6 years, 6 months ago

Do You Have a Great Digital Business Strategy?

Link: http://cisr.mit.edu/blog/blogs/2014/09/24/digital-business-strategy/

Prior to MIT CISR’s CIO Roundtable this summer on digital business strategy, we surveyed CIOs about where they are in the process of creating such a strategy. We defined it as reimagining the business to take into account the capabilities of new technologies, particularly SMACIT—social, mobile, analytics, cloud, and Internet of Things. Many replied that while they know a digital strategy is needed, they aren’t yet clear as to what it should encompass or who should lead the effort. Digging deeper through interviews and our Roundtable, we realized that there isn’t just one digital strategy companies are attempting to implement. Instead, there are actually four evolving digital strategies.

The oldest involves innovation and product development. Some industries like media and financial services have offered digital products and services since 2000, and thus are further along in their development of a strategy. However, even non-digital industries are starting to think about these possibilities. While a lot of responsibility for this strategy rests outside of IT, CIOs almost certainly need to be involved to address integration requirements between new and existing products and services.

The other three strategies are more recent phenomena and have different impacts on different types of companies. The first newer strategy is digital marketing. Companies that haven’t traditionally worked directly with end consumers—such as insurance companies selling policies to corporations for employees — are realizing that they do indeed need to communicate with end users who are the ultimate decision makers. Social media has created opportunities—and expectations—for connecting with end consumers. In the case of insurance companies, they are starting to market to employees who can pick from an assortment of policies and even opt to pay for additional coverage. It’s common for the marketing department to take the lead, but IT needs to be ready to help out.

Another newer strategy involves digital operations. We’re already seeing manufacturing companies focus on this, as their production control systems are highly computerized and sensors provide an immense amount of data. We’re also observing it in high-volume transaction industries like financial services. The challenge is that current digital strategies are usually limited to using the Internet of Things to get more data. The next step is figuring out what to do with all that data to add value. It’s easy to become overwhelmed so this is an especially difficult strategy to design and implement, yet it also offers tremendous opportunities.

The final strategy is what we call the digital workplace. This is frequently viewed as an HR issue, but IT can and should get on board with this one now. As trends like remote work arrangements, collaboration technologies, and mobility allow frontline employees to take on more responsibility, decision making is pushed farther out in the organization. This leads to a fundamental change in how people work and the relationship of those employees with managers. It becomes critical to consider how organizations hire and train people as well as how they define roles because it leads to more effective use of people and information. CIOs need to learn how to leverage this because many HR units aren’t positioned for these changes.

Over time, we expect every company will be touched by all four strategies. However, each is significant on its own, so companies need to determine which ones to focus on and when. They need to consider: Where are the opportunities for a digital business strategy? Which strategies can make the biggest impact? Does the company have the right leadership and incentives in place for those strategies?

Is your company ready to take advantage of digital opportunities? Who will you work with within your organization to convert those opportunities into real value?

Jeanne W. Ross is director and principal research scientist at MIT CISR. She is leader of the 2014 MIT CISR research project, “Do You Have a Great Digital Business Strategy?”.