DIGITAL TRANSFORMATION - Duval Union Consulting · Traditional versus digital players 167 ... Digital Transformation Modeling will give you a better view on ... digital company,

DIGITAL TRANSFORMATION

A model to master digital disruption

Jo Caudron

Dado Van Peteghem

DigitalTransformation-def.indd 3 19/05/16 16:11

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TABLE OF CONTENTS

THANK YOU! 10

INTRODUCTION 14

The book is a story of hope and opportunity 14

Yes, also on paper. 14

It’s partly crowdfunded 15

It contains a methodology 15

Our story is not based on academic research 16

No, it is not abo ut the media industry 16

This is not just a marketing book 16

1. HOW DIGITAL FINALLY BECAME IMPORTANT 19

1.1. SMILE, YOU’RE IN A CRISIS 20

1.2. A short history of “going digital” 25

1.3. The speed of change 28

2. DIGITAL TRANSFORMATION IS REAL 39

2. 1. Waves of transformation 40

2.2. Travel - one digital revolution after another 42

2.3. Video Rental 45

2.4. Kodak - Digging it’s own grave 49

2.5. Music - the sound of digital disruption 52

2.6. Classified ads - Disrupting the disruptors 56

2.7. The tipping point: when disruption becomes destruction 58

2.8. Reading the signs: about roller coasters and the canary ... 62

2.9. How digital players are destroying your market without ... 65

3. DIGITAL TRANSFORMATION MODELING 69

3.1. The infinite loop of transformation 70

3.2. We have to take technology seriously 72

Stop making fun of new things 72

Be part of the technology circle 73

3.3. Creating your survival plan for the future 75

Strategy? What strategy!? 75

The time is now! 78

3.4. Digital Transformation Modeling 79

About Digital Transformation Modeling (DTM) 80


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3.5. Step 1 - create insights: opening up your eyes 83

3.6. Step 2 - impact analysis: are we prepared for the future? 86

The Drivers of Transformation (DoT’s) 88

The Glass House 88

The Package 89

The Frog 90

The Gatekeeper 91

The Traveller 91

The Participant 92

The Cyborg 93

Creating a scorecard 94

Culture 99

Ability to execute 100

Driver’s seat 101

3.7. Step 3 - scenario planning: shaping the future 102

You can not predict the future 102

The driving forces of your future(s) 104

Developing the scenarios 106

Choosing is losing 108

3.8. Step 4 - business cases 110

Creating the long list 111

Selecting the short list 114

Writing the business case 114

Learn from the others 116

3.9. Step 5: trendwatching 117

4. CHANGING YOUR COMPANY 121

4.1. You need a new company 122

Build your own future 122

The current state of affairs 123

The age test 124

The seven-by-seven test 126

What are your options? 127

Digital throughout the organization 128

4.2. The digital chief 132

The digital CEO 132

“Don’t we have guys for this already? What about... 133


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Can the CIO lead the digital transformation? 134

Introducing the Digital Transformation Officer 135

We need a Chief Digital Officer 136

A manager 137

A strategist 138

Digital minded 138

A crisis manager 139

So what about the CEO? 140

A different type of authority 140

The power of the network 142

4.3. The digital leadership team 143

It’s a team effort 143

Digital officers 143

Digital leads 144

Digital supporters 145

The network 145

4.4. Where do you find the people? 147

Find the internal gems 147

Recruit 147

Acqui-hire 148

4.5. The Digital Agenda 150

Future vision 150

Long-term company strategy 150

Short-term company strategy 151

The operational plan 151

The digital commandments 152

The customer always decides. 152

All things you do must start from a superior user ... 152

From now on you are an agile and flexible company. 153

You live in a world of uncertainty. 153

Always play on the offense instead of on the defense. 154

Don’t be afraid to cannibalize your own business. 154

Never, ever disrespect new or small players. 155

Digital Status 155

4.6. The Factory, The Guesthouse and The Garage 157

The Factory 158

The Guesthouse 158

The Garage 159


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4.7. Dealing with different generations 161

The Classics 163

The Converted 163

The Digitals 164

The Ruptured 164

One Size Fits All? 167

Traditional versus digital players 167

4.8. Building the transformation fleet 170

4.9. About (internal) policy and legislation 173

Thou shalt obey 173

So, whose interest is it, anyway? 174

Dealing with the impact of disruption on policy & legislation 175

4.10. Bring your chips to the table, and spend them wisely. 178

If you pay peanuts... 178

Do you take this seriously? 179

The 3/5/7 rule 180

4.11. The internal culture of disruption 182

For the disruptors 182

For the disrupted 183

What to do? 183

5. THE SEVEN METAPHORS, DIVING DEEPER 185

5. 1. The Seven Metaphors 186

5.2. The Glass House 188

New relationships, new rules 188

Transparency and proximity are creating new pressure 190

The importance of being responsive 191

The opportunity of being open 193

The human factor 195

You need the be authentic and accountable 197

So what about you? 200

5.3. The Package 201

We are living in a packaged world 201

Digital is changing the package 202

The package is broken: what we can learn for newspapers 204

The APPification of the world: in search of the ultimate ... 206

From Long Neck to Long Tail 208

In search of the ultimate user experience 210


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No thanks, I will do it myself 212

