The FINANCIAL -- Digital transformation and digitization are words constantly on just about every executive's lips these days. But talking about the new technology and its possibilities and threats is one thing, doing something about it quite another.
In an effort to bridge the gap between chat and action, many organizations have begun to appoint chief digital officers. But what does this new brand of executive do all day and how did they come to be chosen for the role? More important, do they make a difference?
In order to answer questions like these, the Said Business School at Oxford University has through its Future of Marketing Initiative carried out research in collaboration with General Assembly, an organization that teaches entrepreneurs and business people technology skills., according to Forbes.
The findings were published at the CDO Summit, held at General Assembly's London base these days. Unsurprisingly perhaps, the picture they present os somewhat mixed - or rather riven with paradoxes.
Among those identified are:
They are the interface between the organization and its environment to translate technological and market trends into new organisational capabilities. But discovering and exploiting these opportunities creates any number of internal challenges. Paradoxically, that puts many exciting opportunities in the outside world and many challenges on the inside.
They are charged with leading digital transformation, but find themselves leading profound changes that go well beyond technology and digitization.
They are expected to have specialist knowledge and be effective generalists.
Given the novelty of their role, there is no shared understanding of the responsibilities role they try to fill. In the extreme, they transform everyone, but belong nowhere.
They have to be disruptors and catalysts for change, but must also build consensus and serve as cross-functional integrators.
They have to drive important, far-reaching, and, ideally, long-term changes in their organisations but their role is transitional and—if successful—eventually obsolete.
But what does this all mean? One of those who has attempted to break all this talk about digital transformation down into concrete steps that executive teams can take to boost - or even save - their businesses is Sunil Gupta, a professor at the Harvard Business School. In his book Driving Digital Strategy, he argues that in order to thrive in the increasingly digital era, business leaders have to re-examine four fundamental aspects of their operations.
Business strategy. They need to ask themselves what business they are in. Staying competitive in this highly challenging environment could, for example, mean changing focus or evolving to become a platform that manages an ecosystem of partners and competitors, he says.
Value chain. Traditional distribution has been upended, says Gupta. But reexamining and incorporating new methods can significantly improve efficiency and effectiveness.
Customers. Digital technology has changed how consumers search for information and buy products. But it has also allowed companies to collect data about their customers and provided new ways in which they can can acquire them. But technology is not everything. Every brand is looking to engage with customers, but the route to differentiation probably lies in providing special value to customers rather than through relying on social media or the like to reel them in.
Organization. Managing a digital transition is not easy - as the CDOs in the Oxford research can attest. Revenues and profits often decline during the transition period before they are restored. Gupta explains how leaders can strengthen the core business while also building for the future.
As he describes in a lecture earlier this year, established companies have typically responded to the arrival of digital technology in three main ways. They have set up separate digital units in places like Silicon Valley or London's fintech base in Shoreditch, or run experiments or simply used technology to improve efficiency in the hope that that will be enough to fight off competition. But all of these approaches are flawed. Setting up a digital unit is like launching a speed boat to turn around a large ship, he says.
Often, the speed boat takes off but does little to move the ship. Running experiments risks encouraging a plethora of initiatives throughout the organization that are all designed to solve specific problems but have no synergy. Finally, using technology to drive efficiency assumes that things will fundamentally stay the same, when all the evidence is that disruptors are doing much more than just being more efficient versions of what is there already. They are going about things completely differently, often by not even trying to do a lot of things that the incumbent does.