A New Leadership Model for Digital Business

Abbie Lundberg
Abbie LundbergBusiness technology analyst, writer, professional speaker & former editor in chief of CIO Magazine at Lundberg Media LLC
© 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
Copyright © 2015, Lundberg Media
Photo by Dimov Milen - Creative Commons Attribution-NonCommercial-ShareAlike License https://www.flickr.com/photos/42845805@N00 Created with Haiku Deck
Copyright © 2015, Lundberg Media
Photo by Shachenta - Creative Commons Attribution-NonCommercial License https://www.flickr.com/photos/30485374@N02 Created with Haiku Deck
Copyright © 2015, Lundberg Media
WHAT SHOULD BRIAN PROPOSE NEXT?
5
A presentation in Three Acts
The Digital Threat & the
Need for Responsive IT
The Business/IT
Partnership
The CIO as Digital
Leader
Act 1: The Digital Threat
Is digital business a threat to your company?
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
#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
#2
Commoditization, drive for cost savings
FACTOR DRIVING MARKET CHANGE
Source: The Digital Dividend, First Mover Advantage, Harvard Business Review Analytic Services, Aug. 2014
Copyright © 2015, Lundberg Media
“Digital” is a board level
issue
EMERSON CASE STUDY
DIGITAL BUSINESS
IS A BOARD ISSUE
Source: Engaging Boards on Digitization, MIT CISR, 2014
THREAT: Changing Models of Customer Engagement
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
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
28%
Commercialized internal
IT initiatives
Source: Business Transformation and the CIO Role, Harvard Business Review Analytic Services
Digital business =
top-line IT
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
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
“
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
How to be MORE RESPONSIVE
Source: The Leadership Edge in Digital Transformation, Harvard Business Review Analytic Services, Aug. 2014
Act 2: The Business/IT partnership
Digital business requires close collaboration between IT & other parts of the business
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
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
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
Working
Together
▪ Job rotations, co-location
▪ X-functional reporting
▪ Blended roles
▪ Business relationship managers
▪ Business IT strategy board
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
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)
Act 3: CIO as Digital Leader
CIOs are well positioned to lead digital transformation, but…
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
Build Awareness
• Engage digital experts
• Collect & tell external peer stories
• Take digital field trips
• Form a digital advisory board
• Set up reverse mentoring
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
Lead through Influence
Credibility Relevance
The three pillars of influence
Trust
Copyright © 2015, Lundberg Media
Photo by Dimov Milen - Creative Commons Attribution-NonCommercial-ShareAlike License https://www.flickr.com/photos/42845805@N00 Created with Haiku Deck
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
Abbie Lundberg
lundbergmedia.com
Twitter, LinkedIn, Slideshare: @abbielundberg
1 of 33

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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
  • 2. Copyright © 2015, Lundberg Media Photo by Dimov Milen - Creative Commons Attribution-NonCommercial-ShareAlike License https://www.flickr.com/photos/42845805@N00 Created with Haiku Deck
  • 3. Copyright © 2015, Lundberg Media Photo by Shachenta - Creative Commons Attribution-NonCommercial License https://www.flickr.com/photos/30485374@N02 Created with Haiku Deck
  • 4. Copyright © 2015, Lundberg Media WHAT SHOULD BRIAN PROPOSE NEXT?
  • 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
  • 10. Copyright © 2015, Lundberg Media “Digital” is a board level issue EMERSON CASE STUDY DIGITAL BUSINESS IS A BOARD ISSUE Source: Engaging Boards on Digitization, MIT CISR, 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
  • 31. Copyright © 2015, Lundberg Media Photo by Dimov Milen - Creative Commons Attribution-NonCommercial-ShareAlike License https://www.flickr.com/photos/42845805@N00 Created with Haiku Deck
  • 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

