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Keeping pace with digital transformation? It’s a long hard road

Barb Mosher Zinck Profile picture for user barb.mosher March 8, 2017
PWC's 10th annual Global IQ survey brings sobering news. More CEOs embrace digital transformation, but PWC finds that the "digital IQ" of companies is actually declining. Why? Barb Mosher Zinck delves into the data in search of answers.

PwC released the 10th-anniversary edition of its Global IQ Survey and good news - CEOs have finally embraced digital. To be fair, this has been happening slowly over the last ten years, but as the report shows, there continues to be an ongoing struggle that I’m not sure is even possible for many to get past.

According to PwC, digital IQ is “the measurement of an organization’s ability to harness and profit from technology.” In 2016 this number was 67%. Shift forward to 2017, and that number declines to 52%. So why is digital IQ declining?

What digital transformation means

There are a few reasons that digital transformation isn’t as easy as we’d like it to be. The biggest reason according to this study? Digital is accelerating too fast:

Enterprises aren’t so much falling behind as struggling to keep up with accelerating standards. And looking ahead, it is clear most are not ready for what comes next—and after that—as technologies continue to combine and advance, and new ways of doing business go from inception to disruption seemingly overnight.

Here’s another equally important reason: many organizations define digital wrong. Thirty-two percent defined digital as synonymous with IT; 29% defined it as “all technology innovation-related activities.”

Only 6% got it right:

Digital goes beyond technology alone to reflect a mindset that embraces constant innovation, flat decision-making and the integration of technology into all phases of the business.

Organizations need to stop thinking about digital transformation as an IT project. Digital transformation is more than simply implementing new and innovative technology; it’s about identifying how the technology impacts the business - its customers, its employees, its partners - to drive outcomes that are successful for everyone. That is not easy, and that complexity is what is driving the 52% digital IQ statistic.

The study points out that this isn’t necessarily the CEO’s fault. The CEO gets it (68%), and the CIO is there too, but there are other areas of the organization that aren’t engaged in a way that makes them understand the bigger picture and how to pull it all together.

Some might argue the CMO is there. And for some organizations, that may be true. But as we’ve seen, there’s still work to do before the CMO is truly enabled to move beyond the wall of daily marketing and campaign activities.

Keeping up with the Jones’s is hard

Step back a couple of years ago. The big technologies pushing us forward were cloud, mobile, and analytics (and we should even throw in social).  Today, these are considered foundational - necessary to have in place before an organization can dig into the new innovative stuff: IoT, AI, augmented reality, robotics and so on.

That innovative stuff is quickly becoming our new reality, so how does an organization continue to get that foundation solid (because many still aren’t), but also keep their toes in what’s racing toward, and in some case past, them?

The study found that many organizations understand the value of new technology adoption, but are taking the wrong approach to figure out how to move forward. PwC suggests that instead of relying on analysts, competitive analysis and vendors, organizations need to look at incubators and startups, university labs, open source and crowdsourcing as sources of knowledge and inspiration.

Organizations also need to create a dedicated team to explore emerging technologies keeping business needs top of mind, so there’s a real purpose to what the team is doing. These teams could establish relationships with incubators and university labs, participate in open source communities and keep an eye on what’s happening overall.

Connecting the dots between humans and technology

In the PwC study, 70% of CEOs say they focus on ways new technology affects the human experience. But like the study points out, the CEO and CIO aren’t responsible for the services and applications that support customer experience, and the goal of creating a better customer experience is down from 25% last year to 10% this year.

Those that do focus on leveraging technology to improve customer experience have more mature digital strategies and are realizing better outcomes. These organizations, the study found, have a high degree of skill in UX and human-centered design.

It’s not just the customer who tends to get sidelined in digital transformation efforts. Employees are struggling as well. Shifting towards new technologies and new ways to create better customer experiences requires skills that many organizations lack because employees are focused on running the business.

Key skills in cyber security/privacy, human-centered design/UX and business development of new technologies are lagging. Maybe even more interesting is that when these skills do exist in-house, many organizations are still outsourcing them because of costs and ease of speed. Imagine the employee who has trained in cyber security and not getting to apply those skills on the job. It makes for an unhappy workforce, but it is a reality for many.

My take

I’m a big believer in laying the proper foundation. If you don’t have that securely in place and everyone understanding how it works and how they use it, then anything you build on top has the potential to fall apart easily.

But I also recognize the need to keep up to speed with how innovative new technology is helping create better customer and employee experiences. And it’s more than keeping your finger on the pulse; organizations need to be in the mix listening to what’s happening, playing with ways to use new technology to drive better business outcomes.

That might mean a whole team or a few emerging tech evangelists. Whatever form your investigations take, don’t drop it all in the corner and check in now and again. Bring this team into your CX discussions, into your technology discussions and your business discussions.

Give them an open view into how the organization works and is moving forward and let them ask questions, lots of questions. Then when they get an idea or want to try something new - don’t make them do it in a bubble. Bring in a mixed team across the organization and let them open their minds. There’s room for naysayers, but only to expand their views. A failed idea isn’t a bad idea - it’s growth for the next idea.

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