Faster, Faster! 213

Scalability 215

Value for Money 216


5.4. The Frog 218

Digital technology is breaking up marriages 218

Virtualization is making it worse 219

About balloons and drones 219

Brands become media 221

Brands want to go further 222

More Disruption on the Horizon. Will it be you? 223

Fragmentation of touch points 225


5.5. The Gatekeeper 226

A world filled with Gatekeepers 226

The new gatekeepers are at the gates 227

The crowd 229

Your Peers 230

Automated Algorithms 230

New Experts 231

Rebundling 232

Good is Good Enough 233


6. The Traveller 235

The traveller has come a long way... 235

From haters to addicts…the rise of nomophobia 236

We are stimulation junkies, driven by instant gratification. 237

The enablement of location 238

New ways of working… 240

The traveller is looking for utility 241

Contextual awareness: the world around us becomes ... 242


7. The Participant 245

Participating is in our DNA 245

Online communities connect the like-minded across the globe

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Collaboration, building upon the connections 248


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The rise of the sharing economy 251

The power of the crowd: unleashing the power of the ... 253


5.8. The Cyborg 256

The Cyborg is upon us. 256

Data, the new oil 257

The Internet of Things: connecting everything together 260

The quantified self, they new way of life 261

Robotics: the art of making our lives more convenient 263


6. ONE MORE THING 267

6.1. So what is next? 268

6.2. About the authors 270


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CHANGING YOUR COMPANY

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1. YOU NEED A NEW COMPANY

BUILD YOUR OWN FUTURE

If you are convinced that digital is disrupting your company and the industry you work in, you have probably reached the point where you realize you cannot go through a positive transformation in your current form.

Digital Transformation Modeling will give you a better view on the impact of the disruption and the possible transformation you will face in the (near) future. You will however need to do more to prepare your company to deal with the change. Ideally you would just build a new company, bottom-up, based on the current situation. A real startup with digital savvy people everywhere, with lightweight, yet scalable technology and with an agile, permanent-beta culture. You would like your company to be like Netflix, Uber, Amazon or Tesla, but it is not. You are likely in a more traditional company with a large force of people that are used to doing things the traditional way. Regardless of whether you are with just a few dozen or with hundreds of thousands of employees in your company, if you used to do business in a traditional market, you probably are not ready to deal with digital transformation.

So how can you build a new company, without throwing away everything you have today? How can you rebuild a plane while you are flying it? It is not a simple task, maybe even an impossible one. To make it worse: it has never been done before on this scale. Yet we believe it is possible to take matters into your own hands today and start designing and building your own future, instead of having to live in the digital world that was conceived by others.

Before we start explaining the steps towards becoming a digital company, we want to clarify a possible misconception. We never plea for a situation in which you abandon your current business, in which you throw away everything you have built over the years. This is a very valuable asset that

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will probably function well for a certain amount of time. The current activities and approach bring in the money and (business) experience you need to prepare for the digital world. This might seem comforting, but it actually makes the job at hand more complicated: you do not start from a clean sheet of paper and will always be active at different speeds.

THE CURRENT STATE OF AFFAIRS

There is a high probability that you are not working in a digital company. Even if you work at a Telco or IT company, that is not digital in the way we mean digital.

The first thing needed is to clarify how digital your company actually is currently. Once you know how good or (more likely) bad the situation is, you can start introducing the necessary digital leadership.

We have used this quote from George Colony (CEO Forrester Research) before, but as it is so relevant in this phase of the book, we will quote it again:

Without digital leadership, it will be impossible to deal with digital transformation, especially because the transformation is not just a one-off thing, it will be a permanent cycle of responding to disruption and changing accordingly, just to be ready in time to face new disruption. Having a special taskforce that transforms you once will not get the job done.

“If you can’t understand the new world of digital, fire yourself. Build an executive team that is digital-first (when problems arise, the first solution is always digital). Make sure there is a techie on the board of directors. If the board has a low digital IQ, the company will have a low digital IQ”

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You need a company that is flexible enough to be in a constant state of change.

THE AGE TEST

One of the first things you will be confronted with is the age of your company. The bigger the company you work for, the higher the chance that it is an “old” company, with a leadership structure that is much older than the average of the market. This is a first indication of how large the distance might be between how your company thinks and how your market thinks. As the image below shows, we are often confronted with a situation in which the average age of all the people in your company is substantially higher than the average age of your market. This creates huge challenges in keeping up with the way your market acts, behaves and thinks. You might of course engage in all kinds of market research to know what your clients are doing yet this is always an approximation of reality. The older you are (compared to your audience) the more likely you only understand them in theory.

YOURMARKET

YOURCOMPANY

YOURLEADERSHIP

The situation becomes more problematic when your leadership (CEO and management team) is even older than

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your company average age. This might create additional tension between the speeds of innovation your teams might pursue versus the inertia that is imposed by the overall leadership.

It seems to be the norm that top functions in most companies are reserved for the experienced and thus older people. They bring in maturity and have climbed the long ladder of hierarchy that is necessary to understand how to become a good senior manager and how to deal with internal and external objectives and politics.

When we look at the new style companies, we see a difference. The figure below shows an entirely different picture.

