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CHAPTER 1
THE TRANSFORMATION IMPERATIVE
Look at your company as if it were your first day on the job. What would your first impressions be of how your business is operating? How would you learn about its products and services, key customers, and overall financial health of each business, operating unit, and product? How quickly would you absorb key business practices in sales, marketing, and operations that drive the business? Could colleagues easily tell you how products and services differentiate from your competitors and describe the key intellectual property, the "secret sauce" that enables winning and retaining customers?
What would your initial observations be if you opened the box and reviewed what customers get with key products and services? Is it a delightful, immersive experience that makes you want to continue using it? Is the service's value and benefits clearly articulated in packaging or other materials? What's been the latest customer feedback on the product, and what is the company's history in making changes or improvements to the product line? Is it an easy, intuitive product that delivers value on day one, or does it require significant documentation and training?
How well do company executives understand their competition? Do they have strategies and tactics to grab market share from them? Do they understand how their services differentiate, how they stand out by market segment, and how they compete on price and other attributes? More importantly, how broad is their lens on competition? Are they more concerned about traditional competitors, or do they have an expanded view that considers new market entrants, startups, or other product alternatives?
How is data being used for decision making? Do you mostly hear dialog and opinion when decisions are being reviewed, or are facts being presented and insights debated? When data is presented, is it handcrafted using spreadsheets and presentation tools, or is it analyzed directly from the transaction systems — ERP, CRM, or other enterprise system. Are the data and presentation easy to understand and delivered on a regular schedule, or does it look ad hoc, suggesting there may be complexities and quality issues in its construction?
What are your initial thoughts when you walk into the IT department, meet people, and see how it's operating? Are heads looking and banging away at the issue of the day afraid to look up and get asked to address a new set of concerns? D oes the team show signs of battle scars from longer-term firefighting expressing a complete distrust of business leaders and criticism of their treatment? Are they complaining about the lack of funding or support to make operational improvements or keep up with the latest security threats? Are they more likely to tell you about yesterday's difficult user or rogue IT issue versus someone they helped, a business practice they improved, or a deliverable that they completed?
Is anybody in IT doing any significant application development and, more importantly, doing anything tied to improve the business's product and services? Are business executives (and ideally customers) pleased with the latest technology improvements, or are they grumbling about missed timelines, cost overruns, or quality issues? Are the tools and experiences being developed cutting edge, open, and scalable, or are they bolt-ons to interfaces that were developed decades ago?
What's the vibe in the office? Is there a buzz from people collaborating and sharing information, or are people huddled in their offices and cubicles? Do you see outdated projectors, or are touch screens always on, showing KPIs and providing access to tools and information? Is the best company information available only at your desktop, or can you collaborate efficiently on your personal mobile device? Can the people you meet articulate the corporation's mission, values, and objectives, and how they are personally contributing?
These are all fundamental questions that organizational leaders need to ask with some regularity, and the answers speak to the efficiency, intelligence, and culture of the organization. Most importantly, they are all key considerations on whether the organization is ready to compete in a digital world where having access to real-time information, delivering products that win over customers, developing a collaborative organization aligned to its mission, and instituting competitive use of technology are all fundamental requirements.
In some ways, I have been fortunate to have had that first-day experience walking into a new organization as CIO three times over the last ten years of digital enablement and transformation. At Businessweek magazine in 2007, my first impressions were of one team struggling to keep the content management system humming while the Editorial team was screaming for better capabilities and faster publishing, of the Sales team struggling to implement better ad-targeting capabilities, and of everyone trying different approaches to bring in new readers and subscribers.
When Businessweek was sold at the end of 2009, I had the opportunity to join McGraw-Hill Construction, another business of McGraw-Hill's Information and Media that sold news and data products to commercial construction businesses. As a sister business, I already had an impression of the business on my first day: Why was this business so complex? Why couldn't I easily ascertain its value proposition? What were the synergies across customer segments and product lines? Finally, why did the technology team at Construction, which had access to the same technology, practices, and resources that I had at Businessweek, struggle to keep their products stable, let alone competitive and certainly not innovative?
