Digital Transformation: beyond the CMO to a core competency

Profile picture for user gailmoody By Gail Moody-Byrd October 20, 2015
Summary:
Gail Moody pauses to ask the basic question: what is digital transformation? There are plenty of definitions reflecting different entry points.

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Google the term “digital transformation” and your search will return articles from a predictable assortment of consulting firms, hardware and software vendors and publications like Forbes and Tech Crunch. diginomica has its fair share of case studies covering various aspects of this fashionable expression.

Why is everyone chasing this ephemeral topic? Based on everything I’ve read, those who truly 'get it' understand that 'going digital' extends far beyond a limited call to retune one’s web and social presence. It encompasses a movement to rethink the entire customer experience and extended supply chain for purveyors of both products and services.

The definition in Wikipedia:

Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society. Digital transformation may be thought as the third stage of embracing digital technologies: digital competence → digital literacy → digital transformation. The latter stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support the traditional methods.

It’s not just the CMOs job to lead this --- it’s all core functions of the business, starting with the CEO. Last year, Brian Solis of Altimeter released “The 2014 State of Digital Transformation"At the time, respondents still saw the primary champion of this to reside in marketing.

Solis correctly states:

From the onset, we learned that digital transformation means different things to different people, and that’s okay; we’re all learning. What’s important to realize however is that investing in new digital technologies, such as social, mobile, big data, cloud, etc., doesn’t in and of itself equate to “digital transformation.” It’s about uniting individual technology efforts around a common vision supported by an updated, integrated infrastructure to effectively compete as a unified business in connected markets.

Consulting firm BCG’s video The Digital Imperative puts it succinctly:

Digital strategy and transformation must therefore be a top priority of the CEO and the senior-management team. Companies can’t just dabble at the edges by appointing a charismatic chief digital officer or CIO, adopting the latest shiny technologies, or “letting a thousand flowers bloom.”

Cap Gemini Consulting speaks to the breadth of impact on their Digital Transformation homepage:

Digital transformation has become the ultimate challenge in change management because it impacts not only industry structures and strategic positioning but all levels of an organization (every task, activity, process) and its extended supply chain. Their publication on the topic is the Digital Transformation Review, now on volume #7.

My employer SAP, recently launched The Digitalist, a content hub and quarterly magazine designed to reach the C-Suite with content focused on digital transformation. An example of their output, shared by Jeff Woods, VP of Corporate and Portfolio Marketing:

There is a piece that we did in partnership with the Economist Intelligence Unit (EIU) about the hyperconnected economy.  It's fascinating research.  Key findings were that in the e-commerce economy everyone was afraid of getting “Amazoned”.  They were afraid of startup coming in and using Internet technology to displace them from their industry.  Amazoned became a verb in the Internet economy.  What's very interesting about the EIU survey is that people believed the digital challenges there.  The overwhelming majority of executives -- I believe 66% of executives  - believe that the primary digital threat comes from incumbents, not startups. A few got caught off guard on this but going forward, I think everyone's aware of this issue which is why we see so much momentum behind and attention to the digital economy.

IBM’s top search result on digital transformation is a page sharing a study from the IBM Institute for Business Value, focused on business model innovation “where digital meets physical.”

Let’s end with the most tangible example of value creation I could find --- at GE. Digital transformation is expansive enough to include the so-called “Internet of Things”, shared in this Harvard Business Review article: Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business. By adding sensors to their products, GE

...is transforming [the] company’s business model. Now revenue from its jet engines, for example, is tied not to a simple sales transaction but to performance improvements: less downtime and more miles flown over the course of a year. Such digitally enabled, outcomes-based approaches helped GE generate more than $800 million in incremental income in 2013; the company expects that number to reach at least $1 billion in 2014 and again in 2015.

Digital transformation has been around for a couple of years, but 2015 seems to be the year where it’s no longer pigeonholed as a marketing problem to solve but a discipline ripe for application across an entire business. In 2016, I expect to see more examples like those from GE.