Kathy Gibson reports from Oracle Cloud Day in Bryanston – A new type of leader, and a new leadership model, is needed for digital businesses.
Abbie Lundberg, president of Lundberg Media and contributing editor of the Harvard Business Review, defines digital business as the ability to exploit information at speed.
“Information is what it’s all about; about what your customers want; what’s happening in your operations; how you can do things differently – and how you can exploit it to add value.”
One of the fundamental dilemmas of digital business, she says is that there is a need for high-end, mature technology that is secure; with a simple, intuitive and pleasurable experience for customers on the other hand.
“Companies are wrestling with how to take these two needs and bring them together.”
Lundberg urges companies to ask if digital is a threat to their business – and research from Harvard Business Review and MIT (Massachusetts Institute of Technology) shows that 75% of organisations believe it is.
The top factor driving market change is hanging customer behaviour and expectations; with commoditisation and the rie for cost savings coming in as the second factor.
“What this means is that companies have to differentiate their experience; but without pricing themselves out of the market,” Lundberg says.
Emerson, the 125-year-old industrial company, has made digitalisation a board issue – in fact, changing models of customers engagement is one of the top three threat factors.
The traditional way of doing business was based on long-term relationships with purchasing manager. Younger people coming into those roles don’t want to do business that way: they look to do business using a very different model.
“They knew they needed to fix the problem; understand what the digital customers wants and deliver it.”
The company decided to change its business model to differentiate and create value by trading on information.
“For companies like Emerson, this has a lot to do with the Internet of Things,” Lundberg says.
In fact, 38% of respondents in the Harvard Business Review study believe that the confluences of new technologies has dramatically changed their business models.
In addition, 66% of respondents believe their company’s future depends on the quality of their software. “This is where banks or retailers become technology companies,” says Lundberg.
One of the biggest problems with existing IT organisations is that they are not built for speed. “But that’s where cloud comes in. It is seen as the salvation for companies, allowing them to go out and do new things.”
The dark side of the cloud became apparent very quickly, Lundberg points out, with regulation, security and the ability to leverage it across systems coming to the fore.
“We have seen shadow IT coming out of the shadows,” she says. “Business leaders have realised there is a lot of value in involving IT upfront. IT people have come to look at cloud as just another tool in the toolbox, giving them the ability for doing two-speed IT.”
In fact, 64% of business leaders say that cloud has increased their business agility.
Digital business requires more collaboration between business and IT, and a new study shows that there is now more joint involvement across business units in rolling out and managing cloud.
“This is increasingly becoming a team sport; and 60% of business leaders are now directly involved in making IT decisions.”
Companies are employing different practices to raise digital IQ. They include engaging digital experts; collecting and telling external peer stories; taking digital field trips; forming a digital advisory board; and setting up reverse mentoring.
Working together, Lundberg says, could involve co-locating staff, omni-channel teams, cross-functional reporting, new development models like Agile and DevOps, or working with business relationship managers who can bridge the gap between IT and the business.
Leading a digital business requires a new type of person, While the position of chief digital officer is in demand, Lundberg says it’s a really difficult one to fill – and no more than 15% of companies actually have a chief digital officer.
Business believes the CIO should lead digitalisation; IT believes the CIO should too, but general managers – while also voting or Cos – lean towards the CEO as the natural digitalisation leader.
To accelerate innovation, Lundberg recommends things like Skunkworks innovation groups, crowdsourcing, “Speed dating with venture capitalists and startups, innovation days, simulations and prototypes, hackathons, shark tanks and cross-functional innovation boards.
“I cannot emphasise enough he importance of digital collaboration,” Lundberg concludes. “It has to be responsive; there must be a partnership where business and IT collaborate and co-design; and there must be digital leadership that focuses on innovation.”