DL2C Conference ‘Leading Digital’ with George Westerman, MIT Sloan
Turning Technology Into Business Transformation
For this first episode of DL2C 2020, INNOCOM invited George Westerman, a research scientist with the MIT Sloan Initiative on the digital economy. Professor Westerman’s research and teaching focus on digital technology leadership and innovation. An award-winning author of three books and dozens of other contributions, he helps senior executives drive new competitive advantage through technology.
In summary, this Conference offered us various models that can help your digital transformation. To win in the digital age you must transform the way you work and have digital become one of the tools enabling you.
Framing, focusing, engaging and sustaining are key. And leading with vision and governance requires leadership capabilities, whereas projects and platforms require digital capabilities.
Culture-last but not least- requires both. Working with all these elements is essential to win.
In his keynote Professor Westerman focused on sharing his observations and recommendations for the next imminent phase of digital transformation, which will be driven by the convergence of mobility, analytics, social media, cloud computing, and embedded devices. He made it clear that everything that’s happened so far seems like a prelude. Until now, changes in the digital realm have focused on high tech and media companies – less than 10% of the business economy. Through his most recent book, “Leading Digital: Turning Technology Into Business Transformation,” he offers the blueprint for the rest of us.
Professor Westerman posed that the real value doesn’t come from technology but the way factories are built including the processes around it. Although start-ups are not hindered by legacy allowing them to try out new things that disrupt the way incumbents run their businesses, large corporations have the scale and can respond effectively provided they want to change. But because of the speed with which the digitalization is happening, large organisations struggle to respond. It’s not digital that is the problem, it’s the transformation.
2×2 framework of digital and leadership capabilities
A simple 2×2 framework of digital and leadership capabilities helps understanding where you are and where you want to be, alongside with a set of 5 levers that can drive digital transformation.
- Vision: First the top of the company should create a vision. A clear, concise and compelling transformative picture of why change is needed, where you want to go and how your company (and your customers) will benefit from this is imperative.
- Project: Next you should identify digital opportunities and launch projects, experiments and foundational investments, that will help to get there. This affects everything, including the way we deal with customers, how we run operations, our business models, etc.
- Platform: This is how you build your digital capability. How you can layer your systems from spaghetti to lasagna, using platforms that build upon each other. A partnership between the business and IT or the ones in charge of digital transformation is crucial here.
- Governance: Who is in charge of digitalisation? How to manage sharing and coordination, where does digital innovation happen?
- Culture: How do you create a culture of wanting to do more? Keep asking yourself: “What else can we tackle?”
The wheel allowed participants to self-assess their strengths and weaknesses. It turns out most of the participants were strong at framing the digital challenge and engaging the workforce, but still had some work to do in gaining focus and sustaining the transformation.
The breakouts were about discussing these models and understanding each other’s strengths and weaknesses and practices.
One group said awareness was there but that most digital initiatives were focused on the customer, driven by marketing. Expanding the scope to the broader organisation, however, is a must.
Another group said they engaged their teams through roadshows, explaining the new direction and initiatives that were being launched. Having clarity on the problem they were trying to solve and showing the way forward, allowed to shift the culture and become more agile. It’s a combination of talking and doing.
A third group spoke about how it started with a vision but also thought about making it sustainable. Ecosystems are crucial for this. Involving start-ups avoids having to do everything yourself. And last but not least HR has to be involved in digitalisation, and can even have a leading role in the transformation. The question from this team was how one can calculate an innovation budget that is truly allocated to innovation. Professor Westerman explained the McKenzie model of 3 horizons where you focus your incremental innovation on the near term horizon (1) and your adjacencies on the midterm horizon (2). The first typically has a straightforward business case, the second may have a business case but involves more risk. The last horizon is the long term horizon (3) which typically has no business case. That was also the challenge of another group. How to measure success.
Another group had questions on building ecosystems, and how to involve them. Professor Westerman stated that partnerships are key but also warned for not overpaying start-ups.