Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
© Marko Luhtala 2017
Click to edit Master title style
Leadership in the digital economy
6 CHALLENGES FOR CEOs
June 2017
MA...
© Marko Luhtala 2017
My personal journey in digitalization
2
Early adopter
eBusiness director at Nokia, 1999–2002
Solution...
© Marko Luhtala 2017
Discussion topics
Digitalization is the fourth industrial
disruption since the 1700s
Six leadership c...
© Marko Luhtala 2017
We have the fourth major industrial
disruption since the 1700s
4
Electricity
Late 1800s
Computers
198...
© Marko Luhtala 2017
Impacting both your products
and business model
5
Product
Digital services enhancing
current products...
© Marko Luhtala 2017
As a CEO you should focus
on the end game
6
Consider digitalization as a transition to
THE ERA OF DIG...
© Marko Luhtala 2017
Don’t get caught in the transition
7
Don’t prepare a separate digital strategy – look for
digitalizat...
© Marko Luhtala 2017
A competitive edge and
digitalization go hand in hand
Challenge #1
© Marko Luhtala 2017
Companies say they don’t invest
in digitalization yet…
9
…because they have more important
priorities...
© Marko Luhtala 2017
At the same time,
winning companies…
10
…invest in digitalization because they want to gain a
competi...
© Marko Luhtala 2017
Your shareholders have a clear interest
in digitalization…
11
…because companies who
apply digital te...
© Marko Luhtala 2017
Would you know if there
was an industry disruption
around the corner?
Challenge #2
© Marko Luhtala 2017
Before setting up the digital agenda
for your company
13
Is there a risk
(or opportunity)
of a tecton...
© Marko Luhtala 2017 14
CEOs in most industries are
expecting disruption
Source: “Digital Pulse 2015”, Russell Reynolds As...
© Marko Luhtala 2017
You can disrupt the product or
the business model
15
Change the
pricing model
and earnings
logic
Elev...
© Marko Luhtala 2017
Disruptors redefine the rules and roles
in the industry
16
A new set of competitive requirements
For ...
© Marko Luhtala 2017
Will your industry attract
external disruptors?
Value of industry.
Data intensity.
Amount of old habi...
© Marko Luhtala 2017
The nature of work is changing
Challenge #3
© Marko Luhtala 2017
Machines are rapidly entering
white collar roles
19
HUS – The Hospital District of
Helsinki and Uusim...
© Marko Luhtala 2017
You will need some totally
new people and skills
20
Examples of new roles
in digital economy Digital
...
© Marko Luhtala 2017
Where is the knowledge
in your company?
21
Remembering
information
Experienced
people have the
knowle...
© Marko Luhtala 2017© Marko Luhtala 2017
The amount of data is exploding
22
of all data EVER has
been produced during
the ...
© Marko Luhtala 2017
The harder it gets for people the easier
it is for a machine
23
Learning is a core capability for all...
© Marko Luhtala 2017
A strategic question for your
management team
24
What should…
PEOPLE KNOW AND DO? MACHINES KNOW AND D...
© Marko Luhtala 2017
How to speak the same
language as your digital
specialists
Challenge #4
© Marko Luhtala 2017
Do you know how to attract the
right digital talent?
26
How would you
set the targets
and KPIs for th...
© Marko Luhtala 2017
Are you on the same page?
27
SaaS
API
UX/UI
Backend
IoT
Cloud
Machine learning
Software robots
You ne...
© Marko Luhtala 2017
Understanding your digital specialists…
28
…is mandatory for you and your
management team,
to underst...
© Marko Luhtala 2017
But don’t forget your existing people
You need to communicate a vision for your
company in the digita...
© Marko Luhtala 2017
In-house innovation
is not enough
Challenge #5
© Marko Luhtala 2017
Startups are the main source
of digital innovations
31
Corporates are turning
to startups to:
• compl...
© Marko Luhtala 2017
Winning companies have clear partner
programs for startups
32
Ingredients
of a partner
program
Commun...
© Marko Luhtala 2017
Make sure your board is ready
for the digital economy
Challenge #6
© Marko Luhtala 2017
4 common reasons why boards fail
to drive digitalization
34
Without digital skills the board has diff...
© Marko Luhtala 2017
A good acid test for the board
35
are you ready to cannibalize
your existing business to
build a new ...
© Marko Luhtala 2017
How to predict whether you
will fail or succeed?
Final note
© Marko Luhtala 2017
My opinion: Your chances depend on
your company culture
37
Is your culture fit for the digital transf...
© Marko Luhtala 2017
ADVISOR, CONSULTANT
marko.luhtala@ajantasalla.fi
+358-50-3879903
www.linkedin.com/in/marko-luhtala-07...
Upcoming SlideShare
Loading in …5
×

