Leadership Commitment Helps Make Digital Transformation More Profitable

A recent study by MIT's Center for Digital Business found that to fully digitally transform a business, two key factors must work together to drive the process: an investment in technology and an investment in leadership. According to the study, companies that make the investment in both leadership and technology are 26% more profitable than their industry peers.

CEOs who view information technology as a necessary but peripheral part of running a company run a serious risk of becoming obsolete, yet this mindset remains surprisingly prevalent despite an increased imperative to change.

The power of digital transformation is clearest in permanent alterations to the customer-seller relationship. For decades, customers navigated sharply limited choices. They bought what retailers offered on shelves and catalogs and watched television on network schedules. They absorbed mass-media advertising with a fixed, uniform message. Vendors struggled to intuit what the customer wanted, through data and an indistinct blend of art and science.

“Data-driven recommendations deliver results—but only in proportion to how a business develops a feedback loop with rigorous compliance and enforcement measures.”

Now consumer interaction and buying trends are evolving at a furious pace. The 21st-century consumer expects a multi-dimensional, bi-directional relationship with her brands; relevant, timely, coordinated interactions, where the brand doesn’t forget what happened last time; and frictionless transactions.

Revenue growth for many companies will depend on their ability to understand their customers, at a personal level, predict what that customer wants and when and give the customer a frictionless way to interact that makes sense for that specific customer. The most forward-thinking business leaders understand that embracing technology and processes that further this goal means higher revenue, profits and a clear competitive edge.

Comprehensive technological adaptation refines the customer connection and surpasses even the most successful business leaders of the pre-digital era. This doesn’t mean turning company leadership over to computer systems, but instead having leadership that embraces technology and understands how to use it to compete.

For example, the CEO of yesterday discussed results generated after month end with the executive team about what went right and wrong and plans for the next month. The digitally attuned CEO operates with real-time comprehensive global information, understands what is happening as it is happening, and acts accordingly.

The bottom line is that customer management never stops for digitally-attuned companies and leaders. Data-driven recommendations deliver results—but only in proportion to how a business develops a feedback loop with rigorous compliance and enforcement measures. The CEO needs to ensure that his or her company’s analytical insights are reaching every company function affecting customers. Performance and financial returns must be constantly analyzed to continue the ongoing process of digital transformation.

These transitions aren’t easy, and CEOs today are undertaking them with different levels of success. Those that have established highly integrated teams that bring together business, finance and technology will be able to make the proper technology investments—and outperform the competition.



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