This graph shows the age test for Facebook. Zuckerberg is 30 at the time of writing of the book, his team is slightly older and his market is maturing as more and more people are joining. Many game-changing companies have leadership that has the age of their market or is even younger. Evernote’s Phil Libin was born in 1972, Uber’s Travis Kalanick, was born in 1977 and Tesla’s Elon Musk was born in 1971. They are all (potential) billionaires and much younger than the average CEO from the average company.

YOURMARKET

YOURCOMPANY

YOURLEADERSHIP

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So please, apply this test to your company and if you feel that your management team has grown too old, recognize it and act. There is no reason why people that are thirty do not make good managers. You need a couple of them in your senior management team as they will bring younger DNA into the company and they might even inspire the older members to become mentally younger.

THE SEVEN-BY-SEVEN TEST

This test is even more confronting than the age test. Create a matrix like the one below. First think about the technologies and channels that are increasingly used by your audience, put them in the vertical axe. Next map your senior management team on the other axe.

Of course you might have more on both axes, but for the sake of simplicity and because we think “7” is an inspiring number it is OK to limit it to a 7x7 matrix.

Next up you can ask the following question for each channel, service or technology and for each member of your team: is

Facebook

Twitter

LinkedIn

Snapchat

YouTube

Smartphone

Tablet

...

CEO

SALES MKT CIO COO HR CFO .. .

OUTINPick 7 (or more)relevant digital activities

If a member doesn’t score at least 4 out of 7, he’s out

If the majority of leadership is out, the company is out

Score your leadership teamon active usage/ understanding

DIGITAL LEADERSHIP ASSESSMENTThe 7x7 Test

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he an active user or does he have a deep understanding of the dynamics? Use a green mark for every “yes” and a red one for every “no” you get as an answer. If a member of your management team does not have at least four green marks, they are out. If you do not have at least 4 out of your 7 senior management members scoring green, your company is out…

We have done consulting for many different types of companies in many different industries, and we can tell you that the majority of these companies would not be able to pass any of these tests.

It does not mean that you cannot deal with digital transformation it just means you will need new blood on board, while giving a digital blood transfusion to the rest of your team.

WHAT ARE YOUR OPTIONS?

A 2014 report by Forrester Research mentions that 74% of the companies enquired have a digital strategy. The problem though is that once you dive a little deeper most of them have a so-called bolt-on approach. We will all recognize this because it is the most popular strategy. We create a sideline digital business (that brings in a little money) and we try to upgrade some of our existing channels to be ready for social or mobile. This will not do the trick. It is old school thinking (remember “digital on the sideline” from the beginning of the book) and just playing catch-up with evolutions you should have mastered by now. It is nothing more than fixing the basics, but hardly anything that will get you to the future.

Another move we see is that Chief Marketing Officers are upgraded in the company. According to some studies they will get to decide on a large chunk of the IT budget on the upcoming years. This will force them to build a good relationship with the CIO. The logic behind this thinking is that the future will require both superior digital customer

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experience and digital operational excellence. The problem with this is that they are both focused on their own vertical way of operating. The good news of course is it might already break down some company silos. The bad news is that this will not be enough as it excludes so many other aspects of your business. Another downside of this approach is that both senior managers typically do not really understand the power and width of digital transformation: they have been active within a traditional way of working for too long.

The only real option for surviving the digital future is to go digital all the way, across the entire organization. This will entail large investments and the commitment of everyone in your company and even beyond.

DIGITAL THROUGHOUT THE ORGANIZATION

Once you decide to become a digital company, you decide to lead, no longer to follow. Speed of change is so high that if you will only invest in proven concepts, you will be too late, your market might have already shifted and you are already in trouble.

As we have stated before, it would be very unwise (or even plain suicidal) to just throw away your current business. This means that you will have to cultivate multiple operating modes. You will have to extend the legacy business for as long as you can, while at the same time you will have to run an agile digital company.

Whatever your traditional management culture has been, no matter how many layers of hierarchy you have introduced, becoming a digital company will force you to always think in matrixes. They are the only way to capture the need to be excellent in both mastering your business and in mastering digital.

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In order to give digital transformation a chance to succeed, it will need to span across different aspects of your company, both aimed at external activities and at the internal processes that are needed to operate the business. The size of this operation makes it necessary to build a new kind of leadership that must support the digital transformation in a transversal way and throughout all layers of the company, from the highest to the lowest level. If digital transformation is located in a separate task force, it will very likely fail to break down the collection of silos that your company consists of today.

The first thing you need to do is making your board of directors digital. If you failed the age test, it is safe to say that your board of directors will be older. This makes it difficult for them to understand new generations, their behavior and needs, and their adoption of digital. Your board of directors is likely composed of representatives of your shareholders, one or more members of your management team, complemented with independent people, brought on board for their specific knowledge. They all are experienced leaders, often no longer really active, but with a long and proven track record, and thus they are old. Yet the power of this board of directors is considerable. They decide on how the CEO and his management team should run the company. If they do not follow the course of transformation, it will not happen.

One way of trying to tackle this is by installing digital people in your board. Get at least one or two CEO’s from digital native companies to replace some of the older members that might be there mainly for ceremonial purposes. Inspire the entire board by showing them how fast the digital tsunami can impact an industry. Do not see this as a one-off presentation, but rather involve them in your permanent trendwatching. Show them the numbers, they are used to manage-by-spreadsheet. Again: if you do not get them engaged in the transformation, they will not approve your

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transformation-driven business plan. As a result, your efforts will remain marginal and tactical, because they will have to happen under the radar.

