Digital transformation ensures businesses are future ready
and well positioned for success.
A strong strategic vision
and long term investment in digitalisation initiatives
are what enables organisations to pivot
and seize opportunities.
Certainly, the significant challenges
and opportunities presented by the last few years
have shown digital maturity
to be the differentiator
between those businesses that have just survived
versus those that have truly thrived.
Peter Weill is a world renowned expert
on digital transformation.
He's a senior research scientist
at MIT and Chairman of the MIT Centre
for Information Systems Research,
which studies and works with companies
on how to transform
for success in the digital era.
Peter's work centres on the role,
value and governance of digitalisation in enterprises
and their ecosystems.
Peter joins us to discuss
the insights from his current research.
Focussed on identifying the successful pathways
for digital business transformation
and the role of senior executives
in leading their companies
to be top performers in the digital economy.
So welcome Peter, and thank you for joining us today.
Firstly, what's the role of digital transformation
to create value and improve bottom line performance?
Thanks Nicole, great to see you and greetings from Paris.
So digital is really
a term that involves many different technologies,
but also a mindset, you know, how to do business differently.
And so we think about it at MIT
as digitally enabled business transformation.
And we've mentioned this across
more than 1200 companies globally
to try and understand
what business impacts you can achieve
through better application
of digital technologies and changing the way you work.
And we measure it, if you like, on two axes.
The vertical axis is customer experience improvement,
and the horizontal axis is operational efficiency improvement.
And the companies that are in the top right
of this two by two, we call future ready.
And there were 23% of firms
who've made it into the top part of customer experience,
relative to the competitors and operational efficiency
and they really performed better.
19 percentage points higher revenue growth
and 14.5 percentage points higher margin.
So it's a massive
goal to achieve, but not easy.
Thanks, Peter.
And I just want to pick up on something you said there.
You talk about digitalisation as the key to being future ready.
How do you define future ready?
That's a great point.
We have a book coming out with that title,
so we've thought a lot about that.
So future really is really
about creating a set of internal capabilities
that allow you to adapt to any new
or almost any new circumstance.
And COVID has been a great test
on companies’ future readiness,
but also your ability to apply
new business models to partner in different ways.
Those things are all about future ready.
And we found that no matter what industry you're in,
no matter what size you were,
there was six attributes of being future ready.
So Peter, with that, I'm assuming that leadership
play a very important role in
successful digital transformation.
And you know, like most things, it starts with the leaders
and we can't just delegate digital transformation down
in the organisation.
So, you've touched on this already but could you
also explain how do senior executives change to become
leaders in digital transformation?
Great place to start
and it's all about thinking for digital solutions first.
And for most senior executives,
by definition, they're not born digital.
So what it requires is a curiosity,
a leaning in,
rolling up the sleeves,
hanging out with digital first people to really understand
what's possible, to get excited about
the new ways of working.
And it does have to come
from the top down as well as the bottom up.
There's two ways to test
whether you are a digitally savvy organisation, two or three.
My favourite ones are,
have you created reusable digital services
for your crown jewels?
Measure that, because if you have,
you are creating
a more digital organisation that's more plug and play.
And have you moved from a project
orientation to a platform orientation?
The idea of projects
that have a beginning and an end in a digital world,
morphing to the creation
of an enduring asset of a platform
that we can reuse in the organisation.
And so that is a good way of telling whether it's working.
And then finally,
and the thing that I have the most trouble with
in becoming more digital, is
leaving the old idea
that I should have the answer and tell people what to do.
To asking the right question.
And that's my first advice to senior executives
who are listening to this.
That, in a digital world where we have data everywhere,
you don't need to know the answer.
In fact, you probably don't.
What you do need to know is the question
and how to get the data to say, here’s how to answer it.
Thank you.
Now how does technology impact
how we do business
and how can all leaders harness
the power of disruptive technologies?
You know, technology is pretty much everything we do.
What is important though,
is you can't just overlay technology
on the current organisation.
In fact, we talk about the four explosions
you have to manage to get value from technology.
And we use the word explosion because
that's what it feels like.
You know, you have to blow stuff up
from the way you were doing things before and do new ways
of doing things.
And I'll just pick two of the four to mention.
The first one is, new ways of working.
So new technology enables new ways of working.
I've already mentioned it's
less hierarchical, more coach and communicate,
but it also enables much more of a test and learn approach.
Much more multi-functional global teams to try things,
much more evidence-based decision making, much better
feedback from the customer, very quickly in real time.
So how do we do that new way of working?
And for a lot of companies that boils down to silo busting.
You know, how do we get people to work together
more effectively.
And the second one I wanted to mention,
and this is the hardest, is decision rights.
If we don't change the decision rights,
we won't get a new outcome.
So a simple example of an important decision right
is the what versus the how.
Who in the organisation gets to decide
what we're going to do.
You know, what new mortgage offer
or what new claim process are we going to use
versus how do we build that and how do we
use our existing technology to do it?
That what versus how, if you give those two decision
rights to the same group in an organisation,
you almost guarantee silos and spaghetti.