Editor's Notes

  1. Brian, CTO, luxury brand, Italy True story, but… Company under a lot of pressure to develop a high-end digital customer experience Need to keep up with their well-heeled customers’ changing expectations. Equipped with tablets and smartphones, they want a rich and integrated online, mobile and in-store shopping experience. Some of the company’s competitors are starting to deliver. Brian’s colleague, Katherine, the chief marketing officer, wants to hire an outside agency to create the new digital technology platform. Brian believes it’s better to keep the project in-house. The decision about which way to go will be made during this month’s executive team meeting in the company’s board room.
  2. The boardroom Katherine’s case Brian’s response Phillip’s skepticism Brian’s idea Katherine’s dismissal
  3. One of central dilemmas of digital business Meet the needs for sophisticated development on the one hand and amazing customer experience on the other. How will they bridge that gap? WHAT SHOULD BRIAN PROPOSE NEXT? 2-3 MINUTES DISCUSSION ……………………………………………………………………………………………. What Brian actually proposed: co-locating developers w/marketing creatives His appeal to Katherine to work together Pleased at Katherine’s positive response – she’s intrigued – teams will learn new things – create something unique Discussion of costs and logistics, Phillip’s decision Brian’s excitement tempered by Katherine’s affect. This is not going to be easy. We’ll leave Brian and his colleagues for now….
  4. 750 business & tech leaders Global but mostly NA & Europe All industries, size cos (skewing to large)
  5. 65% put this in top 3 Today’s consumers are mobile and tech-savvy. They expect to be connected, to have access to information and to be able to conduct transactions anywhere. Companies investing a lot in this
  6. 45% put this in their top 3 Consumers can access products and services from literally millions of vendors — from independent eBay sellers to main-street stalwarts. It is easier than ever before to find exactly what they want at the best possible price. This is having a commoditizing effect on a whole host of products and services and putting significant cost pressures on companies. Differentiate AND offer a competitive price
  7. Not all about retail, or B2C Digital affecting all businesses 125 year old diversified global manufacturer ~$25 billion in sales 150 countries Ed Mosner at G2i
  8. Corporate buyers transitioning to online purchases. Amazon supply Digital customer journey Research & find Decide & quote Purchase Support & service Cyber security
  9. Opportunity: new products & business models Sensors, IoT Simulation technology built into plant control systems to predict and prescribe Home HVAC monitoring to detect, decide, act and learn Only 2 direct reports – CIO & CMO - plus whatever LOB is currently in transformation
  10. Emerson is not an isolated case
  11. Companies that really focus on technology enabled business innovation higher at 40%
  12. Smart products Consumer: cars Industrial equipment: manufacturing control co. Services: real estate Cloud services Mostly IT but also healthcare
  13. On average, 47% of respondents said their organizations had missed out on new technology-enabled business opportunities because their IT department was too slow to respond. (only 27% of leaders v. 64% of laggards)
  14. On the flip side, companies with highly responsive IT departments have been able to successfully leverage new technologies (mobile, social, etc.), seize new business opportunities, and make the transition to digital business much faster than their competitors. Showing top box scores, 8-10 out of 10
  15. So what can IT leaders to be more responsive? Some of the things that came up in our in-depth interviews Simplify Infrastructure Focus our teams on innovation Leverage Partners – and make sure their partnerships are strong Exploit the cloud Enable Innovation across the entire enterprise Collaborate, Collaborate, Collaborate (segue to next slide)
  16. Stat Good or bad. Shadow IT 22% primary IT decision-makers 38% involved in IT decisions 28% decision influencers How involved are you in making information technology (IT) decisions for your area of responsibility within your organization? n=750
  17. We have always pushed IT to understand the business. Now it is the business being pushed to better understand technology
  18. Remember Brian co-locating developers with marketing creatives? X-functional reporting & blended roles Addidas Emerson AmEx BRMs Are you doing any of these things?
  19. What is your digital partnership score? What is your most important initiative to increase collaboration and partnership? ambassadors, advocates, interpreters
  20. 42% of respondents believe the CIO is the best suited member of the C-suite to lead digital transformation. That’s more than twice as many as chose the CEO (18%). Responses of general managers are less clearly defined. While CIOs still lead at 30 percent, there are also strong votes for the CEO (21 percent), LOB leader (17 percent), and COO (15 percent). There is little support for having the CMO or CFO lead digital transformation.
  21. Raise company’s digital IQ
  22. Little direct authority…
  23. WHAT SHOULD BRIAN HAVE DONE DIFFERENTLY? [discussion] He had been so focused on coming up with the best solution that he hadn’t thought through the impact of his approach. Proposed working much more closely with Katherine and her team but hadn’t discussed the idea with her before he presented it in the meeting.