Westerman talks about the need for companies to focus more on the customer while seeing newer technologies like social, mobility, cloud
George Westerman, a research scientist with the MIT Sloan School of Management-Initiative on Digital Economy, researches and teaches digital technology leadership and innovation.
As co-author of Leading Digital: Turning Technology into Business Advantage, Westerman talks about how, other than technology firms, large companies in traditional sectors—from finance to manufacturing to pharmaceuticals—too are using digital to gain a strategic advantage.
In an interview on the sidelines of the Nasscom India Leadership Forum in Mumbai on Wednesday, Westerman spoke about the DNA of the so-called digital masters, and the need for companies to focus more on the customer while seeing newer technologies like social, mobility, cloud, analytics (SMAC) and the Internet of Things (IoT) as enablers. Edited excerpts:
What exactly is the DNA of a digital master?
When we went out to study these individuals to understand how they used digital technologies, we found that there was an awful lot of activity going on, but there were very few companies that were doing it well. The digital masters were doing it well. They had it in their DNA. What is really important is that for the digital masters, it wasn’t a technology problem, but a leadership challenge. It was a chance to transform the way that companies work. The digital masters excelled in three dimensions. One thing was to just do those things to change the customer experience, but more important was having the leadership to drive change. They have a strong vision of where they are going. And they engage people and execute well. Digital masters build digital capabilities by rethinking and improving business processes, their customer experiences and their business models.
In your book, you have cited the examples of companies such as Nike and even an Indian firm like Asian Paints as digital masters...
Asian Paints is the only company we studied in India. There are a lot of companies that have implemented ERP (enterprise resources planning). That’s great. But Asian Paints did this in a different way. They were going to unify 13 regions, but once they did that, they asked what else can we do. How can we do better. So, Asian Paints just doesn’t make paints any more. In fact, it sells just white paint. It’s the retailers who add colour. Asian Paints sells services. They are now a global company. Asian Paints has extended the role of the chief information officer (CIO) to cover strategy as well as IT (information technology).
When it comes to adoption of these technologies, you have divided them into four broad groups—beginners, conservatives, fashionistas and digital masters...
Digital masters excel in technology and also leadership. But there are other companies that are doing a lot of digital, but without leadership. They are fragmented. They are wasting a lot of money. We call them fashionistas. They have a lot of collaborative tools, for example many Facebook pages, but these tools do not collaborate with each other. They make revenue, but not necessarily profits. Conservatives are those that are not doing very much because they are very careful. These companies are not losing money (on digital), but they are not making money either. And then there are those that are yet to begin their digital journey meaningfully.
But can we really put companies in such silos?
That’s a really good question. We define digital masters as those above the median on the measures we use. So, some people are barely there. And I think that more complex the company is, the more likely you are to have different divisions doing different things. The question is: where do you put that integration where you need it.
In this context, we see another trend—that of more and more technology spends moving away from traditional IT departments to marketing departments, thus making the chief marketing officer (CMO) also a key decision-maker along with the CIO. Such a situation also gives rise to conflicts over digital spends and execution...
Yes. We sense frustration in a lot of companies over the IT departments not moving fast enough. The answer seems to be that we are going to do it ourselves. And I’m seeing that in a lot of companies. There is so much of knowledge in the IT departments about processes and technology enablement that marketing departments should find a way to work with them. Working separately will not help in the long term. This is a lesson to be learnt from the digital masters.
We have the CMO, CIO doing this stuff, and then there is this emerging role of a chief digital officer. Do you need all these Cs?
All these people are trying to do digital, and trying to control spends. The role of the chief digital officer may go away since digital is simply getting embedded in all we do. All these Cs (CMO, CIO, chief digital officer and chief innovation officer) have to work together, and some of them (the roles) will eventually go away.
I see all the Cs fitting into your fashionistas category...
That’s absolutely right. And why is that? It’s because they are driving their empires and seeing their needs as more important than that of others. That’s natural in an organization. Sometimes you need top-down control to resolve the conflict.
As we adopt these newer technologies (SMAC and IoT), security is becoming a bigger concern...
This is a perfect example of why, if you have marketing running things, you open up a different kind of risk because IT has been at these things (handling security, etc.) for a long time and knows how to do things. If you think about your customers, you may want to think about operations first and see technology as an enabler.
In essence, then, a digital vision won’t work without the CEO driving things...
Till even four years back, a lot of the technology work used to be delegated. Now, I’m getting calls every week from CEOs and heads of companies and the top leadership asking how to make this digital drive work. This means that the top of the company is waking up, and it’s a sea change.
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