I spoke to George Westerman, who is a Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy. His research and teaching focus on digital technology leadership and innovation. George has written numerous contributions for publications ranging from Sloan Management Review to The Wall Street Journal. He is the co-author of The Real Business of IT, IT Risk and Leading Digital. In the following brief interview, Westerman talks about how companies can create a digital vision, use technologies to transform their operations, and more.
Dan Schawbel: How do companies create a digital vision?
George Westerman: A digital vision is essential because companies, and employees in a company, don’t always know how the future compares to what they’re doing now. If you don’t put a vision out there, they’ll assume that the way they’ve been working is the way that the future looks and that can be the wrong answer.
So how do you create a vision? You create a compelling picture of how the organization will be different in the future. Then you help people understand how they fit into that vision, and how they’re going to know they’re making the right progress. So you want to talk about where you’re going and the outcome, and what you’ll look like when you’re there. You want to give them some ways of measuring how they’re making progress.
Nike executives set a new vision that they’re not just going to make things to wear; they’re going to become part of your life. It’s a nice, strong vision because it helps people who have been making clothes and shoes understand that Nike’s going to be doing more than that in the future. Another good vision is at P&G, where the former CEO Bob McDonald said they’re going to be digital end-to-end, from R&D through the way they link manufacturing to real time sales data. That means having all the information you need available when you need it, in the right way. It also means being much more efficient than you’ve ever been before. Another good one is Boeing. Boeing doesn’t want to make airplanes anymore, they want to be the center of a digital airline and that’s not only the airplanes themselves, but also all the services and all the information that’s going to flow around to make United or American or the other airlines work really well.
Dan Schawbel: How are organizations using emerging technologies to digitally transform their operations and re-imagine their business processes?
George Westerman: The power of digital technology is that it not only makes you more efficient, it can also allow you to be something completely different from what you were before. Using social, mobile, and analytics can help free you from some of the constraints of the past, constraints like having to live with paper, constraints like having to all be in the room at the same time.
Asian Paints, for example, re-thought of itself from being thirteen regions in India to being one unified company in India. That opened up many new opportunities. Managers could use data to understand how their products were and weren’t working. They found an opportunity to get into services, so they supply painted walls rather than just selling paint. Once they were into services, they could then expand into home renovations. Now Asian Paints has grown to be a global provider, not just inside India. It took re-thinking what the company was about because the technology was there and then starting to use those technologies, to transform the way the company worked.
Dan Schawbel: What steps should your digital transformation playbook contain?
George Westerman: A key point about getting value from technology is being able to drive the transformation that the technology enables. If you focus only on the technology the value’s not going to happen. You need to create that vision but then you also need to govern the change to make sure everybody’s moving in the right direction, that you’re investing in the right ways. Governance is about creating the synergies, about creating the coordination, so you can move forward in an efficient and a powerful way.
Digital leaders can learn an awful lot from the way great IT leaders govern technology investments. Now if your IT governance is a mess, you don’t want to build on it. But if your IT governance is working pretty well, then you can apply a lot of the lessons there to making digital governance work well.
Dan Schawbel: What are three things every technologist should do to ensure successful digital transformation within their organizations?
George Westerman: Always remember that it’s not the technology, it’s the transformation. You need to find the ways to build the leadership capabilities that will drive change in the organization. That means strong vision. That means engaging people in the vision and that means driving governance to make sure people are moving in the right directions and you’re investing in the right ways. The Digital Masters that we’ve talked about, they don’t think of digital as a technology challenge. They think of it as a transformation opportunity. They lead it very strongly from the top down. Every technologist needs to figure out how you can play a role in envisioning and driving that change.
Dan Schawbel: Which workflows and processes are most profoundly affected by digital transformation currently? What areas do you think will be most profoundly affected in the future?
George Westerman: Technology has traditionally been about automating processes, and that’s happened a lot over the last couple of decades. Now, however, automation is moving from basically fixing paper processes to doing other things. Big Data now allows insights that were never available before, that we had to do on intuition before. In addition, robotics are getting much more powerful than they ever were before, and these new opportunities mean that we need to think carefully about any process we’ve got in the company. So where it used to be back-office automation, finance, those kinds of things were the focal processes for automation, now we’re seeing it in marketing, we’re seeing it in product development, we’re seeing it in customer service, and, and many other places. As technology gets better and better, even more more opportunities open up.
One other thing to think about there is it’s not only processes that are changing, it’s business models that are changing. So, if you think about what Progressive is able to do with selling insurance based on new information from its Snapshot box, and if you think about what many pharma companies and medical insurance companies are able to do with the big data about drug use and health outcomes, or if you think about the way that media companies are selling differently now through social media, it’s the business models changing, not just the processes. If you don’t look at how your business models will change, somebody else is going to find a way to change that model.
Dan Schawbel: You said that digital transformation needs to be led through strong top-down leadership, but we have seen the bottoms up approach work through “citizen development” as well, as it promotes technology adoption and developing solutions that perfectly fit the business need. Do different situations call for different approaches to developing applications to support your organization’s digital transformation — I.e., citizen development (bottom-up) vs. 100% IT driven (top-down)?
George Westerman: There’s a lot of talk out there about bottom-up development. For every story of a radically new product developed that way, there are dozens of stories of failure. That’s a tough recipe for a company that’s going to spend millions on a transformation. I believe deeply in bottom-up innovation and ideation, but transformation needs more driving from the top.
In studying digital in hundreds of large companies, we found no examples of successful digital transformation happening from the bottom up. They were all led very strongly top down. That doesn’t mean that the leader defines every detail or that the leader comes up with the original idea. What it means is the leader, after talking with many people, sets up a vision and a governance process, and engagement to get people going. Then the rest of the organization can start to fill in that vision with what they know. If you can get the top down vision and governance right, and engage the edges, then the edges can to start to fill in the vision from there.
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