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Digital business models help set companies up for future success

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Two researchers from the MIT Center for Information Systems Research have developed a framework, in the form of six questions, that can help inform an enterprise’s digital transformation strategy.

In their book What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise, researchers Peter Weill and Stephanie Woerner developed this framework in an effort to help executives remain competitive as they usher their businesses into the digital era.

One of the six questions that Weill and Woerner identified is “Which Digital Business Model Is Best for Your Future?”

A digital business model is a direction that companies can take in the digital era that covers best practices, operations, goals, etc.

In a short video, Weill explains that there are four business models that enterprises can use to make money in the digital era. He expands on one of these models, the Ecosystem Driver, stating that “it’s the most successful on every metric that we look at.”

“Ecosystem Drivers are all about becoming the go-to destination for the customer, either through B2B or B2C in a particular domain,” Weill says.

He discusses Amazon and Netflix as examples of Ecosystem Drivers within their domains.

“The big threat is that these companies sit between you and your customer,” he says. “So as you’re thinking about the next decade, you need to buy an option for your business for how you’re going to be an Ecosystem Driver in your industry.”

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Culture

Digital transformation for a more sustainable world

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Sure, they’re confronted with business challenges every day, but the world’s top business leaders have a significant part to play in solving the world’s challenges — economic, technological, societal and educational. 

As Christian Klein, Co-Chief Executive Officer of enterprise application software company SAP succinctly puts it in a blog post for the World Economic Forum, “Companies today don’t just prosper based on their financial performance, but on how they make a positive contribution to society.”

Ahead of the World Economic Forum’s 2020 meeting — taking place Jan. 21-24 — Klein outlined how digital transformation can be a force for good in the world, and be a way to create a more sustainable world.

Critical minds, he starts, might wonder why companies would take the time, considering their primary goal of making money. “These critics should not underestimate the power of the consumer,” he argues, explaining that while customers do consider their decisions based on products or price, but the company’s values. Employees act in a similar way, choosing to join companies “that embrace their responsibility towards humankind and the planet.”

Almost every person on the planet knows that technology plays a profound effect on just about every facet of our lives, from jobs to wages to health to security. Meanwhile the need for business to undergo digital transformation, simply to stay relevant and alive, is hardly big news anymore. 

“But transformation is also about a change of culture, which requires a radical rethinking of people, processes and technologies,” Klein writes. Included in this are “tectonic changes” that go into a company, and how employees interact within the whole system. 

“And just like a business cannot digitally transform unless – or until – its people transform, I believe that, while they come with their own environmental costs, technology and digitalization can play a crucial role in developing solutions for a better tomorrow.” 

Some examples? Blockchain’s potential to add traceability (and by extension, trust) to food supply chains. The empowerment of people with disabilities through AI, which, when properly applied, can reduce bias in the hiring process. Smart cities, powered by everything from sensors to open data to better supply services and protect resources.

[Related reading: How 5G and the Internet of Things can create a winning business]

“There is no doubt that technology and digital transformation break down silos and create transparent and unified data for objective decision-making,” Klein writes. “But even more so: they change how companies manage their relationships with the wider world.”

Creating a sustainable world requires us to look beyond corporate borders, toward the communities around us, creating an ecosystem of trust “that allows us to exchange ideas to create a safety net for the most marginalized.”

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Four steps for CIOs undertaking DX

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CIOs are in a unique spot in any organization’s digital transformation (DX) journey. 

With one foot on the business side and the other firmly planted as a technical leader, CIOs are a vital piece of the puzzle, especially with the many challenges and constant management required on the road to digital.

As Gustavo Gomez, founder and CEO of intelligent process automation software provider Bizagi, explained in The Enterprisers Project, “Only CIOs have the broad perspective to ensure that transformation deployments can reach both deeply into organizational silos and broadly across lines of business.”

How can CIOs put their organizations onto a digital transformation path that’ll lead to a better likelihood of success? Gomez outlines four essential steps:

1.) Embrace different perspectives

CIOs aren’t always the catalyst for digital transformation. Frequently, leadership from many parts of the organization will “have a “wouldn’t it be great if we could…” epiphany,” as Gomez explains.

As the bridge between technical implementation and business objectives, the CIO needs to recognize and address this divergence before it undercuts the actual transformation,” he says.

How? Clear and steady communication between the transformation teams and stakeholders, with a goal of understanding what transformation will accomplish.

