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Winning with digital

‘Digital transformation’ is a hot topic—and for good reason. It’s allowing organizations to improve their engagement with customers, empower their employees to do more, optimize their operations for maximum efficiency and transform both their business models and their products. While businesses have always been looking to better themselves through new technology, today’s digital transformation opportunity is quite unlike anything we’ve experienced in the past. Previously, technological capability trailed the vision and creative capabilities of a business. But now, in many areas, technology is no longer the limiting factor; new solutions are enabling businesses to make bold moves and turn their dreams into reality.

Successful digital transformation isn’t just about technology—it’s about business, and business involves people. Simply adopting the latest solutions without a commitment to a new company-wide business strategy is not the right recipe for success. Indeed, digital transformation efforts hinge on the ability of leaders to take a fresh look at their business and inspire widespread cultural change.

Here I get to grips with the digital challenge, explore the key attributes of successful digital leaders, and find out how pioneering enterprises are reaping the rewards of the new business landscape.

Why is this important now?  

I speak with far too many companies who have yet to carve out a path for successful digital transformation. Many organizations are held back by silos, some don’t have the right mindset and others are simply unsure about the longevity of digital. What I’ve found is that, because of this, many companies are fearful of investing in change and instead are opting to ‘wait and see’ what happens.

This is supported by new research[1], which suggests that nearly 90% of business leaders believe that their industries will be moderately or greatly disrupted by digital trends. But despite acknowledging this, less than half think that their organization is adequately preparing for this digital disruption.

But digital transformation is here to stay. Often referred to as ‘the fourth industrial revolution’, it is giving way to new capabilities enabled by advances in artificial intelligence, machine learning and holographic computing to name a few—capabilities which provide an unlimited number of possibilities for businesses such as predictive maintenance thanks to embedded sensors in equipment, proactive customer service using behavioral algorithms and new levels of collaboration through the combination of cloud and mobility technologies. These possibilities are allowing adopters to truly set themselves apart from the competition and carve out new paths to success.

Effective leadership is key

With all this in mind, I truly believe that leaders cannot afford to wait any longer to instigate change. From my point of view, the cultural transformation that needs to happen for a company to embrace a digital mindset is not trivial—it will take time and effort. According to recent Accenture research[2], leaders need to accelerate their own digital credentials so that they can effectively manage the cultural and competitive challenges faced by their workforces and organizations. To achieve digital transformation on the inside—operations, culture, practices, and workforce—as well as on the outside—company image and employee appeal—execution relies on the clear commitment and direction of business leaders.

But what are the ingredients to success? Here I discuss three key traits which I believe are consistent with the most successful digital business leaders

Trait 1: They are able to look at opportunities without constraints

Today’s digital leaders are moving beyond traditional business models. They are able to dream about capturing new market opportunities without constraints. This is because, for the first time in many decades, the advancement of technology is outpacing the advancement in business process innovation. Technology is no longer a barrier—it is instead an enabler.

Uber and Airbnb are perfect examples of companies who have created innovative business models that take advantage of the fact that we are transitioning to a digital economy. Airbnb, a worldwide accommodation provider, owns no real estate, and Uber, the popular taxi company, owns no vehicles.

Rolls-Royce is a great example of a company that is leveraging digital technology to expand their business model to capture a new opportunity.  Rolls Royce has more than 13,000 engines for commercial aircraft in service around the world and, for the past 20 years, it has offered customers comprehensive engine maintenance services. Now, Rolls-Royce has recognized an important opportunity to expand the services they offer by providing meaningful, data-driven insights across more of its airline customers’ operations. Fuel efficiency is one of the highest yield areas. By analyzing new data against existing forecasts, reference tables, and historical trends, Rolls-Royce will be able to help airlines understand exactly which factors – including flight plans, equipment maintenance, weather, and discretionary fuel – have the most impact on fuel performance. “Digital technology and analytical insight deliver a real, sustainable advantage in the services we provide,” said Nick Farrant, Senior Vice President, Rolls-Royce. “Our goal is not data for the sake of data, but to embrace the cloud and analytical technologies to deliver more expert insights to the right stakeholders at the right time. If we can do that and link new digital capabilities into our services, we can collaborate more deeply with our customers, as well as improve execution in our own business.”

Trait 2: They cultivate a dynamic culture which accepts failure

For any successful leader, failure has to be an option. My past and recent experience around transformational changes is that it’s simply not affordable to flesh everything out upfront. The path to finding the North Star needs to be going in the right direction, but it’s important to remember that, in the journey to it, the specifics between northeast or northwest—and anything in between—won’t be clear. However, as long as we are moving north, then progress is being made, learnings are happening and adjustments to the right destination are being made. Risk taking, and being able to try a new path, is crucial. It’s also important to quickly recognize when the path is not working and try a new one without making the same mistakes.

I recently read an interview in FierceWireless: Europe[3], where Emma Mohr McClune from Current Analysis summed this up perfectly: “‘Fail fast’ is one of the central principles of innovation, the others being trial and error, revision and improvement: putting something out there, seeing how it does, reeling it back in fast if it doesn’t work, and then trying something new,” she said.

The facts back this up. Approximately 80% [4], of respondents from digitally maturing companies say their company culture actively encourages risk taking and agility, compared to just 23% of early-stage companies.

It’s no wonder that digitally maturing organizations consistently look for managers and executives who can inspire cultural and organization-wide change and collaboration. Key attributes of these leaders, say respondents, include having a transformative vision (22%), being a forward thinker (20%), having a change-oriented mindset (18%) and collaborative skills (22%).

