As an organization undertakes digital transformation, opportunities arise to rethink business models, operations, and relationships with customers and ecosystems. It’s a complex dynamic with many moving parts and pieces.
By taking advantage of these opportunities, an organization can change how it does business today. Innovation is associated closely with digital transformation precisely because of the great benefits that change can bring.
The innovation of digital transformation relies on technology coupled with rethinking the company’s relationship to customers. Technology and platforms enable new capabilities, for example, the ability to gather data at scale and use it to personalize interactions with customers.
At the same time, adopting a customer-first mindset is the engine behind innovation and rethinking what’s possible. The forward motion of transformation lies in the realization that we, as a company, can and must evolve to face new customer expectations and competitive shifts in the market. The journey combines technology with culture shift under the leadership of mindset oriented to change and innovation.
With all this, no wonder digital transformation is one of the most exciting and fascinating areas of business activity today.
Mike Sutcliff, Group CEO of Accenture Digital, is one of the most accomplished digital leaders in the world. Accenture Digital employs 41,000 people, has revenue over $9 billion, and grew 40 percent last year. It’s truly a digital transformation behemoth.
During episode 212 of the CXOTALK series of discussions with innovators, I explore these topics in an in-depth conversation with Mike Sutcliff. The video, which is embedded above, offers a detailed course on digital transformation, including:
- How to start the digital transformation journey
- Key components of transformation
- Role of IT and the CIO
- Relationships between the CIO and the Chief Digital Officer
- What happens to marketing and the CMO
- How digital transformation changes the Chief Financial Officer role
- Using data science to create personalized experiences for customers
Here is an edited summary of a few key points:
How do you start a digital transformation initiative with your clients?
We traditionally start with the digital customer channel and market question, asking how their customers are behaving, how digital tools and techniques can enable them, whether there are new digital markets they need to participate in, or whether the digital channels need to be integrated differently into their multichannel experience.
They start to imagine a different capability around how they personalize and interact with customers, and then they start to dive into the experiences, thinking creatively about what’s possible in the future and how they can serve customers. Once they’ve imagined that, they come up with these fantastic ideas of what the next generation of an experience might look like.
They may find the existing operating model is not going to allow them to deliver that at scale and efficiently. So, they have to ask questions like, “How are we going to operate the company? What are the basic business processes, the organizations, the technical architectures, how are we going to take advantage of other people’s platforms in addition to the ones that we own internally?”
When they’ve gotten those questions on the table then we know they’re ready for a digital transformation that can work at scale and happen at pace.
What is a digital organization?
It’s different by industry, but there are indicators that tell us people are thinking the right way about embedding digital in their organization.
First, they think fairly expansively about digital. They don’t create a digital sub-unit and think of it as something that’s on the side, kind of an experiment over in the corner; they think about digital as something that’s going to be pervasive in the business.
Second, they stop thinking about their business as a black box that they’re going to design and operate as an independent entity. They start thinking about collaboration with the ecosystem, the platform economy, how they’re going to integrate technologies with others, etc. When they think in that manner, they see opportunities to create leverage in their business that hasn’t existed before.
It’s their openness to a more creative and thoughtful process about how they’re going to create value for their clients with the operating models, tools, and techniques needed to get there.
What is the role of IT and the CIO?
Most of the IT organizations that we speak with are very conscious that they must move past traditional systems of control into the new world of systems of engagement. Working with the marketing organization, they’re focused on customer engagement, creating and delivering different experiences. So, they’re part of the conversation.
But, in many cases, they don’t have the skills, assets, capabilities, or funding to do everything that the business wants to accomplish. So, internal IT organizations are pivoting to this different world, learning new architectures, and building new capabilities internally.
But you can’t create better experiences, connect with customers, and deliver the experience that you’ve promised through the marketing organization without incredibly strong IT. It’s no longer a luxury. IT is a core requirement not just to run the business, but to deliver the experiences that customers are looking for.
And so, the CIO is not just at the table, but are driving the conversation regarding what they can contribute. The difference is: they’re now at the table with a lot more people who are all dependent on them to help them get there very quickly. So, it’s a bigger conversation, and the CIO is critical to getting it right.
We also see many cases where a Chief Marketing Officer, or a Business Unit Executive, or a Chief Digital Officer says, “Maybe you don’t need to own the technology. Maybe I can rent it. Maybe I can subscribe to a service that exists in the ecosystem and mesh it with what we had internally. We see a lot more willingness to subscribe to services and to mix and match from the technology ecosystem.
We think that’s healthy. We think the mix-and-match approach, and the experimentation that comes with it, is allowing clients to move faster. Then, if they decide that it’s strategically important to own something they can build internally, but they’ve accomplished speed-to-market without spending the budget needed to do it from scratch.
What is the relationship between CIO and Chief Digital Officer?
We’ve seen three types of Chief Digital Officers.
In many cases, the Chief Digital Officer comes from a marketing background, and they’re focused on the digital channel and digital experience. In many cases, they’re more externally-focused and more willing to use external services and move independently from what’s happening in the CIO organization. But over time, those usually come together, because you can’t do much for the customer without access to all the customer information, all the product information, pricing information that exists in your legacy environments.
The second kind of Chief Digital Officer that we see comes from the IT world. They grew up in IT, and they’re trying to learn artificial reality, or artificial intelligence, or blockchain, or one of the emerging technology sets, and figure out how that applies to the business.
Those are all rapidly moving spaces, so Chief Digital Officers focused on the technology side of the equation usually work closely with the CIO.
They’re trying to figure out how to manage the two-speed IT question. We’ve still got to manage the legacy environment, create predictable results, manage the budgets. But we also need to experiment and be beyond the leading edge, if not the bleeding edge, of some of these technologies, to serve the needs of the business.
And then the third kind of Chief Digital Officer is business people focused on creating a brand new commercial model or disrupting an industry value chain, fundamentally changing the way business is going to execute.
That third type of Chief Digital Officer usually relies on the CIO to answer the question, “What’s possible? Can you do this?”
All three of those types of Chief Digital Officers, over time, become more and more dependent on a very productive, symbiotic relationship with the CIO to get their jobs right.
See the list of upcoming CXOTALK episodes and learn from the world’s top innovators.
(Cross-posted @ ZDNet | Beyond IT Failure)