CEO critical in steering digital lifeboat into uncharted waters
• Clear strategy, thorough processes and people empowerment will ensure sound transition
Given the pace at which digital innovation is disrupting industries in Africa and the rest of the world, it is not surprising that most CEOs feel pressure to find and deploy the right technology as fast as their budgets will allow.
Many are discovering, however, that becoming a digital leader is not simply a matter of technological savvy. It is about creating an agile organisation that can detect what type of change is essential and respond quickly with the most competitive solution.
In our experience, most companies are already steeped in technology and learning fast how it can transform their businesses. Typically, teams in the field are well aware of the digital threats and opportunities within their area of the organisation — usually more so than the corporate centre.
They have launched their own apps, deployed robotics, established partnerships with digital players or are using data to analyse their business and make better decisions.
The problem is that these efforts tend to be ad hoc and uncoordinated. Without the proper framing and orchestration at overall company level, the best initiatives will fail to get the attention and investment they need.
While it is important to encourage local ownership of ideas and projects, turning them into game changers requires clear, sometimes ruthless, direction from the centre. Only the CEO has the power to provide this kind of direction.
To do that effectively, Africa’s CEOs, like their counterparts in other countries, need a holistic view of the digital threats and opportunities facing key parts of the business and a way to link them to an overall vision for how digital is reshaping the competitive landscape.
This brings order to the chaos of initiatives and provides a clearer basis for narrowing down priorities and managing the interdependencies the best digital solutions often present. Three ways to manage the digital transition are:
Define where change is needed most. Digital technology affects every company differently, but it tends to create or destroy value in four critical areas of the organisation: customer engagement, digital products and services, operational performance and preparing for disruptive new business models. Developing a clear point of view on the opportunities or threats in each area will suggest which capabilities need the most attention.
Consider how General Electric arrived at the decision to develop and launch its Predix cloud-based industrial operation system. The initiative began when the CEO encouraged his organisation to explore how the accelerating trend towards value-added services in the industrial sector might eventually affect the company’s growth. In essence, he challenged his team to act as a change leader by interpreting the weak signals coming from the market.
He asked them to pay attention to how digital native companies were creating shifts in customer behaviour and to diagnose digital solutions for business challenges that had not yet taken a toll on the company’s profit and loss statement.
Launched in August 2015, Predix helps companies see how their machines and infrastructure are performing so they can improve them. General Electric has treated the platform as open source, reasoning it will power the growth of the industrial internet, which will in turn benefit the company. Its early success highlights the CEO’s key role in challenging the organisation to assess its digital competence and determine how urgently it needs to respond to threats and opportunities.
Choreograph the change. Even the clearest digital strategy will fail if your people are unprepared to embrace it. As critical as defining where you need change is setting up the capabilities and processes that will enable it.
Information and technology, for instance, is often the tightest digital choke point because it is mired in old processes and needs significant reshaping to link it more closely to strategy, while creating a more agile approach to development.
It is also essential to develop key capabilities in data analytics to make better decisions using the new information flowing through the organisation.
Ensuring that change sticks involves the hard work of defining new roles, adding new skills and adopting new ways of working. It is important to carefully choreograph the change, defining who will lead the effort and how it will be sequenced.
Mobilising for this kind of change inevitably means shaking up the status quo and leaders need to be prepared to manage the company differently.
Consider the challenge companies face in the rapidly changing market for power train compressors. Increasingly, competing in this market means equipping compressors with hundreds of sensors that send information back to the manufacturer. This data is then analysed remotely to predict problems their customers might face and offer solutions proactively.
Blending the hardware with digitally enabled services creates measurable customer value. But taking full advantage of it requires significant cultural changes. The old system of passing possible solutions across silos, wading through validation loops and meeting threshold tests is not fast enough.
Empower people. One implication of this approach is the importance of an orchestration model for digital — prototyping, risk-taking and mobilising the frontline to push initiatives.
Many of the world’s leading digital models have been distributed throughout an organisation via “digital relays” or champions within each geography and business unit. They are centrally orchestrated at a cadence that improves uptake and so the design remains consistent where appropriate.
This project team-based approach relies on empowering people at every level to work together to devise and implement solutions.
Again, that requires some critical organisational and cultural changes. Everybody, for instance, needs access to customer data and the analytics and visualisation tools used to interpret it — information that is typically hoarded in a particular part of the organisation.
Only the CEO can manage this process by breaking down boundaries, giving teams permission to set new rules and providing the strategic framework to buttress the new order.
AFRICA’S CEOs … NEED A HOLISTIC VIEW OF THE DIGITAL THREATS AND OPPORTUNITIES FACING THE BUSINESS