Trait 3: They break down departmental barriers

In my almost 30 years of experience working with many different companies, I have found that the vast majority of organizations still operate in a very dislocated way. There’s a lot of data out there to confirm my anecdotal experience – indeed, the latest findings show that more than half of companies currently work in silos [5], with each business function making its own decisions on which capabilities matter most. But it doesn’t have to be this way. In the digital world, sharing and aggregating data can lead to phenomenal levels of efficiency and provides greater insights.

Many industries are being disrupted by the aggregation of information from both inside and outside the walls of an organization, giving birth to new business models. Data is the new currency and, when data gets converted to information, magic happens, ‘aha’ moments are born and new ideas and opportunities come to life. Correlations of data across different departments are as valuable as bringing external data into the mix – technology can then help convert all that data into key correlations that can in turn help companies to differentiate, excel or even disrupt the market.

Digital leaders are more likely to use data over instinct in making decisions or before moving ahead. The key is that you’ve got to have the data. Disruptive leaders tend to share information to co-create value with partners and they focus on freeing up trapped business value through collaboration instead. This leads to faster time to market, new products or services and, in some cases, new business models.

The Carlsberg Group, an international company producing more than 500 brands of beer, is an excellent example of how breaking down barriers to enable global teamwork and collaboration can drive positive business results. Following a period of unprecedented growth, the Carlsberg Group wanted to optimize its global business operations, while remaining close to local markets. The company reorganized itself around a new operational model designed to find the right balance between working together at a global level and allowing its many regional beer brands to flourish. The new operational model is enabling Carlsberg to achieve new levels of collaboration and business success. Anders Munck, Enterprise Architect for the Carlsberg Group, says “With a relatively small amount of work from our IT organization, we delivered a new service to the business that is transforming how people at Carlsberg collaborate across the globe. Our top executives connect from St. Petersburg, Hong Kong and Switzerland using Skype for Business Online, and our business departments are brainstorming and collaborating using interactive video meetings with hundreds of people participating to bring products to market faster. We never thought we could come so far so quickly, but we are improving individual productivity, virtual teamwork and business efficiencies to stay ahead in the global market.Etienne Dock, Vice President IT Architecture and Sourcing, the Carlsberg Group said in agreement: “No matter what device or distance, the cloud is breaking down traditional barriers so we’re better able to focus on brewing the best beer in the world.”

Reaping the rewards of a digital mindset

Success in digital transformation is just as much about a different approach to work, converting data to relevant information as it is about the capitalization of technology as an enabler. Leaders in this field can think outside the box and are willing to take risks in a way that is quite different from incumbents. They engage employees and customers alike, creating ‘wow’ moments that are truly differentiated. And they recognize that competition doesn’t necessarily lie within their own industry.

Overall, these leaders have a different mindset—and it’s this that will instigate change across a business. At Microsoft, we believe that those companies that have successfully applied a digital mindset to their organization are able to continuously improve in four ways:

  • Engage customers—Build natural, tailored experiences by harnessing data representing a complete view of your customer, then drawing actionable insights that can deliver personalization at scale and achieve a segment of one.
  • Empower employees—Empower people to achieve more by designing a workplace where every working style can thrive—one that harnesses digital intelligence to improve experiences and enables the flexibility of mobility, while keeping your organization, people, and information secure.
  • Optimize operations—Accelerate the responsiveness of your business, improve service levels, and reduce costs with intelligent processes that anticipate the future and coordinate people and assets more efficiently.
  • Reinvent products and business models—Harness data as a strategic asset, shifting from hindsight to foresight, automating manual processes, delivering personalization to customers, and innovating with new business models, services, products, and experiences—all to differentiate and capture emerging revenue opportunities.

These are not standalone digital initiatives—each impacts the other. The opportunity may start in any one of these areas, but what we have experienced is that each success drives and expands into adjacent business needs, gradually building out the digital enterprise. Who knows where it will take us?

The path to digital

The path to digital transformation cannot be achieved by capitalizing on new technology alone; it requires business leaders to embrace a different way of bringing together people and processes with those technology tools as well as an openness to re-envisioning traditional business models and the mindset of a digital company in terms of how you engage your customers, empower your employees, and optimize your operations to reinvent products and business models. Digital transformation is your transformation, supported by Microsoft’s commitment to empower every person and every organization on the planet to achieve more.

Get started today

Work with Microsoft to start your digital business transformation today. Use our knowledge and expertise in a business outcome workshop, deeper solution session, private preview, or customer focus group—or develop a proof of concept or pilot to drive the right implementations and solutions for your business.

  • In a business outcome workshop, you can engage with Microsoft Services one-on-one to scope innovative solutions, architectural designs, and next steps. We will look at where you are, what you are trying to achieve, and how we can help you get there.
  • In a deeper solution session, you can explore any of our solution areas in more detail to develop a comprehensive plan of how to proceed.
  • In a private preview and customer focus group, work directly with engineering teams on innovative new capabilities—starting with our robust tools and your existing infrastructure—to begin developing solutions that meet your specific needs.
  • Begin a proof of concept (POC) or a pilot with support of key engineering teams and partners. No matter how you start, you can count on Microsoft to provide the solutions and resources to help you transform your business.

Additional Resources

Follow me on Twitter @aarcinie.

[1] ‘Aligning the Organization for Its Digital Future’ (2015) MIT Sloan Management Review and Deloitte.
[2] ‘Digital leaders: Moving into the fast lane’ (2015) Accenture Strategy.
[3]  Telefónica eliminates Digital brand, aims for €1.5B in cost savings 
[4] ‘Aligning the Organization for Its Digital Future’ (2015) MIT Sloan Management Review and Deloitte.
[5] ‘Reimagining operations’ (2015) PwC