Four years later and after a series of successful business, marketing, and technology transformations, I was part of the team that successfully led McGraw-Hill's divestiture of Construction. I was off looking for another transformational opportunity and landed at a forty-year-old consulting and data provider to financial services institutions. They were like Businessweek and Construction and looking to transform their data sourcing and delivery capabilities but with a rich history of delivering highly valuable insights into C-level banking and other financial executives.
I'll provide more stories and insights throughout the book, but, as I said, I've now had three experiences walking in day one as CIO of a business that needed to transform. I've taken on the challenges leading different IT teams that needed to radically change their capabilities and services. I walked in as a technologist that had some success developing technology at startup companies selling software as a service (SaaS), data, and social networking products and services. So my career has taken me from the challenges of leading a startup organization through growth, complexities, and pivots to an older "analog" business looking to transform and develop digital businesses.
That background has given me a unique perspective on what incumbent businesses must do differently today to compete. Startups have many advantages without legacy practices and with the opportunity to stay small and nimble with highly driven individuals during its early years of development and growth. The experience over 15 years and four startups enabled me to wear many hats, learn several industries, work with different technologies, and have a wide-ranging list of responsibilities.
But here's the one thing I learned from all these experiences and why this is relevant to you, your current role, and whatever situation you are facing in your enterprise or in your business. Your organization needs an updated set of practices to compete in a digital environment, deliver winning customer experiences, develop digitally driven products, and leverage data for strategic insights. It's not good enough to have IT practice agile development; you need collaboration with business teams, capabilities that drive speed to market on new ideas, and estimating practices that enable the development of longer-term roadmaps. Your organization likely needs to double the number of growth initiatives and find ways to take cost and complexity out of legacy practices. You need a growing data practice to deliver more convenient and insightful products while you promote a data-driven culture. Technology platforms need to be standardized and integrated for you to develop competitive advantages with emerging technologies like artificial intelligence, blockchain, or the internet of things (IoT). These are just some of the topics covered in this book on driving digital leadership and practices.
Beginning Transformation — Every Day Is Day One
Whether today is your first day walking into your office or you've been working for the same enterprise for the last decade, I would suggest that today and every day are your day one. In your role as a transformational leader, every day is a new day to make change, transform, or do something that has a positive business impact. This is not a Tony Robbins, jump up and down and get your team motivated and excited to do more-better-faster-and-cheaper pitch. The culture of the team is very important, but what I am suggesting is that transformation happens in small baby steps that you can do or influence daily that will take you a couple steps closer to a new destination. And while you are taking these steps, you can open your eyes and ears for feedback. Walk straight, step a little to the right, or pivot completely. Your feedback can come from the people in front of you, a dashboard that you review for insights, news that you read about the competition, or a dialog that you have with customers. Every day is another day one for you to do something innovative, something that will improve a customer's experience, make a colleague's work smarter, or make the world a safer place.
The world is also changing around you. New technologies, new competitors, new mashups, new capabilities, new regulations, new security vulnerabilities, new mobile devices everyone wants, new quality issues that need to be addressed, new customers providing feedback that need consideration, new opportunities to influence employees, new marketing approaches to attract customers, and new algorithms to develop insights that can develop into whole new businesses.
Is the World Faster, Bigger, and Smarter?
Do you believe that the pace of change and your ability to influence in small doses is more significant today than it was a decade ago?
You better. Let's look at some numbers and examples:
* While the number of startups funded in 2015 declined versus 2014 by 20% to 12,371, the total capital invested increased by 21% to $126 billion, according to PitchBook. The venture capitalists are getting more selective but increasing their level of investment in the startups. Some of these startups will challenge, compete, or even disrupt your business.
* 2.5 quintillion bytes of data are created daily, and 90% of the world's data has been created in the last two years alone. That's a lot of data, and I'll let you translate this data explosion to your own business's velocity and acceleration of data stored. Now the question is how much of your organization's data do you properly analyze, and how does your analytics and business intelligence capabilities compare to your competitors? Per one report, 90% of an organization's data is "dark," that is, data that isn't fully analyzed for insights. At the same time, there are numerous studies showing the difficulty most organizations have staffing data science, database, and other analytic roles. Topping that is the alphabet soup of technologies that one can deploy for analysis beyond an SQL database — everything from NoSQL warehouses, to Hadoop variants, to BI solutions in the Cloud. Again, this points to more data that some organizations can leverage to strategic benefits and gain a competitive edge against those that are lagging.