The next layer you need to tackle is the senior management team. The CEO (you?) needs to create a new company strategy that is ready for a digital future. Even if the CEO is not the one with all the capabilities to manage the actual change, it is still his ownership to make it happen. This will firstly consist of building and empowering an operational digital leadership team throughout the company. Next up, the CEO will have to use his power to make a compelling case for change: he will have to sell the idea and the plan to all internal and external stakeholders and he is the highest in command to manage the resistance to change that you will no doubt face.

All of your senior managers need to become digital-savvy. Get them smartphones and tablets, get them on social media and show them the new world. From our own consulting experience, we have found training them for a couple of hours teaching them the basics and taking away the fear of the unknown is often perfect first step. You must inspire them.

In a more drastic move you have to consider giving top functions to younger people, but why fear this move? Just look at Google and Facebook, jointly representing almost 600 billion of value, and managed by people in their thirties or early forties.

Go look for young talent, you might find them internally or you might have to attract them from outside the company. These people will not be charged with the digital transformation itself. No, they will be in charge of your traditional activities and divisions, but with a younger attitude that is closer to the market.

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This finally brings us to the people that will have to actually transform the company: your Digital Leadership Team (DLT). In the next chapter we will discuss how you can set up the necessary internal competence and ownership to gradually change the company. It involves all kinds of new roles, including the one of Chief Digital Officer, a new top-profile to join your senior management team.

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2. THE DIGITAL CHIEF

THE DIGITAL CEO

In the ideal world, your CEO should embody everything that is needed for digital transformation. The CEO runs the company and does this from a digital-native perspective. Even if most CEO’s are not up to this yet, we still can get inspired by some CEO’s of apparently traditional companies that have embraced digital in the core.

Take Elon Musk (age 44), the CEO of Tesla Motors, who is in charge of a car manufacturer that promises to change the world. He can in no way be compared to other CEO’s in the car industry. He is not just successfully running the car-company of the future (alongside a space agency and a solar power company), he is also in charge of the digital agenda and he is the real owner of the strategy. His last exploit is significant: he opened up all the Tesla patents to whoever wants them. He believes that being the only company succeeding in a small market, is a higher risk than helping to grow the market by aiding your competitors with technology. This could turn out to be a very smart move in the long term.

Other CEO’s from companies like Uber, Airbnb, Aereo or Spotify have a similar DNA to Elon Musk. We could mistakenly assume that this is normal because these are Internet companies, so it is obvious that their CEO’s are digital, however none of these companies are actual Internet companies. Tesla Motors makes cars, Uber is a limo/taxi service, Airbnb is in travel and Spotify is leading the way in the music business. We perceive them as Internet companies because they run their traditional business in a Silicon Valley startup kind of way. And that makes the difference.

Not every digital CEO follows the Silicon Valley style. Take Angela Ahrendts, the CEO of the leading fashion brand Burberry from 2006 to 2014. She built up her entire career

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in fashion and luxury businesses and worked for companies like Donna Karan. When she took over the troubled Burberry business in 2006, she realized that the future of the company and of the entire fashion retail business, was digital. Probably the best thing she decided to do was taking personal control of the digital agenda. Nowadays Burberry is flourishing and leading the way for many other fashion and retail brands. It successfully transformed into a digital company. It was no surprise that Angela Ahrendts joined Apple as their new VP of retail in 2014.

Unfortunately many companies do not have digital CEO’s yet, so they need to bring in digital leadership in another way.

“DON’T WE HAVE GUYS FOR THIS ALREADY? WHAT ABOUT OUR CHIEF MARKETING OFFICER?”

The first response of the CEO, once he realizes he is not the one to do this yet, is to go look around the existing organization to find senior management that can handle the job. The logical choices would be the Chief Marketing Officer or the Chief Information Officer. However, we do not believe this is the correct approach.

Of course, it is likely that your CMO understands the real power of digital channels because his department was the lead for most of the online activities that were developed over the last two decades. It seems logical the CMO is the perfect candidate for your digital transformation. Many believe that the CMO is becoming one of the leading functions in building the digital future. This has to do with the fact that they own the customer facing touch points of the company, and as these are increasingly becoming digital, so one would think this should be the job of marketer. The challenge though is that marketers look at the company in a marketing-centric way, without the necessary holistic and transversal view on everything else that matters.

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CAN THE CIO LEAD THE DIGITAL TRANSFORMATION?

Another usual suspect to lead digital transformation is the CIO. He understands technology better than anyone, and is the owner of the IT strategy and platforms. Yet, the CIO faces similar problems, as digital transformation has more to do with business then it has with IT.

The CIO is the keeper of the current technology and this responsibility comes with substantial budgets, strict policies and processes. This requires a traditional way of management that is difficult to mix with the attitude that is needed for digital transformation. Yet a new approach toward the function of the CIO that we often encounter, implicates a broader role and interpretation of IT. As the illustration below shows, there is now room for different kinds of IT, from the Core IT, towards more Edge IT and even Shadow IT.

It will be crucial for the CIO to understand the other dimensions of IT, however this is all very much a technological approach.

