A New Leadership Model for Digital Business

1. © 2015 Lundberg Media A New Leadership Model for Digital Business Abbie Lundberg President, Lundberg Media Contributing Editor, Harvard Business Review Analytic Services Former Editor in Chief, CIO magazine

5. 5 A presentation in Three Acts The Digital Threat & the Need for Responsive IT The Business/IT Partnership The CIO as Digital Leader

6. Act 1: The Digital Threat Is digital business a threat to your company?

7. 7 75%Our company’s survival depends on our ability to exploit IT Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014 n=750

8. 8 #1 Changing customer behavior and expectations FACTOR DRIVING MARKET CHANGE Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014

9. 9 #2 Commoditization, drive for cost savings FACTOR DRIVING MARKET CHANGE Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014

11. THREAT: Changing Models of Customer Engagement

12. OPPORTUNITY: Changing Business Models In the 21st century, we will differentiate our company and provide value to our customers and shareholders through trading on information. Charlie Peters, Sr. Executive Vice President Emerson “ Source: Engaging Boards on Digitization, MIT CISR, 2014

13. 13 38% The confluence of new technologies has significantly changed our business model/s* Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014 “ *Scoring 8-10 on a 10-point scale n=672

14. 14 28% Commercialized internal IT initiatives Source: Business Transformation and the CIO Role, Harvard Business Review Analytic Services Digital business = top-line IT

15. 15 28% 29% 37% 66% Redefined product value chain as service to others Make analytics capability available for a fee Offer internally developed capability as cloud service Make products smarter & sell info/services around them What’s being commercialized Q: What types of IT initiatives has your company commercialized? Source: Business Transformation and the CIO Role, Harvard Business Review Analytic Services

16. 16 47% We’ve missed business opportunities because IT was too slow to respond Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014 “

17. 48% Followers 20% Leaders 32% Laggards 68% 45% 33% Customer Engagement 64% 45% 25% Employee Work Processes 62% 36% 29% Product Offerings 62% 37% 24% Business Models 59% 40% 22% Core Business Operations & Processes To what extent is the confluence of new technologies changing the following in your organization? IT Responsiveness = Digital Opportunity Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014

18. How to be MORE RESPONSIVE Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014

19. Act 2: The Business/IT partnership Digital business requires close collaboration between IT & other parts of the business

20. 60% directly involved in I.T. decision making Only 27% work in I.T. function Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014

21. 21 90%Collaboration is critical to exploit I.T. for business advantage Digital business is a team sport Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014

22. Changing Roles & Relationships The lines have blurred. IT is extending into marketing and engineering, and they are extending into areas traditionally owned by IT. Kathy McElligott, CIO Emerson Electric Source: Engaging Boards on Digitization, MIT CISR, 2014 “

23. 23 Working Together ▪ Job rotations, co-location ▪ X-functional reporting ▪ Blended roles ▪ Business relationship managers ▪ Business IT strategy board

24. 24 Emerson’s Business IT Strategy Board  Created by COO, CIO, head of strategy  25 leaders meet 4x/year  De facto governance body  Business strategy, with deep dives into specific topics  Ensures alignment, ability to adjust

25. 25 Digital Partnership Assessment To what extent do you agree with the following: 1. Business and IT leaders at our company trust and respect each other 2. Roles and responsibilities for digital transformation are clearly defined 3. We use a common vocabulary when we talk about digital business 4. We have a digital strategy board made up of senior company leaders 5. We “embed” IT staff in the business (e.g., business relationship managers) 6. The CIO and CMO collaborate on an ongoing basis around digital customer understanding and engagement 7. We employ a coaching model to help business partners gain digital acumen Add and double (out of = 100) Score each question on a scale of 0 (low) to 7 (high)

26. Act 3: CIO as Digital Leader CIOs are well positioned to lead digital transformation, but…

27. 27 0% 3% 3% 3% 8% 9% 12% 18% 42% 0% 2% 1% 2% 4% 8% 6% 12% 64% 0% 4% 4% 3% 15% 6% 17% 21% 30% CHRO CFO CMO Other COO CDO LOB leader CEO CIO All IT respondents Gen Mgmt respondents Who do you believe is best suited to lead digital transformation at your organization? n=750 CIOs Should Lead Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014

28. 28 Build Awareness • Engage digital experts • Collect & tell external peer stories • Take digital field trips • Form a digital advisory board • Set up reverse mentoring

29. 29 • Skunkworks innovation group • Crowdsourcing • “Speed dating” with VCs, startups • Innovation days • Hackathons • Simulations and prototypes • Cross-functional innovation board • Shark tanks Foster Innovation

30. 30 Lead through Influence Credibility Relevance The three pillars of influence Trust

32. 32 What Digital Requires of You Responsive IT Business/IT Partnerships CIO Leadership In summary… Simplify, automate, offload Connect at many levels Focus on innovation Summary

33. Abbie Lundberg lundbergmedia.com Twitter, LinkedIn, Slideshare: @abbielundberg