By Carol Hildebrand
The concept of digital transformation may sound like hype, but it’s the real deal—and digital innovators are already pulling away from the pack, according to Dr. Didier Bonnet, Capgemini Consulting’s senior vice president and head of digital transformation.
“Digital masters are 26 percent more profitable than peers in their industries,” said Bonnet, who kicked off Oracle OpenWorld sessions Tuesday, September 30 with a keynote analysis of what these companies do right. “That’s not a small number—these people are performing better,” he said.
Bonnet, along with MIT’s George Westerman and Andrew McAfee, studied more than 500 large companies in traditional industries, looking for organizations that have seamlessly integrated digital technologies such as social, mobile, cloud, and analytics into their business strategy. They found a handful of what they call digital masters across every industry they examined, and were able to codify what these companies do well. “It takes leadership, tenacity, and resources, but anybody can do it,” Bonnet said.
He emphasized that deploying technology is only the first step—companies must know not only where to invest in digital capabilities, but also how to lead the transformation.
“You can’t forget the past,” said Bonnet. “Digital is about seamlessly meshing the old and the new.”
Doing the first without the second wastes both time and money, said Bonnet. “We saw a bank that had 17 mobile apps, all doing roughly the same thing, from different vendors in different parts of the world. [The apps] didn’t work together, and nobody was talking to each together because there was no sense of vision or strategy,” he said.
When it comes to what areas are ripe for digital transformation, digital masters tend to invest in three distinct areas: customer experience, operational efficiency, and business model transformation. Take customer experience, for example. A casino operator, one of Bonnet’s digital masters, puts customer data at the heart of the entire customer experience, increasing reach and engagement. “They dispatch this data to all of the organization,” said Bonnet. If you lose money gambling while staying at this casino, for instance, the chambermaid knows to put flowers and chocolate in your room to make you feel better, said Bonnet.
How to Lead
The real advantage comes in what Bonnet calls the how. “Leadership capabilities are what turn digital investments into a digital advantage,” he said. “There is zero evidence that digital is happening at the edge. It is entirely driven top-down by strong leadership.”
Digital masters emphasize four key areas:
Vision: It’s hard to define, but like art, you know good vision when you see it. Bonnet and his colleagues found several elements that roll up into a good, shared digital vision. First, start with what you’re good at and figure out how to make that useful in the digital world. From there, build a transformative vision with a clear intent and outcome—marketing slogans won’t work. You have to clearly see where the company is going, and you have to constantly evolve—strategic visions don’t have an endpoint.
Engagement: Digital masters also know how to get their employees to buy in, and they are very smart about using technology to engage people at scale—wiring the company for engagement, so to speak. Devices such as wikis or social networks give people a voice and a connecting mechanism, and they work best when there is real business value to using them. Your senior leaders need to be early and consistent adopters of these connective components, and you need to continue to scale the efforts to foster new ways of working.
Governance: The nuts and bolts of how a digital vision is implemented, “governance is the biggest driver of the profitability number,” according to Bonnet. Strong governance reduces redundant projects and wasted efforts by instituting processes that let leaders prioritize and synchronize digital investments within their overarching digital vision. There are plenty of different governance models, from a central unit to committees to roles such as the chief digital officer. The trick is to find the model that best meshes with your corporate culture, and give it some teeth.
Business/IT: Many companies want to implement digital transformation despite IT. None of them is a digital master. “Every digital master we saw had actually fundamentally changed the nature of the business-IT relationship,” said Bonnet. These companies designed programs to build digital skills within their companies and understood the value of a good digital platform to connect their services, even if it required extensive platform overhauls to make it work.
Bonnet cautioned that the digital transformation is far from clear-cut; in fact, it’s messy. But companies neglect the process at their own peril. Digital technologies are accelerating tremendously, and companies must learn to constantly integrate changing technology into their operations. “You have to start doing things now,” he warned, “because companies that don’t are going to have a really hard time doing business in the next five to ten years."
