You don't have to be Google to be a 'digital master'

Four guidelines for any company seeking to employ technology in innovative ways.

It's time to establish your credentials as leading or playing a supporting role at a "digital master" company.

That's the word from George Westerman, with the MIT Initiative on the Digital Economy, and co-author of Leading Digital: Turning Technology into Business Advantage.

In an recent interview at MIT, Westerman said you don't have to be working at the Googleplex to be involved with a digital master. You can be working at any organization that's grappling with moving to the next stage of leveraging new technologies -- be it sneaker manufacturer, cruise ship line, or insurance company.

Digital masters -- companies ahead of the curve in embracing technology-enabled business -- had one thing in common, however. "In studying more than 400 large companies around the world, we found a set of firms that average 26 percent higher profit margins than their industry peers and that have a common approach to using digital technologies," Westerman says. Digital mastery comes from employing technology in new ways to become service oriented, reach customers, and improve internal operations.

While technology opened up the gates for these leaders, technology was not the factor that helped these organizations succeed, Westerman continues. Rather, their common quality is inspired leadership. As he put it: "They use digital technology to fundamentally change their customer experiences, internal operations, or business models. More importantly, they have the leadership capabilities to drive transformation in the company."

In a follow-up interview conducted by Leslie D'Monte at Live Mint, Westerman went even deeper, describing how one company, Asian Paints, employed technology to transform itself from manufacturer to service broker:

"There are a lot of companies that have implemented ERP (enterprise resources planning). That's great. But Asian Paints did this in a different way. They were going to unify 13 regions, but once they did that, they asked what else can we do. How can we do better. So, Asian Paints just doesn't make paints any more. In fact, it sells just white paint. It's the retailers who add color. Asian Paints sells services. They... have extended the role of the chief information officer to cover strategy as well as IT."

Based on interviews with numerous digital leaders, here are Westerman's four main pieces of advice:

  • "Create a vision of how your firm will be radically different because of technology."
  • Engage employees to make the vision a reality. "Show them how they have a role to play in the new order," he recommends. "Then encourage them, through contests and conversation, to suggest ways to move the company in the new direction."
  • Establish governance roles and mechanisms. Roles such as chief digital officer, digital innovation committee, or shared digital unit will help "coordinate digital investments, create standards, and build on the right foundation," says Westerman. One caveat, he notes: "The role of the chief digital officer may go away since digital is simply getting embedded in all we do."
  • Engage the IT department: "Although your digital vision and leadership capabilities shouldn't be technical, they will need to use technology," he advises. "Find a way to work with your IT leaders so that they can connect you with what's valuable in your legacy systems, help you to manage risk appropriately, and develop ways to operate at a speed that the new digital world requires." This is extremely important, since IT has knowledge about processes and technology that no one else has. Digital masters encourage business units to work closely with IT rather than go off on their own, he says.

Digital transformation may seem like a whole different animal than various technology developments that have gone before over the years and decades, especially since it's so tightly wrapped to the business. But the lessons are the same that have been learned repeatedly since the days of client/server and early ERP. That is, there is the expectation that buying lots of shiny new technology will auto-magically deliver business growth. Growth comes from enlightened management that's open to innovation, that knows how to help people get the best out of themselves, to be inspired to seek better ways of doing things. Technology is the tool that helps make this a reality.

That's what I would call the making of a digital master.