Leadership in the digital economy - six challenges for CEOs

699 views

Published on

Digitalization is the fourth industrial disruption since the 1700s. CEOs should consider digitalization as a transition to the era of digital economy, not a project with a completion date. Here I present six leadership challenges CEOs face in the digital economy.

Published in: Leadership & Management
  • Hello! Get Your Professional Job-Winning Resume Here - Check our website! https://vk.cc/818RFv
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Leadership in the digital economy - six challenges for CEOs

  1. 1. © Marko Luhtala 2017 Click to edit Master title style Leadership in the digital economy 6 CHALLENGES FOR CEOs June 2017 MARKO LUHTALA
  2. 2. © Marko Luhtala 2017 My personal journey in digitalization 2 Early adopter eBusiness director at Nokia, 1999–2002 Solution provider Sales director/Enterprise solutions at Nokia, 2002–2005 User of digital technology widely in commerce Director/ VP of Retail at Nokia, 2006–2010 Solution provider, SaaS-entrepreneur CEO at NearMe Services, 2010–2016 Advisor and implementer Digitalization consultant at Ajantasalla, 2016- MARKO LUHTALA © Marko Luhtala 2017
  3. 3. © Marko Luhtala 2017 Discussion topics Digitalization is the fourth industrial disruption since the 1700s Six leadership challenges in the digital economy Final note: How to predict whether you will fail or succeed?
  4. 4. © Marko Luhtala 2017 We have the fourth major industrial disruption since the 1700s 4 Electricity Late 1800s Computers 1980s Digitalization Now Steam engine Mid 1700s How was your industry before computers and electricity?
  5. 5. © Marko Luhtala 2017 Impacting both your products and business model 5 Product Digital services enhancing current products New digital products New pricing models Operating model Sales & marketing Operations People & skills Customer support Customer experience Market Who are your competitors? Who are your customers? Who belongs to your value network?
  6. 6. © Marko Luhtala 2017 As a CEO you should focus on the end game 6 Consider digitalization as a transition to THE ERA OF DIGITAL ECONOMY not a project with a completion date THE ERA OF DIGITAL ECONOMY IMPORTANT Understanding how to get there MORE IMPORTANT! Understanding how to lead your business when you are there
  7. 7. © Marko Luhtala 2017 Don’t get caught in the transition 7 Don’t prepare a separate digital strategy – look for digitalization opportunities in all strategies If you appoint a Chief Digital Officer, make sure his role is to make digitalization become business as usual – and then terminate the role Resist the temptation to focus on shiny IT solutions before concluding what you and your customers need STRATEGY? CDO? IT?
  8. 8. © Marko Luhtala 2017 A competitive edge and digitalization go hand in hand Challenge #1
  9. 9. © Marko Luhtala 2017 Companies say they don’t invest in digitalization yet… 9 …because they have more important priorities in their strategy, such as: scalable sales and marketing models… new business models… exceptional customer service… offering innovation… internal productivity… data as a source of strategic value creation… €
  10. 10. © Marko Luhtala 2017 At the same time, winning companies… 10 …invest in digitalization because they want to gain a competitive edge in those particular areas Because digitalization delivers: • Higher impact • Faster speed • Better cost efficiency in strategy implementation
  11. 11. © Marko Luhtala 2017 Your shareholders have a clear interest in digitalization… 11 …because companies who apply digital technologies typically: 1€ one-time revenue equals 1€ in valuation 1€ recurring revenue equals 3–4€ in valuation Example: software business Innovative companies generate total shareholder return premiums of 7.5 percent over their industry peers Source: BCG GROW FASTER BUILD A UNIQUE ADVANTAGE COMMAND HIGHER VALUATION
  12. 12. © Marko Luhtala 2017 Would you know if there was an industry disruption around the corner? Challenge #2