2.) Focus on incremental wins

According to Gomez, organizations will encounter two competing narratives: “Start immediately on disparate pilot programs (risking control and scalability) or meticulously craft the perfect comprehensive transformation (risking months or years of delay with limited return).

A clear, goals-driven strategy is key, but feasible milestones that are regularly achieved can go a long way in showing steady results to stakeholders or the board. 

3.) Win hearts and minds

Organizational change of any kind is often met with resistance, and it’s no different when it comes to digital transformation. But given that DX is a key part of ensuring long-term success, Gomez explains, employee participation is “a matter of survival.”

The trick to getting everyone on board? Departmental management. By on-board these leaders to the larger vision, their role within it, and bigger-picture business objectives, “CIOs can help evangelize the change, ensuring it trickles down to all levels of the organization.”

4.) Identify a scalable solution

As Gomez explains, it’s one thing to complete a successful trial transformation in a small team, and another to turn around and roll that change out across an entire organization. 

He identifies two considerations: First, it’s possible to achieve micro-scale DX wins that end up siloed in a single part of the organization. Two, transformations that work in controlled, smaller settings but fail when scaled up for broad release.

A key indicator can be a heavy reliance on IT involvement in modifications,” says Gomez. “Digital transformation must evolve to meet changing business realities, and anything that leans too heavily on IT for those adjustments will quickly stall.

All digital transformation journeys have hurdles, but through the unique position of CIOs as both business and technology leaders, success is more likely when they actively work to effectively hear from all sides, embrace smaller-yet-frequent milestones, win over stakeholders, and ensure that the DX journey goes where it’s needed. 

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GuideSpark CEO says communication breakdown to blame for failed digital transformation

It’s been well-documented that a significant number of digital transformation (DX) efforts fail.

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It’s been well-documented that a significant number of digital transformation (DX) efforts fail.

With two-thirds of businesses recognizing that their company must digitize by 2020 in order to stay competitive, even the biggest household name companies are pouring trillions into DX initiatives.

GE, Ford, and Procter & Gamble all failed in their initial efforts, while just 16% saw improvements in their performance.

And while it’s been widely accepted that employees, organizational culture, and leadership are “weak links,” according to GuideSpark CEO Keith Kitani, in a commentary article for CNBC, “few acknowledge the real common thread: communication breakdown.”

“The truth is, people aren’t the problem,” he explains. “It’s the organization’s failure to communicate effectively with its people that sets them up for digital transformation trouble from the start.”

Implementing new tools, processes, and workflows is the easy part. Changing people? That’s where efforts tend to go sideways. “Organizations that are unable to get the right message to the right people at the right time will find it downright impossible,” Kitani says.

How can organizations overcome communication breakdown, and increase their chances for digital transformation success? Kitani outlines 6 ways:

1) Focus on the why:

Go behind the issue, and talk about its inspiration and necessity. “Explain how the transformation will benefit the business, why it’s critical for future viability, and how it impacts employees,” Kitani says.

When employees can rally around a common purpose for the whole team, it’s more likely they’ll get on board.

2) Create personalized communication journeys:

In marketing, it’s important to meet customers where they are in the buying process. “In digital transformation,” explains Kitani, “your employees are the customers you need to convince to buy into the change. One-size-fits-all doesn’t work.”

Consider employees’ questions, concerns, challengers, customizing a message that’ll resonate.

3) Create targeted multimedia experiences that reach different groups:

Some people are visual learners, while others are better at listening or a hands-on style. 

“Creating targeted experiences that reach different groups through varying formats and channels, with distinctive tones and styles based on their demographics, can help you make a much stronger, longer-lasting impact,” Kitani advises.

4) Communicate in context:

Employees are busy, with busy Slack boards and inboxes that are overflowing. Essentially, it’s easy for digital communication to get lost in the mix. 

Getting employees to pay attention requires working with the tools they’re using, and be embedded in their everyday work: “By communication within the context of work, the information is more relevant, timely, and more likely to make an impression.”

5) Use data to measure and iterate:

Communication isn’t about the delivery of the message, Kitani explains. It’s really about ensuring the message can get through. How? Measuring engagement and response. What messages are opened? What content gets viewed? 

One tip Kitani shares is to conduct a quick poll to gage feedback in real-time, allowing organizations to make quick adjustments on the fly.

6) Become a change-ready organization: When an organization’s culture and structures of communication are willing and able to adapt to change, the result is a more agile and proactive foundation. 

“After all, the rate of change and evolution in business and technology is only going to continue and even pick up speed.”

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