights Reserved
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What Does It Mean to Digitize a Company?
• Digital products and services• Digital business models and transactions• Digital relationships--employees, customers, suppliers• Digital labor—robots and automated software• Digital data put in structured form to create insight
• Prioritized investments in people and platforms• Analytics and data used for internal decisions• Capabilities adopted early and with marketing flair• A well-managed change process
DIGITALCAPABILITIES
DIGITALLEADERSHIP
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Predictions from the IDC FutureScape for Worldwide Digital Transformation:
• By the end of 2017, two-thirds of the CEOs of the G2000 will have digital transformation at the center of their corporate strategies
• By 2017, 60% of companies with a DX strategy will deem it too critical for any one Functional area and create an independent corporate executive position to oversee the implementation
• IDC Research Vice President Bob Parker: "Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets.”
Digitizing Is Not Just for Unicorns!
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The DNA of Digital Masters
Dig
ital C
apab
ility
Leadership Capability
CONSERVATIVESBEGINNERS
FASHIONISTAS DIGITAL MASTERS
Source:MIT Center for Digital Business
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Digital Masters Outperform Their PeersD
igita
l Cap
abili
ty
Leadership Capability
REVENUE GENERATION
+6%
Basket of indicators: Revenue/Employee, Fixed Asset Turnover
+9%
-10%-4% Dig
ital C
apab
ility
Leadership Capability
PROFITABILITY
+26%
+9%-24%
-11%
Basket of indicators: EBIT Margin, Net Profit Margin
Source:MIT Center for Digital Business
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Digital Masters in Various Industries and Geographies
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Digitization at Nike
Social Media Digital Product Design
Customized Manufacturing
Nike Digital Sport
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Digital marketing Digital product innovation/design Digital commerce (e/m-commerce) Digital technologies (GPS, mobile, etc.) Customer analytics
FIRM-LEVEL DIGITAL TRANSFORMATION BEYOND THE SHOE
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Digitization at Asian Paints
New Transactions/ Relationships
Direct Customer Knowledge
Automated Manufacturing
IT and Strategy Interconnected
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Selling “painted wall” Ideas Engine for home decor Salespeople as consultants Relationships with contractors Now in 17 countries CIO is head of Strategy
FIRM-LEVEL DIGITAL TRANSFORMATION
AT EARLY STAGES
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Digitization at Caesars
Mobile and Social
Total Rewards Offers
Service Measures and
Analytics
Analytics-Driven Culture
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Strong pull from CEO Test-and-learn focus Continued investment/expansion Strong Analytics and Digital groups
FIRM-LEVEL DIGITAL
TRANSFORMATIONON TACTICAL
DECISIONS
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Digitization at Codelco
Remote telecommand
devices
Autonomous vehicles
Integrated operations
centers
Automated mining focus
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Primary focus on worker safety Predictive, optimized operations Chief Digital Officer Goal of no underground miners by 2017
FIRM-LEVEL DIGITAL
OPERATIONS TRANSFORMATION
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Digitization at GE
Sensors in Many Products
New Service Models
Platform for Industrial Internet
Digital/Industrial Model
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Strong pull from CEO Chief Digital Officer role Major investment in people and tech Built partner and venture ecosystem
EXTERNALDIGITAL
TRANSFORMATION
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Digitization at Wells Fargo
Multiple channel innovations w/
testing
Strong customer and risk analytics
Multi-faceted data
infrastructure
Offense/Defense Balance
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY Early digital governance focus Enterprise data and analytics function Working to connect diverse analytics and
data initiatives across the business while satisfying regulators
CUSTOMER-FOCUSEDDIGITAL
TRANSFORMATION
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The DNA of Digital Masters
Dig
ital C
apab
ility
Leadership Capability
The “What”Customer experience Operational processes
Business models
The “How”Vision
EngagementGovernance
Technology Leadership
Challenge Your Business Model Before Someone Else Does
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Re-Inventing Industries
Substituting Products & Services
Crafting New Digital Businesses
ReconfiguringDelivery Models
Rethinking Value Propositions
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Digital Business Models at
• Find and connect with a local agent• Find a Service Center• View a copy of your insurance ID card
• Make a payment• Quote and buy a policy• Report vehicle damage with photos
• Pay-as-You-Drive • Snapshot: Monitors actual driver behavior• New “data products” from in-car sensor data
• Add Flo and Progressive to your social network• Watch new commercials
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Building Blocks of Digital Capability
BUSINESS MODEL
CUSTOMER EXPERIENCE OPERATIONS
Digitally-modified offeringsCustomer analytics Process digitization
New digital businessesTop line growth Digital labor
Rapid quantitative testingIntegrated touch points Operational analytics
DIGITAL PLATFORM
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The DNA of Digital Masters
Dig
ital C
apab
ility
Leadership Capability
The “What”Customer experience Operational processes
Business models
The “How”Vision
EngagementGovernance
Technology Leadership
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Building Blocks of Leadership CapabilityCreate a transformative vision of the digital future
Engage employees at scale to make vision a reality
Link IT & business communities to build digital skills & transform
technology platforms
Establish strong digital governance to steer the course: coordination, sharing, momentum
Vision
TechnologyLeadership
Governance Engagement
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Governance Steers the Course
DESIGN GOVERNANCE TO ENCOURAGE NECESSARY SHARING AND COORDINATION
SHARED DIGITAL UNIT
Unit/Region/Brand
Unit/Region/Brand
Unit/Region/Brand
Unit/Region/Brand
KEY MECHANISMS
• Chief Digital Officer• Digital liaisons• Shared digital units• Governance committees
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Business and IT Functions Need to Collaborate
IT Business Relationship
Digital
Skills
Digital Platform
We’re Just Getting Started!
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Augmented Reality
Robotics Artificial Intelligence
Sharing Economies Wearables
3D Printing