From http://zdnet.com/blog/hinchcliffe

CIO REST OF ORGANIZATION

- Workers- Business Units- Marketing- Chief Digital Officer- Digital Unit(s)

IntranetInternet PresenceERPCRMDMS

LOBApps

Marketing ExperiencesSystem of Record

System of Engagement

Org

Emphasis &

Priority

E-mailUCESNCMSCollaborativeEconomy

CIO PURVIEW

EDGE IT

EDGE IT

CORE IT

THE ENTERPRISE “Shadow IT”

OtherBYOD/BYOA/BYOT

growing

Microsites &local CRM

Social Tools & Digital Communities

Mobile Apps

Productivity Aids

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Now we know that the transformation ahead is not about ( just) marketing or technology. It involves everyone and everything in the company and is triggered not by technology, but how a changing society is utilizing technology.

It is correct to assume that both CMO and CIO will be at the frontline of the digital events, but they are probably not suited to draft the marching orders for the entire company, due to their vertical legacy and focus. Maybe your CMO or CIO has broader management skills, and a transversal view of the company. If that is indeed the case, he could be the person to shape the digital transformation, but then he would have to leave their current job to take up the new position leading the transformation. We do believe it will be difficult to combine the role of the traditional manager with the role of the great transformer, as these have inherent conflicting strategy and tactics.

We still need a new role.

INTRODUCING THE DIGITAL TRANSFORMATION OFFICER

If you need to transform, you need to hire a Chief Transformation Officer, right? It seems logical, but the issue with this way of thinking is that it suggests that this is some kind of one-off crisis management, like a large organizational process that knows a beginning and an end. An event that you can just temporarily hire people for, then once the

CEO

SALESMKT CIO COO CbsO

DTO

DIGITAL TRANSFORMATION TEAM

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job is done, they leave the company to pursue other crisis management challenges.

A DTO would need to be part of the CEOs team, running special projects from special mandate. A DTO would have a Digital Transformation Team to assist with implementation..

We do not believe this is the right way to go. Digital disruption is a permanent process. It will never stop. Once you digest one wave of disruption through the proper transformation, you will face another one. This new senior person will stay on board for a long time and must be part of the core. Someone with a special mandate for a limited period of time will not succeed.

Another problem with this view is that, although the DTO reports directly to the CEO, he will be perceived as some kind of (external) consultant. The chances of really blending in with the rest of the team will be slim. The DTO might be regarded as an intruder, not a peer or a partner of the other CxO’s in the company.

WE NEED A CHIEF DIGITAL OFFICER

Once you accept that you have engaged in a never-ending digital evolution, it becomes clear that you need someone who is part of the core of your organization.

CEO


CDO

DIGITAL LEADERSHIP TEAM

It is a permanent role. Digital Disruption will be here forever.

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The Chief Digital Officer is someone new on CxO level that will be there for the long run. The main reason you need a CDO is because your current CEO is not digital enough to run the company as if it was Uber, Airbnb or Tesla. This possibly creates an awkward situation and perhaps even tensions between the CEO and the CDO that need to be resolved. There has to be a strong partnership between the two or the operation will fail. So what does this CDO look like?

You do not need a digital guru, but rather a digital general manager with all the skills to manage a lot of internal and external change. If you have a smart CEO, he will give the CDO the mandate to drive the necessary change that will not be coming from the established hierarchy. If your CEO is a bit less savvy, it might be the board that appoints the new CDO and that could be considered as a form of bypassing of the authority of the CEO, which is a dangerous starting point for the relationship.

A MANAGER

The main characteristic you are looking for in a CDO is leadership. The ideal CDO is a charismatic figure that can convince all the stakeholders to make the digital transformation happen.

The CDO will have to be the one that is able to connect to both internal and external forces. He has to be close to external experts and new trends that are emerging. Internally, he will be the one that breaks down the traditional silos to create a real transversal company with new forms of hybrid structures, processes and teams. In a lot of cases, the existing digital efforts have already laid the foundations for this effort, but this will now need to accelerate. The CDO needs to be a leader in relationship building and using influence to get everyone aligned towards the same strategic objectives.

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The CDO must be able to operate in a large-scale business and effectively influence people across the entire organization. This means that understanding and managing internal politics is an asset and being able to deal with cultural sensitivity is a must. One of the big challenges will be to get executives to forget a lot of what they know and adapt to new ways of thinking and executing. This means that he must be able to speak the language of the different aspects of your business: your CDO is fluent in the languages of IT, marketing, strategy and finance.

A STRATEGIST

The CDO is a real strategist, someone that can define new business models, deal with culture shifts and is able to have others execute the strategy so that it leads to new structures and processes of the business. If necessary, the CDO will have the mandate to rethink the very foundations of the entire enterprise. While doing this, part of the job will be to challenge everything that is already in place. This must be done both on a strategic level as on an operational and process level.

Whatever future the CDO can strategically conceive, there is only one point of reference: will the customer buy it?

DIGITAL MINDED

Of course the CDO needs to be much more than just another, more agile and possibly younger version of the CEO. And this is where the digital skills kick in.

The CDO has to have very thorough digital knowledge: E-commerce, online transactional platforms, online marketing, social media experience and mobile ecosystems. None of these should be secrets for the Digital leader. Although this means that the CDO understands (deep-)technology very well, he is not here to make the technology decisions or to

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run the company infrastructure. Of course, the general digital course of the enterprise will impact the IT-systems, meaning a good relationship with the CIO or CTO is fundamental. We will come back to these roles later on.