* 65% of adults are now using social networking sites, and 20% claim that they are online "almost constantly." Pew Research Center has this broken down by age, education, and other demographics, all showing increases and activity reaching critical mass. Digital channels will continue to increase in importance in both B2B and B2C markets, but digital marketing strategies are still in experimentation stages, and the available technologies are growing. The number of marketing technology vendors almost doubled in just one year from 2014 to 2015 to 1,876 vendors and another two times to 3,874 in 2016, so this will be an area of competition, disruption, and experimentation for at least the next few years.
* If your company lives in the physical world of products, retail, or manufacturing, then it's hard to imagine that it won't be affected by the IoT over the next ten years. The questions are how long do you have, how much do you invest, and will your existing product or process default to legacy if you don't make the right decisions fast enough? In retail, Beacons are expected to have influenced $4 billion in sales in 2015, and 72.1 million wearable devices are expected to ship in 2015. The growth in these and other IoT technologies suggests that if you are a consumer, industrial, or retail business, you'd better be reviewing how IoT may shape your business and industry over the next 10 years.
* If you are in media, publishing, entertainment, information, analytics, legal, and segments of health care, then you are already close to being a digitized business, but you may not be a fully digital business. A digitized business implies that the delivery to the customer is in a digital format as opposed to a paper or other analog format. To be digital, the end-to-end processing is done digitally, the commerce to acquire the digital product or service is digital, and then the delivery is digital. Digital disruption is now in its third decade, starting with books, magazines, and music and now in later stages where marketplaces enable services performed or made available by third parties like Uber and AirBNB. The next stage will include commerce services interchanging digital rights through blockchains. So, in 20 years, digital services have disrupted analog counterparts that have been around since the advent of the printing press 600 years ago.
* If you are in financial services and especially in banking, your world is about to go through some significant disruptive forces. In 2015, mobile banking exceeded retail bank transactions for the first time and is expected to trend more and more digital. There is the emergence of blockchain technology, and many banks are testing it to replace some of the more common and complex financial transactions. Currently 25 banks are partnered with R3 in a consortium aiming to leverage blockchain technology in markets. But banks are also facing disruption from fintech startups implementing digital businesses in lending (LendingTree.com, Prosper.com), investing (Wealthfront.com, FutureAdvisor), and Payments (Apple, Samsung, Google, etc.).
* Another major transformation that's accelerated is the digital, democratized, and distributed workforce. Digital workforce enablement has been accomplished through a combination of mobile, collaboration, and presence tools enabling knowledge workers to be connected and productive wherever and whenever required or convenient. The White House has a bring your own device (BYOD) program, collaboration tools enable business users to communicate in the context of their workflow, and Cloud-enabled desktop computing enables enterprise users to carry light devices and have access to applications and data anywhere.
* Also, let's add the poster children of digital businesses and disruption. I'm speaking about Airbnb that already has more rooms than Hilton and Marriott, yet doesn't own a single hotel. Their market share of rooms in major cities is growing year over year, averaging 9.9% in the top ten U.S. cities. Then there is Uber, which provides more car service transactions than the aggregate of all taxis and limousines. Uber just passed a billion rides, has expanded to 58 countries (as of May 2015), and now has surpassed taxis/limos for business ground transportation. Businesses are facing increased competition from digital disruptors that can deliver new value and offer users conveniences that legacy businesses cannot enable as easily.
* Finally, there is a new workforce out there that can help businesses with digitally driven workflows and data processing. Artificial intelligence algorithms powered by Cloud computing systems can automate intelligent processing of complex forms of data from voice to images. If it can't be processed by machines yet, then you can hire an on-demand crowdsourced workforce through services like Amazon Turk to handle small tasks. These capabilities can be tapped into an enterprise's data using APIs to automate the data flow.
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Excerpted from "Driving Digital"
by .
Copyright © 2017 Isaac Sacolick.
Excerpted by permission of AMACOM.
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