In fact, the Boston Consulting Group reports that many CEOs “just dabble at the edges by appointing a charismatic chief digital officer or CIO, adapting the latest shiny technologies or ‘letting a thousand flowers bloom’” in digital innovations and seeing which ones may flourish as significant initiatives. Instead, “the digital imperative” calls for “more fundamental action,” BCG said. The firm recommends 5 broad approaches.
- Prototype your strategy. Accelerate the pace at which the company tests, refines and prototypes products and strategies, and bring customers into the mix. This requires mimicking the “agile” methods of software pioneers in “learning by doing, rapidly and frequently delivering working products inspired by real consumer needs, developing innovative delivery methods and value propositions, and adapting to changing requirements.
- Disrupt your business before others do. Business leaders should seek to turn their businesses upside down before digital attackers do. “Incumbents should be more disruptive in their approach and not leave the playing field open” to pesky startups out to reinvent entire industries by addressing needs in completely new ways. “Large companies hold a lot of cards – including resources, assets, relationships and data—that smaller competitors frequently do not have enough of” but must use them better to their advantage in challenging current business models and assumptions.
- Digitize the core business. CEOs must “fundamentally transform the company’s business to ensure leanness, agility and lower cost” using digital capabilities, not just roll out new IT projects. Think “end to end” about where digital efforts can produce a step change in performance and value for customers. This should include not only marketing but also operations and the back office.
- Create value from data. Unleashing “big data” from internal and external sources generates 12% higher revenues than when companies don’t experiment with big data, the consulting firm found. And such companies are three times more likely than weak innovators to “mine big data for new-project ideas and to actively target innovation toward digital design, mobile products and capabilities, speed of adopting new technologies, and big-data analytics,” the group said.
- Position your business in the broader ecosystem. This means companies must secure their place in an increasingly disruptive digital ecosystem that is revolutionizing nearly every industry, by working with a network of companies, individual contributors, institutions and customers “that interact to create mutual value.” Such environments also happen to be where digital talent thrives best.
The digital imperative needn’t be a challenge to CEOs. Following these five guidelines for navigating digital transformation can go a long way toward helping you and your companies come out flourishing on the other side.