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What Does It Mean to Digitize a Company?

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The DNA of Digital Masters

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What Does It Mean to Digitize a Company?

  1. 1. Just How Digital Is That Company? Thomas H. Davenport Babson College/MIT/Deloitte/International Institute for Analytics Forbes/Teradata Digital Revolution Summit October 3, 2016 1 | 2016 © Thomas H. Davenport All Rights Reserved
  2. 2. 2 What Does It Mean to Digitize a Company? • Digital products and services • Digital business models and transactions • Digital relationships--employees, customers, suppliers • Digital labor—robots and automated software • Digital data put in structured form to create insight • Prioritized investments in people and platforms • Analytics and data used for internal decisions • Capabilities adopted early and with marketing flair • A well-managed change process DIGITAL CAPABILITIES DIGITAL LEADERSHIP
  3. 3. 3 Predictions from the IDC FutureScape for Worldwide Digital Transformation: • By the end of 2017, two-thirds of the CEOs of the G2000 will have digital transformation at the center of their corporate strategies • By 2017, 60% of companies with a DX strategy will deem it too critical for any one Functional area and create an independent corporate executive position to oversee the implementation • IDC Research Vice President Bob Parker: "Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets.” Digitizing Is Not Just for Unicorns!
  4. 4. The DNA of Digital Masters 4 DigitalCapability Leadership Capability CONSERVATIVESBEGINNERS FASHIONISTAS DIGITAL MASTERS Source: MIT Center for Digital Business
  5. 5. Digital Masters Outperform Their Peers 5 DigitalCapability Leadership Capability REVENUE GENERATION +6% Basket of indicators: Revenue/Employee, Fixed Asset Turnover +9% -10%-4% DigitalCapability Leadership Capability PROFITABILITY +26% +9%-24% -11% Basket of indicators: EBIT Margin, Net Profit Margin Source: MIT Center for Digital Business
  6. 6. Digital Masters in Various Industries and Geographies 6
  7. 7. Digitization at Nike 7 Social Media Digital Product Design Customized Manufacturing Nike Digital Sport DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Digital marketing  Digital product innovation/design  Digital commerce (e/m-commerce)  Digital technologies (GPS, mobile, etc.)  Customer analytics FIRM-LEVEL DIGITAL TRANSFORMATION BEYOND THE SHOE
  8. 8. Digitization at Asian Paints 8 New Transactions/ Relationships Direct Customer Knowledge Automated Manufacturing IT and Strategy Interconnected DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Selling “painted wall”  Ideas Engine for home decor  Salespeople as consultants  Relationships with contractors  Now in 17 countries  CIO is head of Strategy FIRM-LEVEL DIGITAL TRANSFORMATION AT EARLY STAGES
  9. 9. Digitization at Caesars 9 Mobile and Social Total Rewards Offers Service Measures and Analytics Analytics-Driven Culture DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Strong pull from CEO  Test-and-learn focus  Continued investment/expansion  Strong Analytics and Digital groups FIRM-LEVEL DIGITAL TRANSFORMATION ON TACTICAL DECISIONS
  10. 10. Digitization at Codelco 10 Remote telecommand devices Autonomous vehicles Integrated operations centers Automated mining focus DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Primary focus on worker safety  Predictive, optimized operations  Chief Digital Officer  Goal of no underground miners by 2017 FIRM-LEVEL DIGITAL OPERATIONS TRANSFORMATION
  11. 11. Digitization at GE 11 Sensors in Many Products New Service Models Platform for Industrial Internet Digital/Industria l Model DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Strong pull from CEO  Chief Digital Officer role  Major investment in people and tech  Built partner and venture ecosystem EXTERNAL DIGITAL TRANSFORMATION
  12. 12. Digitization at Wells Fargo 12 Multiple channel innovations w/ testing Strong customer and risk analytics Multi-faceted data infrastructure Offense/Defense Balance DIGITAL CAPABILITY LEADERSHIP CAPABILITY  Early digital governance focus  Enterprise data and analytics function  Working to connect diverse analytics and data initiatives across the business while satisfying regulators CUSTOMER- FOCUSED DIGITAL TRANSFORMATION
  13. 13. The DNA of Digital Masters 13 DigitalCapability Leadership Capability The “What” Customer experience Operational processes Business models The “How” Vision Engagement Governance Technology Leadership
  14. 14. Challenge Your Business Model Before Someone Else Does 14 Re-Inventing Industries Substituting Products & Services Crafting New Digital Businesses Reconfiguring Delivery Models Rethinking Value Propositions
  15. 15. Digital Business Models at 15 • Find and connect with a local agent • Find a Service Center • View a copy of your insurance ID card • Make a payment • Quote and buy a policy • Report vehicle damage with photos • Pay-as-You-Drive • Snapshot: Monitors actual driver behavior • New “data products” from in-car sensor data • Add Flo and Progressive to your social network • Watch new commercials
  16. 16. Building Blocks of Digital Capability 16 BUSINESS MODEL CUSTOMER EXPERIENCE OPERATIONS Digitally-modified offeringsCustomer analytics Process digitization New digital businessesTop line growth Digital labor Rapid quantitative testingIntegrated touch points Operational analytics DIGITAL PLATFORM
  17. 17. The DNA of Digital Masters 17 DigitalCapability Leadership Capability The “What” Customer experience Operational processes Business models The “How” Vision Engagement Governance Technology Leadership
  18. 18. Building Blocks of Leadership Capability 18 Create a transformative vision of the digital future Engage employees at scale to make vision a reality Link IT & business communities to build digital skills & transform technology platforms Establish strong digital governance to steer the course: coordination, sharing, momentum Vision Technology Leadership Governance Engagement
  19. 19. Governance Steers the Course 19 DESIGN GOVERNANCE TO ENCOURAGE NECESSARY SHARING AND COORDINATION SHARED DIGITAL UNIT Unit/ Region/ Brand Unit/ Region/ Brand Unit/ Region/ Brand Unit/ Region/ Brand KEY MECHANISMS • Chief Digital Officer • Digital liaisons • Shared digital units • Governance committees
  20. 20. Business and IT Functions Need to Collaborate 20 IT Business Relationship Digital Skills Digital Platform
  21. 21. We’re Just Getting Started! 21 Augmented Reality Robotics Artificial Intelligence Sharing Economies Wearables 3D Printing

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