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How digital transformation is reshaping business and society

Kenny MacIver — November 2016

Perspectives on the digital revolution from thyssenkrupp CEO Patrick Bass, Aviva CIO Monique Shivanandan, Fujitsu CTO Dr Joseph Reger and INSEAD’s Herminia Ibarra.

2016 was the year when digital transformation transcended the IT organization and moved to the top of the management board agenda.  That is evident in the nature of the business stakeholders who now ‘own’ digital transformation initiatives — but who, nevertheless, look to their CIOs and IT teams for inspiration, guidance and, ultimately, execution.

As Herminia Ibarra, professor of leadership and organizational behaviour at INSEAD Business School, argues, every organization today needs to have a clearly thought-out digital transformation strategy. “There isn’t a single organization that I know today that isn’t hugely concerned with digital and its impact on its business — what to do about it, how to strategize round it,” she says in our Big Thinkers of 2016 video compilation.

Even as digital transformation has become a hot topic for many management boards, misconceptions about it persist, maintains Dr Joseph Reger, CTO for Fujitsu in the company’s EMEIA region. “Some still think that digital transformation is about technology. And while it often starts as a technology project or through the introduction of some new technologies, digital transformation is really about business transformation.”

And that transformation can be profound. When done well, he observes, it often results in a dramatic shift in business direction. “It can mean changing the business model, the product portfolio, the go-to-market strategy — essentially every aspect of the business. And that can demand the development of entirely new skillsets and entirely new company structures and ways of operating,” he says.

Fuelling that business change is a powerful combination of technologies, says Dr Reger, principally cloud computing, big data analytics, machine-learning and the Internet of Things.
Inspiring business model change

That sense of technologically inspired revolution is evident at companies like elevator maker thyssenkrupp. The CEO for North America at the €43 billion ($48bn) German industrial group, Patrick Bass, is leading an IoT- and big data-powered preventative maintenance program that is dramatically improving service for around a million of the elevators it operates worldwide.

He believes that the transformation underway differs from previous eras when innovation was about reinventing products. “Now we’re seeing it in regards to business model change,” he says.

In the case of its elevator business, thyssenkrupp quickly came to the conclusion that the intelligence resulting from IoT-fed data models could, if exploited by a competitor or a start-up, disrupt the business. “We either had to respond by preparing to react [as new threats emerged] or by being on the front end of this. And we decided that we wanted to drive it and be willing to take the risk of that journey.”

“Every business is now a technology company — whether they realize it or not.”

While such initiatives are being led from the top, the CIO has a vital role to play in that journey. The dynamic set of business change that is underway, says INSEAD’s Ibarra, “presents a huge opportunity for IT leaders, provided they’re able to frame what they have to offer, not in terms of IT but in terms of business strategy.”

And that’s the key hurdle, she maintains. In order for CIOs to propel their way into wider business leadership roles at this watershed time, they must “connect the dots, between what they know technologically and the opportunity that exists for their organization in its business environment.”

That is exactly what Monique Shivanandan is doing at UK-headquartered global insurance company Aviva. “IT is responsible for changing the way the business is going, changing the products that the business offers, changing the culture of your organization, changing the way it interacts with customers and the brand that we want to present to them,” she says. “Every business is [now] a technology company — whether they realize it or not.”
Digitally driven processes

The opportunities may be crystallizing, but CXOs need to appreciate that this is an undertaking that requires substantial commitment and well-judged application, Bass emphasizes. “You are talking about a double-digit million [dollar] investment for this type of project on a global scale,” he says, and that means translating intangible discussions about business model disruption into a solid business case for an application that will enhance business value considerably.

“You can get the board to pay attention and get a sense of urgency, but you still need to have them buy in to the business model change, to the vision, to the concrete return on investment,” he says.

And that means spelling out that digital transformation requires business model change. “It’s a transformation not just about digital data, it’s changing everything from a process standpoint to be focused on a digital capability,” says Bass.

• Illustration: Getty/Jason Fawcett

First published
November 2016
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About: Big Thinkers of 2016
Big Thinkers of 2016 Insights from technology and business leaders Monique Shivanandan, Patrick Bass, Dr Joseph Reger, Thierry Bedos and Steffen Krotsch, plus business school professors, authors and thought leaders Don Tapscott, Carlo Ratti, Linda Hill and Herminia Ibarra.

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