  13. 13. © Marko Luhtala 2017 Before setting up the digital agenda for your company 13 Is there a risk (or opportunity) of a tectonic shift in your industry fueled by digitalization? ASK YOURSELF © Marko Luhtala 2017
  14. 14. © Marko Luhtala 2017 14 CEOs in most industries are expecting disruption Source: “Digital Pulse 2015”, Russell Reynolds Associates
  15. 15. © Marko Luhtala 2017 You can disrupt the product or the business model 15 Change the pricing model and earnings logic Elevate customer service and experience to a new level Change the core offering features from physical to digital Build a de facto platform or “operating system” for the industry Bypass middlemen Typical ways of creating a digital disruption
  16. 16. © Marko Luhtala 2017 Disruptors redefine the rules and roles in the industry 16 A new set of competitive requirements For example: 24/7 availability, personalized customer service, predictive maintenance, excellent user experience Change in what customers are paying for For example: usage instead of ownership, benefits instead of work done, data instead of experts, software instead of hardware A new ecosystem and roles in it For example: OEM roles, access to ecosystem only through disruptor’s platform, licencing programs, developer networks
  17. 17. © Marko Luhtala 2017 Will your industry attract external disruptors? Value of industry. Data intensity. Amount of old habits. 17 If high, the chance of external disruptors is also high What would Google do in your business? ASK YOURSELF
  18. 18. © Marko Luhtala 2017 The nature of work is changing Challenge #3
  19. 19. © Marko Luhtala 2017 Machines are rapidly entering white collar roles 19 HUS – The Hospital District of Helsinki and Uusimaa – is using artificial intelligence to support specialist medical care diagnostics and treatment decisions. DLA Piper in the first law firm in Finland to adopt artificial intelligence. AI will first reduce routine tasks from lawyers. Software robots, digital automation and AI will reduce at least half of our routine tasks, estimates Palkeet – Finnish government shared services center for finance and HR. Several studies show: Machines are better than humans at choosing the best employees AI
  20. 20. © Marko Luhtala 2017 You will need some totally new people and skills 20 Examples of new roles in digital economy Digital marketer SW architect Data scientist UX specialist SOME expert
  21. 21. © Marko Luhtala 2017 Where is the knowledge in your company? 21 Remembering information Experienced people have the knowledge Finding information Knowledge is in people AND data PAST TODAY
  22. 22. © Marko Luhtala 2017© Marko Luhtala 2017 The amount of data is exploding 22 of all data EVER has been produced during the last two years 90% Data sources for knowledge building In-house business and product data Industry bodies and publications Public government databases 3rd parties consolidating and selling data Open source data e.g. maps, traffic, weather Online industry and competitor data Public research documents and thesis
  23. 23. © Marko Luhtala 2017 The harder it gets for people the easier it is for a machine 23 Learning is a core capability for all humans. MACHINE LEARNING is by far the hottest trend in artificial intelligence. Hint: Start with use cases and “big business questions”, not technology Lots of data Complex dependencies Figures, images, text Answers Predictions Correlations Recommendations
  24. 24. © Marko Luhtala 2017 A strategic question for your management team 24 What should… PEOPLE KNOW AND DO? MACHINES KNOW AND DO?
  25. 25. © Marko Luhtala 2017 How to speak the same language as your digital specialists Challenge #4
  26. 26. © Marko Luhtala 2017 Do you know how to attract the right digital talent? 26 How would you set the targets and KPIs for these roles? Can you spot the difference between a super candidate and a smooth talker? Where would you look for these talents? Do you know what makes them tick and why they would want to work for you? Can you list the key tasks for a data scientist or SOME expert? ?
