The DNA of Digital Masters

1. 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

2. 2
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
DIGITAL
CAPABILITIES
DIGITAL
LEADERSHIP

3. 3
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!

4. The DNA of Digital Masters
4
DigitalCapability
Leadership Capability
CONSERVATIVESBEGINNERS
FASHIONISTAS
DIGITAL
MASTERS
Source:
MIT Center for Digital Business

5. Digital Masters Outperform Their Peers
5
DigitalCapability
Leadership Capability
REVENUE GENERATION
+6%
Basket of indicators:
Revenue/Employee, Fixed Asset Turnover
+9%
-10%-4%
DigitalCapability
Leadership Capability
PROFITABILITY
+26%
+9%-24%
-11%
Basket of indicators:
EBIT Margin, Net Profit Margin
Source:
MIT Center for Digital Business

6. Digital Masters in Various Industries and Geographies
6

7. Digitization at Nike
7
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

8. Digitization at Asian Paints
8
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

9. Digitization at Caesars
9
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
TRANSFORMATION
ON TACTICAL
DECISIONS

10. Digitization at Codelco
10
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

11. Digitization at GE
11
Sensors in Many
Products
New Service
Models
Platform for
Industrial
Internet
Digital/Industria
l Model
DIGITAL CAPABILITY
LEADERSHIP CAPABILITY
 Strong pull from CEO
 Chief Digital Officer role
 Major investment in people and tech
 Built partner and venture ecosystem
EXTERNAL
DIGITAL
TRANSFORMATION

12. Digitization at Wells Fargo
12
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-
FOCUSED
DIGITAL
TRANSFORMATION

13. The DNA of Digital Masters
13
DigitalCapability
Leadership Capability
The “What”
Customer experience
Operational processes
Business models
The “How”
Vision
Engagement
Governance
Technology Leadership

14. Challenge Your Business Model Before Someone Else Does
14
Re-Inventing
Industries
Substituting Products
& Services
Crafting New
Digital Businesses
Reconfiguring
Delivery Models
Rethinking
Value Propositions

15. Digital Business Models at
15
• 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

16. Building Blocks of Digital Capability
16
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

17. The DNA of Digital Masters
17
DigitalCapability
Leadership Capability
The “What”
Customer experience
Operational processes
Business models
The “How”
Vision
Engagement
Governance
Technology Leadership

18. Building Blocks of Leadership Capability
18
Create 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
Technology
Leadership
Governance
Engagement

19. Governance Steers the Course
19
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

20. Business and IT Functions Need to Collaborate
20
IT Business
Relationship
Digital
Skills
Digital
Platform

21. We’re Just Getting Started!
21
Augmented Reality
Robotics Artificial Intelligence
Sharing Economies Wearables
3D Printing