The CDO understands the power of data. Contrary to many other traditional roles in the company, his focus will be on being able to monitor everything, not just the digital space, but literally everything you do, both online and offline. Understanding data will be one of the key drivers to deal with the impact of change and it will force the organization to be flexible and agile.

A CRISIS MANAGER

The CDO starts from an existing situation, a company that is there and does business in a certain way, directed by its own legacy. Many of the things the enterprise does will need to change, so this means your company, its people and processes, its technology and policy, will all change in a relatively small period of time. The only way to do this is through real change management.

The CDO needs to be able to deal with the transformation of products and technological capabilities so that they are evolving from an analog to a digital paradigm. This will include the change of existing business models, but also the development and introduction of new channels and business models.

Ideally the CDO is in charge of all digital transformation related innovation, wherever it happens in the company. If that is not possible due to different ownerships (think R&D) or the high-tech aspect of innovation, the CDO will still aggregate the different innovation initiatives that are part of the digital agenda. We will talk about this later.

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SO WHAT ABOUT THE CEO?

When you read all of the above, you might realize that a lot of the general characteristics of the CDO are actually the same of what we normally would expect from a CEO. We have stated before that the only way to make this happen is for the CEO and CDO to have a very tight cooperation, a real trusting partnership, in which the one is strengthening the other and vice versa. The CEO stands for the power of the present (and the past), the CDO stands for the opportunities of tomorrow. You could call it a form of co-CEO-ship, although that is often known not to be a very effective leadership model.

The CEO needs a CDO when he is not able to pull off the huge challenge of digital transformation alone. By accepting a full-force CDO and giving a “license to change”, the CEO knows that a lot of the future of the company will depend on the success of the new kid on the block. This could mean that the CDO is involved in creating and rolling out the initiatives that guarantee the revenue streams and profit of tomorrow. This will make the CDO the executive holding the keys to the future, putting him or her in direct line to become the next CEO of the company.

A DIFFERENT TYPE OF AUTHORITY

If we accept that a synergy between CEO and CDO is necessary to guarantee the future of the company, we have to ask ourselves how their different styles of leadership impact the organization. We have mentioned before that the CEO is running the company and all of its value today, while the CDO is running the transformation process. They are in a tight partnership that serves one sole purpose: stretching the success of the present as long as possible while building the foundations of the future.

Having these two senior functions aligned is just part of the challenge, as the entire company needs to become aware

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of the need to change and the plans to make it happen. It is staggering to see how little energy is devoted to getting a buy-in from the team to make projects successful. If you think that external communication poses a challenge to your company, wait until you examine how poorly organized the internal communication and collaboration are structured. If you want to transform digitally, you will need to work on this aspect simultaneously.

The figure below shows how the two types of authority and organization might coincide. The CEO will run the company in a traditional way, with line and staff organizational structures. The CDO will operate in a staff function with a virtual Digital Leadership Team that works in a transversal way throughout the company.

CDO


Digital Leadership Network

OutsideWorld

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THE POWER OF THE NETWORK

We believe that the real power of the Digital Leadership Team is in growing a networked authority rather than a hierarchical management structure. This network connects people of all levels to each other, triggering their sensibility for change, making them adopt the Digital Agenda of the company.

This way, the future (digital) strategy and tactics are not imposed in a top-down way on the entire organization. The purpose of the network is to have an organic creation and flow of ideas throughout the enterprise, involving and including everyone that is ready to support the change, without distinction in role or position in the company. This should happen without the traditional hierarchical barriers that typically exist in a company, so information, plans, results, etc. flow to as many people as possible without resistance. Ideally this network becomes a group of self-interested people who organize themselves dynamically around the activities to make transformation happen in an efficient and effective way.

The more people that become part of the network, the more buy-in the transformation plans will get and the faster the actual transformation can happen. As we will talk about in the next chapter, it will also be crucial to extend this network outside the boundaries of your company.

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3. THE DIGITAL LEADERSHIP TEAM

IT’S A TEAM EFFORT

The CDO cannot do this alone. Buy-in from the CEO and board of directors is necessary but that even will not be enough. Depending on the size of the transformation and challenges ahead, the CDO will need both a dedicated and a virtual team to assist in all the work that needs to be done in the future. It is a team that is formed for a long-term effort, a team that will operate for many years to come.

We introduce three different roles that come with different ownerships and tasks: Digital Officers, Digital Leads and Digital Supporters. Of course you can call them whatever you like to make it work in your internal organization.

DIGITAL OFFICERS

The CDO will likely need a team of dedicated people that can help with all of the work at hand. Together they form the Digital Office, the headquarters of digital change in the company. It is not up to us to define how many people should work in this department. It will be up to the CDO to create a team that supports the plans full-time. The responsibility of the Digital Office will be to create and execute all aspects of the digital agenda (see later). They have a similar profile as the CDO, but at a more executional level.


Digital Leads

Digital Officers

Digital Office

Digital SupportersNetwork

OutsideWorld

CEO


CDO

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DIGITAL LEADS

Every division in the company needs to assign one or more Digital Leads that form the Digital Leadership Team that cuts through the organization. Each of these people is also operating in a vertical line-management function, involved in traditional activities of the company. Their role in the Digital Leadership Team is virtual and they serve as gateways between their own division and the Digital Office. They are building bridges between the ambitions of the Digital Office and the reality of the business division.

