Avoiding the ‘Big Bang’ in digital transformation

(Editor’s note: Peter Weill, senior research scientist and chair of the Center for Information Systems Research (CISR) at the MIT Sloan School of Management, is an award-winning author who focuses on the role, value and governance of digitization in enterprises. Weill, who co-authored What’s Your Digital Business Model? with Stephanie L. Woerner, recently discussed enterprise digital transformation themes with ISACA Now after addressing chapter leaders at ISACA’s Global Leadership Summit in Chicago. The following is a transcript of the interview, edited for length and clarity).

What are the most important building blocks for organizations in terms of creating a winning digital strategy?
Having a compelling vision to excite customers is the most important factor. There are a whole lot of digital and cultural change capabilities that you need, but you can’t do it without the vision, and then there are a series of building blocks, like Lego blocks, that are your data, your customer experience components, new ways of working, your people innovating, that make it work.

You emphasize the importance of the customer voice being a driving force in making decisions. What guidance might you have for organizations to ensure that is the case in their decision-making process?
The customer voice is all about how you listen to the customer and then amplify their voice in every decision, in every activity you make. And so, data analytics, real-time connections, mobile connections, sentiment analysis, social media—these are all ways you can amplify the customer’s voice, but then you have to change the culture in an organization to hear it and use it, and that is probably the hardest part.

Why is understanding life events of customers so valuable and important?
Most companies have made a successful living selling products, but in a world of ubiquitous search, you can search for the lowest (price of a) product at a certain quality level in seconds. Now, customers want to have a broader set of needs met, and one extremely good way of doing that is life events.

Some companies use customer journeys—but they are more about how the sequence of meeting life events is enacted. Take a B2B customer—are they entering a new market? Are they doing a merger? Is there a change of CEO? Those all have needs, and there are products and services that need to be connected together to achieve the life event.

What are some of the common missteps organizations make when it comes to pursuing digital transformation?
The most common misstep is once you have a great vision, to try to do a big bang. In our digital world, with all the new digital tools, we use test and learn. So, you use some lessons from Silicon Valley of MVP (minimum viable product). You try lots of things, you see what works, and once they work, you scale and integrate. That’s a very different way of operating, so that’s one of the biggest problems we see. Another is that organizations believe they can do these things all themselves. Digital is a partnering world. So, how do you get better at partnering, sharing information appropriately, and using that collaboration to provide better services?

Can you elaborate on the concept of a higher-value digital business model? What does that entail?
The average profitability of a supplier model is significantly less than the average profitability of an ecosystem driver model, but a much higher percentage of companies are supplier-dominant models than ecosystems. So, an ecosystem is a much higher value model, but it’s harder to achieve and there is significant consolidation among the players.

From your interactions with boards and executive leadership, what stands out as the most difficult types of decisions leaders have to make when it comes to digital transformation?
The most difficult question I hear from senior executives is ‘Do we have the right talent?,’ particularly at the senior leadership team, and we often see quite a high turnover in organizations that successfully transform. But also, how do we engage the brains and energy of all the people in the organization? It’s not just the senior leaders that have to transform the entity; everybody has to. And so how do you engage the whole hearts and minds of everybody, and through that, change the culture from a hierarchical, linear project culture to an agile team, test-and-learn, minimum viable product culture?

With a forward-looking lens, which new technologies or emerging digital themes do you see as having the biggest impact on reshaping the business landscape?
I’m a big proponent of the future of IoT because I think it will create great customer value, but with it comes all kinds of risks, and the whole cyber question around IoT, I think, is unanswered. AI will help with cyber, and I think one of the great potentials is the use of AI to do cyber analysis. I’m less concerned about the technologies themselves because they’ll change over time, but how do we provide better customer service at lower cost, and how do we avoid a world of the information rich and the information poor?

(This post originally appeared on the ISACA blog, which can be viewed here).