  27. 27. © Marko Luhtala 2017 Are you on the same page? 27 SaaS API UX/UI Backend IoT Cloud Machine learning Software robots You need to speak the same language as the people who are shaping your future It means a lot of new terms and concepts in a CEO’s vocabulary
  28. 28. © Marko Luhtala 2017 Understanding your digital specialists… 28 …is mandatory for you and your management team, to understand the future core assets of your company
  29. 29. © Marko Luhtala 2017 But don’t forget your existing people You need to communicate a vision for your company in the digital economy… …in a way that EVERY team member finds clear and personally compelling. Otherwise you will soon have an “us and them” mentality. 29
  30. 30. © Marko Luhtala 2017 In-house innovation is not enough Challenge #5
  31. 31. © Marko Luhtala 2017 Startups are the main source of digital innovations 31 Corporates are turning to startups to: • complement their R&D • leverage digital talents they are not able to recruit • accelerate learning speed HOWEVER There are hundreds of potential startups 80% of them fail at the early stages Startups have very different culture, clock speed and way of working compared to corporates
  32. 32. © Marko Luhtala 2017 Winning companies have clear partner programs for startups 32 Ingredients of a partner program Communicate clearly which business problems you want the potential startups to focus on. Provide a clear channel and process for startups to approach you with their proposals and solutions. Clarify the rules for co-operation including commercial terms. Be fair: startups don’t have in-house lawyers to read the small print. Partnering must be win-win. Measure and nurture the commercial value of your ecosystem systematically. An effective partner program lets startups be startups while you can operate like a corporate.
  33. 33. © Marko Luhtala 2017 Make sure your board is ready for the digital economy Challenge #6
  34. 34. © Marko Luhtala 2017 4 common reasons why boards fail to drive digitalization 34 Without digital skills the board has difficulties in crystallizing the impact and direction of the change. Compelling vision, roadmap, and implementation are left vague. Running existing business and building a new one in parallel is challenging especially if it involves major changes in the business model. Discussion in digitalization jumps too quickly to technology and IT. This is not helped by dozens of solution providers bombarding you every week. The board and top management have their schedules filled to the minute running the existing business. There is not enough time to focus properly on the digital transformation. DIGITAL SKILLS EXISTING BUSINESS FOCUS ON IT AVAILABILITY OF TIME
  35. 35. © Marko Luhtala 2017 A good acid test for the board 35 are you ready to cannibalize your existing business to build a new one? When the time comes
  36. 36. © Marko Luhtala 2017 How to predict whether you will fail or succeed? Final note
  37. 37. © Marko Luhtala 2017 My opinion: Your chances depend on your company culture 37 Is your culture fit for the digital transformation? HIGH FIT You invest in R&D and new competences at least as much as industry peers Trial and error is accepted for new initiatives in your company Teams are empowered to innovate, new ideas are welcomed by top management Decisions are made based on information New recruits are systematically searched from other industries LOW FIT You maximize short term profits and cash flow by limiting investments You avoid risk taking and rather copy tested industry practices Strategy creation and decision making is top down Decisions are made based on intuition Industry experience is highly-weighted for employee selection
  38. 38. © Marko Luhtala 2017 ADVISOR, CONSULTANT marko.luhtala@ajantasalla.fi +358-50-3879903 www.linkedin.com/in/marko-luhtala-07b02321 MARKO LUHTALA I HELP COMPANIES WIN IN THE DIGITAL ECONOMY

×