They are the ambassadors of the Digital Agenda of the CDO, spreading the word in a formal way. They are the change agents who should be questioning the traditional, vertical approach and tactics in the light of the new strategy. They should draft suggestions for the CDO on how their own vertical division can be prepared for transformation, based on their own in-depth knowledge of the day-to-day reality in their own division. They will also help selling and implementing the changes that the Digital Office wants to introduce to their department and colleagues.

Their long-term objective is to make everyone and everything in the division become more digital. Besides their function as gateway, this will likely include activities like coaching, training, guidance, planning, assistance with hiring, and so on.

These people are not techies; they are business oriented with a large understanding of the impact of digital on the activities. Ideally they are the highest in command for a certain division. If they are not, it should be guaranteed that people higher up in their own hierarchy do not block them. They should probably get some kind of special mandate for this reason.

Just as the CDO is logically a strong candidate to lead the company in the long term, the Digital Leads should have the profile to be the next chief of their department.

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DIGITAL SUPPORTERS

Digital Supporters are all the people that make up your informal Digital Leadership Network, even if they do not have a formal role to play. These people are convinced that digital is the way of the future. They are aware of the plans and strategy of tomorrow and would like to stay informed on the progress that the Digital Office is making. They can feed the organization with their input and support and stand by their company when things gets tough, as true fans and supporters would.

Ideally this is everyone in your company, but lets be realistic; there will always be a group of people resistant to change, doing anything in their power to protect the status quo. It will be part of the Digital Leads’s work to identify them and turn them around, even if that takes a long time. If that does not work out eventually, they likely will not be part of your organization of tomorrow.

THE NETWORK

Your digital leadership network should also reach out and include people from outside the organization. If you succeed in effectively tapping into an external reality, you will be able to learn things that you cannot pick up within your own organization. For many corporates, this will prove to be quite challenging, as they are not used to be open towards the outside world. How can they share what they are working on with people outside the company, when they are used to secrecy when it comes to new developments? Being open about your strategy and R&D is something that is typically part of the DNA of startups and challengers, not traditional companies.

Still it is crucial to reach out to the external world to connect to another reality. This can take place in different forms, as

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long as it brings in new insights that can validate what you are working on.

The most logical outside network you can connect to is your peer network. Similar companies that face similar challenges. Share experiences.

Try to tap into the world of kids and youngsters. For years we have been suggesting to companies to install a “kids-board”, a platform that allows kids, teens or young adults to talk about their perception of the world and how they see their future.

Another challenge is to tap into the dynamics of the thought innovators and challengers. Can you connect to the ones that disrupt your business in order to learn from how they think and behave? Of course you can observe and analyze what they do (and you should), but if you can actually talk to them, this will give you an even better insight.

Although this element of reaching out will be crucial in obtaining much-needed knowledge, we believe that this will be difficult to accomplish for many companies. It must be high on the agenda of the CDO to make this happen, to find the balance between the secrecy-driven internal approach and the open, networked approach.

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4. WHERE DO YOU FIND THE PEOPLE?

Hiring the right people for all of these different roles will be a huge challenge. Not only are they very scarce, they will probably not be very attracted to an old-school company. So this is definitely the first major hurdle you will have to make to start the digital transformation: get the talent on board.

We believe there are a couple of ways to achieve this.

FIND THE INTERNAL GEMS

This is possibly the most pragmatic way to go after digital talent: look within. If you are a large company, there is a big chance that you have people scattered around the organization that could be part of the Digital Leadership Team. It is likely that you will find several of the Digital Officers and Digital Leads this way, but it is less likely that you will find a CDO. There is always the possibility that one of your senior managers does have all the characteristics and the DNA (remember the CMO’s and CIO’s?). You have to be very cautious, there will always be the legacy and stigma from the old department and that will be hard to let go, both for the CDO himself and his peers.

RECRUIT

If you don’t find them inside the company, you will have to hire them externally, but how do you hire for a job that has not existed in the past? Who will help you with that? And where do these people come from?

It is obvious that if you look at the description of the CDO profile in the previous chapters, that you are looking for a very rare individual. A senior management profile that fully understands digital and that wants to come work for a traditional company, and not even in the role as CEO. Good luck finding them.

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The chances of finding these profiles in your own industry are close to zero. You will probably have to go look for them elsewhere, in other industries that have already experienced some transformation and where staff became more conscious of the necessity of digital DNA. Maybe they want to exit that sector because they feel that it is too late to change course for example music, travel, HR, media etc. The smart ones might try to bail out before the ship actually sinks, looking for opportunities in other industries. These people might be your target.

ACQUI-HIRE

If you want to speed it up and be sure that you find the right native digital DNA, you might want to engage in what is called Acqui-hire. Get the people you need on board by buying their company.

The logical step in this is to find a local and successful challenger in your own industry. Buy them, not necessarily for what they do, but rather for how they do it. Buy the company for the talent. Not every great startup is the next Facebook, Snapchat or Uber, so they are likely to go through rough periods in their existence (think funding, cash flow issues, bad business planning, …), making them vulnerable and open to acquisition.

