What Does It Mean to Digitize a Company?

Just How Digital Is That Company?Thomas H. Davenport

Babson College/MIT/Deloitte/International Institute for Analytics

Forbes/Teradata Digital Revolution Summit

October 3, 2016

1 | 2016 © Thomas H. Davenport All Rights Reserved

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What Does It Mean to Digitize a Company?

• Digital products and services• Digital business models and transactions• Digital relationships--employees, customers, suppliers• Digital labor—robots and automated software• Digital data put in structured form to create insight

• Prioritized investments in people and platforms• Analytics and data used for internal decisions• Capabilities adopted early and with marketing flair• A well-managed change process

DIGITALCAPABILITIES

DIGITALLEADERSHIP

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Predictions from the IDC FutureScape for Worldwide Digital Transformation:

• By the end of 2017, two-thirds of the CEOs of the G2000 will have digital transformation at the center of their corporate strategies

• By 2017, 60% of companies with a DX strategy will deem it too critical for any one Functional area and create an independent corporate executive position to oversee the implementation

• IDC Research Vice President Bob Parker: "Digital transformation is not just a technology trend, it is at the center of business strategies across all industry segments and markets.”

Digitizing Is Not Just for Unicorns!

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The DNA of Digital Masters

Dig

ital C

apab

ility

Leadership Capability

CONSERVATIVESBEGINNERS

FASHIONISTAS DIGITAL MASTERS

Source:MIT Center for Digital Business

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Digital Masters Outperform Their PeersD

igita

l Cap

abili

ty


REVENUE GENERATION

+6%

Basket of indicators: Revenue/Employee, Fixed Asset Turnover

+9%

-10%-4% Dig

ital C

apab

ility


PROFITABILITY

+26%

+9%-24%

-11%

Basket of indicators: EBIT Margin, Net Profit Margin

Source:MIT Center for Digital Business

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Digital Masters in Various Industries and Geographies

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Digitization at Nike

Social Media Digital Product Design

Customized Manufacturing

Nike Digital Sport

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Digital marketing Digital product innovation/design Digital commerce (e/m-commerce) Digital technologies (GPS, mobile, etc.) Customer analytics

FIRM-LEVEL DIGITAL TRANSFORMATION BEYOND THE SHOE

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Digitization at Asian Paints

New Transactions/ Relationships

Direct Customer Knowledge

Automated Manufacturing

IT and Strategy Interconnected

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Selling “painted wall” Ideas Engine for home decor Salespeople as consultants Relationships with contractors Now in 17 countries CIO is head of Strategy

FIRM-LEVEL DIGITAL TRANSFORMATION

AT EARLY STAGES

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Digitization at Caesars

Mobile and Social

Total Rewards Offers

Service Measures and

Analytics

Analytics-Driven Culture

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Strong pull from CEO Test-and-learn focus Continued investment/expansion Strong Analytics and Digital groups

FIRM-LEVEL DIGITAL

TRANSFORMATIONON TACTICAL

DECISIONS

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Digitization at Codelco

Remote telecommand

devices

Autonomous vehicles

Integrated operations

centers

Automated mining focus

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Primary focus on worker safety Predictive, optimized operations Chief Digital Officer Goal of no underground miners by 2017

FIRM-LEVEL DIGITAL

OPERATIONS TRANSFORMATION

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Digitization at GE

Sensors in Many Products

New Service Models

Platform for Industrial Internet

Digital/Industrial Model

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Strong pull from CEO Chief Digital Officer role Major investment in people and tech Built partner and venture ecosystem

EXTERNALDIGITAL

TRANSFORMATION

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Digitization at Wells Fargo

Multiple channel innovations w/

testing

Strong customer and risk analytics

Multi-faceted data

infrastructure

Offense/Defense Balance

DIGITAL CAPABILITY

LEADERSHIP CAPABILITY Early digital governance focus Enterprise data and analytics function Working to connect diverse analytics and

data initiatives across the business while satisfying regulators

CUSTOMER-FOCUSEDDIGITAL

TRANSFORMATION

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Dig

ital C

apab

ility


The “What”Customer experience Operational processes

Business models

The “How”Vision

EngagementGovernance

Technology Leadership

Challenge Your Business Model Before Someone Else Does

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Re-Inventing Industries

Substituting Products & Services

Crafting New Digital Businesses

ReconfiguringDelivery Models

Rethinking Value Propositions

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Digital Business Models at

• Find and connect with a local agent• Find a Service Center• View a copy of your insurance ID card

• Make a payment• Quote and buy a policy• Report vehicle damage with photos

• Pay-as-You-Drive • Snapshot: Monitors actual driver behavior• New “data products” from in-car sensor data

• Add Flo and Progressive to your social network• Watch new commercials

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Building Blocks of Digital Capability

BUSINESS MODEL

CUSTOMER EXPERIENCE OPERATIONS

Digitally-modified offeringsCustomer analytics Process digitization

New digital businessesTop line growth Digital labor

Rapid quantitative testingIntegrated touch points Operational analytics

DIGITAL PLATFORM

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Dig

ital C

apab

ility


The “What”Customer experience Operational processes

Business models

The “How”Vision

EngagementGovernance

Technology Leadership

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Building Blocks of Leadership CapabilityCreate a transformative vision of the digital future

Engage employees at scale to make vision a reality

Link IT & business communities to build digital skills & transform

technology platforms

Establish strong digital governance to steer the course: coordination, sharing, momentum

Vision

TechnologyLeadership

Governance Engagement

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Governance Steers the Course

DESIGN GOVERNANCE TO ENCOURAGE NECESSARY SHARING AND COORDINATION

SHARED DIGITAL UNIT

Unit/Region/Brand

Unit/Region/Brand

Unit/Region/Brand

Unit/Region/Brand

KEY MECHANISMS

• Chief Digital Officer• Digital liaisons• Shared digital units• Governance committees

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Business and IT Functions Need to Collaborate

IT Business Relationship

Digital

Skills

Digital Platform

We’re Just Getting Started!

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Augmented Reality

Robotics Artificial Intelligence

Sharing Economies Wearables

3D Printing