Have someone in your company go to the startup-rallies, VC-pitching events, etc and have them make lists of those companies that are proving that they have the vision, leadership, entrepreneurship and the talent, but still ended as the number two or three in the competition. This competition might have been the all-or-nothing moment for them, and if it goes wrong, you are there to catch them when they fall.

Nothing stops you from scouting outside your own industry. Talent is everywhere.

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So what is the issue with this approach? You will have to pay a substantial bonus to get your talent on board, because you don’t just hire people, you buy an entire company. Maybe you cannot even do anything with their offering in the long term, so you will have to be willing to write that off eventually.

Maybe the biggest issue will be to keep the talent inside the company. These people will be so different from your legacy-staff that mixing them up might be counter-productive. If the integration and empowerment of this talent in your Digital Leadership Team does not happen fast enough, if the rest of your company does not want to play along, if you do not invest substantially in change, you will lose your digital talent. As soon as their earn-out is over, they will run as fast as they can. So please, if you take this route, go all the way.

A good example of this acqui-hire approach is Tesco, the UK retailer. In a two year timespan, they bought three digital companies that were active in video streaming, digital music and e-books. What seems like an odd move for a groceries and food retailer, it was actually a smart way to quickly build up the skills they needed to execute their new digital strategy.

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ONE MORE THING

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1. SO WHAT IS NEXT?

We hope that reading this book is just the beginning. It is a way to gain insights you can use to convince your stakeholders. It gives an idea on how severe the impact of digital disruption can be for your business, and it shows what the future could be and how you can actively participate in creating it.

This means that the road is still very long. Actually the road will never stop. You are embarking on a mission that has no end, because there is no such thing as a destination you can reach. There may be many harbors where you can stay and rest for a while, but new digital disruptions will force you to keep moving, to keep evolving, to keep transforming.

If your company is not willing or ready to start this journey of change, you might consider another job, because you will continuously recognize signs of change everywhere, and you will not be able to act upon it. Ignorance is bliss, but once you become involved, you are part of it and you have a responsibility to act.

What should you do next if you do believe in digital transformation? Regardless of your level in the company, talk to people and convince them that change is coming and action is needed. Get enough support to start with a Digital Transformation Modeling exercise as this will give your stakeholders a first insight on the digital impact, possible futures and activities you can roll-out.

The next step is to understand how ready your company is for the digital future. The impact analysis from the Digital Transformation Modeling approach is a first step in a much wider audit of the digital readiness of your entire company and the people that work for it. This must lead to a concrete plan for setting up your Digital Transformation Team with their Digital Agenda. Remember what we said in the introduction

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of this book, Digital Transformation has different dimensions. You start from a strategic model (insights, impact, future) to build an organizational model that is able to run the on-going operational reality of digital transformation.

Yet regardless of the road you follow, the most important thing is that you take transformation in your own hands, in order to lead your own future and not just to undergo what others are dictating. Build your digital leadership, define projects, invest, transform. It will take time, but you need to start today.

We hope you enjoyed reading this book, and that it got you inspired. Now it is time to act.

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2. ABOUT THE AUTHORS

Jo Caudron has been active in the online world for over two decades. He co-founded over a dozen of Internet-related companies: web agencies, creative agencies, interactive TV-companies, online publishers, etc.

As an author and inspiring speaker, he travels around to spread his vision on the impact of digital transformation on the world. He is guest lecturer at several schools and universities.

Jo founded his consulting company DearMedia in 2006 to help organizations better deal with digital strategy. In 2015 DearMedia became part of the Duval Union-ecosystem. Today Duval Union helps large European organizations in retail, finance, media, government, HR and many other sectors with taking on the challenges of digitization.

In his role as managing partner, Jo is responsible for high-level digital strategy development with a focus on digital transformation.

Jo is married and has two children (daughter and son), he lives between the cows in the Flemish Ardennes and loves making and listening to music as well as reading a good thriller.

Dado Van Peteghem started his career at InSites Consulting, a global market research and consulting firm, where he worked as a consultant for leading international brands in nearly all industries.

Dado joined DearMedia in 2011 (later on Duval Union Consulting) and soon after became managing partner. His focus is on helping companies build sustainable digital, social & mobile strategies. He’s a frequent guest lecturer and speaker.

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Dado and his wife Danielle have a daughter Milou and a son, Noah. Dado loves a good glass of wine (especially Italian) and Pop Art.

If you think that Duval Union Consulting can help you with getting your digital act together, do not hesitate to contact us. Jo and Dado can be booked as speakers and organize workshops to accompany you through all the steps of Digital Transformation Modeling. Our experience as entrepreneur and CEO of several companies can help you with rethinking and rebuilding your operational structures in order to introduce digital leadership or to jumpstart digital transformation projects.

Drop us a note if you would like to discuss the options.

[email protected] @jcaudron Phone: 0032 475 43 80 98 www.linkedin.com/in/jocaudron

[email protected] @dadovanpeteghem Phone: 0032 474 82 68 07 www.linkedin.com/in/dadovanpeteghem

www.duvalunionconsulting.com

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Documents

DIGITAL TRANSFORMATION - Duval Union Consulting · Traditional versus digital players 167 ... Digital Transformation Modeling will give you a better view on ... digital company,