CEO
CEO’s Role in the Digital Era – 6 Steps Approach
Background
In today’s business world, with the advent of disruptive digital forces, nothing is sacrosanct. Traditional thought processes and viewpoints are being challenged. Innovation is taking place across multiple dimensions at a rapid pace which has never been witnessed before. In addition to product innovation being ushered in due to new digital technologies, there are now innovative business models that are being developed. Competition is being witnessed not just from traditional competitors and from customers (via backward integration) & vendors (via forward integration) but also from corporations outside the industry. Some of these corporations are simply seizing opportunities by addressing the weakest link in an enterprise or creating one that doesn’t exist today.
Who is Responsible?
Should the CEO be accountable to the shareholders for the success of the Enterprise’s Digital Strategy and Transformation?
The CEO is responsible for ensuring the success of the enterprise in this Digital Era, and he in turn depends on his team.
There is no clear-cut approach or methodology to achieve success in this Digital Era. Every situation is unique, and it is up to the leadership to help guide the future of their enterprise. However, there are certain guiding principles (steps) that are available and that can be followed by the leader to come up with a good game plan.
Recommended Six Steps to formulation of Digital Strategy and successful Transformation:
- Embrace digital (enhance growth by innovation & imagination i.e. Digital External*)
Albert Einstein once said, “The true sign of intelligence is not knowledge but Imagination.” We are limited by our ability to imagine, and this holds true today more than it ever did in the past. As the CEO, the question is not only to be an expert in your Industry (or domain) but also to be able to imagine possibilities outside your current realm and across boundaries. A future enterprise’s business strategy will be based on who can best imagine the new possibilities and seize those opportunities by leveraging existing capabilities to their advantage and revitalize their ‘Core’. This has to be an ‘on-going’ process as all competitive advantages are temporary, in particular, in this high ‘Clockspeed’ digital era.
- Develop a good business strategy with great tactics (i.e. Operating strategy)
Once the new business opportunity has been identified, leaders should focus on developing a good business plan. In the Digital Era, time is of paramount importance; hence, developing a strategy that is good enough to move forward is all that is required. As per General Patton, “ A good plan, violently executed now, is better than a perfect plan next week.”. The focus has to be on developing great tactics (i.e. Operating strategy) to compete against competitors in the marketplace. This is where the wars are won or lost, i.e. in the trenches. Look no further; in football, no matter how good the strategy is, the team that frequently wins is the one that is disciplined, relentlessly perseveres, makes adjustments as needed, and eventually wears out its opposition. It’s all about the tactics!
- Act quickly while listening to the customer
How to differentiate between Customer’s ‘Active’ and ‘Inactive’ problems is a tough ask. One possible way to ascertain this is to use Data Analytics. There are multiple tools and techniques that are available to understand and predict customer needs but come at a cost (i.e. investment). This may provide an insight into a customer’s future needs but cannot assure positive Return on Investment (ROI). Hence, one should tread carefully in this area. In the beginning, it may be prudent to leverage data analytics for internal improvements (recent studies show that the ROI attained is much higher for internal improvements versus gaining customer insights). In parallel, learn from what your competition is doing in terms of customer insights. Sometimes, it makes sense to let someone else spend his resources to convert those problems from ‘Inactive’ to ‘Active’ as they try to gain the first mover advantage. In digital business, first mover advantage is not necessarily an advantage rather acting quickly once the customer need is established is hugely advantageous. There are multiple examples that prove this statement (Netscape Navigator browser was taken over by Microsoft IE browser, MySpace by Facebook, Alta Vista by Google search engine, etc.)
- Focus on a few and monetize
Enterprises have limited resources; hence, the focus should be on selecting a few products (or services) and vigorously execute the set out plan. Additionally, effort should be made to monetize whatever you are selling. It is not sufficient to just increase certain perceived metrics such as the number of registered users, eyeballs, etc. The focus should be on delivering results that business experts and shareholders can understand and feel i.e. the language of money!
- Develop excellent business capabilities (Digital Internal*)
The key ingredient for success, apart from imagination, is the development of business capabilities. Of course, the objective is to leverage existing capabilities and to assess what is lacking. The gap in terms of capabilities can be bridged either by developing them internally or acquiring them from outside. Herein lies the opportunity to acquire those required capabilities in the shortest possible time (remember time is of paramount importance in this Digital Era). There are various ways to acquire these capabilities which could be digital in nature. Some of the proven traditional ways are Mergers & Acquisitions (M&A) and/or strategic partnerships. Additionally, one should look at digital technologies such as the ‘Cloud Computing’, ‘Mobility’, and ‘Social Media’ to help develop these capabilities quickly.
- Motivate & trust your team to perform meaningful work
An enterprise can be as strong as its weakest link. This is where we see a major difference between a good versus a great organization i.e. the quality of their workforce. Malcolm Gladwell mentioned in his book Outlier, people crave for meaningful work. Meaningful work consists of three criteria:
- Effort to Reward relationship: Define a clear relationship between effort and reward. The better the performance, the higher the reward.
- Complexity: Put people on complex projects, and they will shine
- Autonomy: Provide complete independence
In other words, give people a challenge (complexity), freedom to run it like their own business (autonomy) and set up a system that rewards them for their successes. Then, just sit back and enjoy the journey. However, the team needs to be close to the customer so that it can listen to the customer needs, understand market shifts and make any course corrections on the way.
There is so much social, political and economic uncertainty around the world. On top of that, digital technologies & new business models are destabilizing one industry after another (more so in Media & Entertainment, Electronics, Finance & Insurance, Retail, Airlines, Hotel industries) and no industry is immune to these disruptive forces and it’s just a matter of time.
Obviously, in order to counter these challenges and convert them into opportunities requires vision and fortitude. The question is, as the CEO, are you ready for greater challenges?
Digital Internal vs Digital External*:
Digital Internal – Digital technologies utilized to develop organization’s internal business capabilities
Digital External – Product and services offered by an organization that are digitally consumed by the end customer
About the Author
Udey Chaudhry is an Executive Management Consultant, focusing on Digital business strategies and execution, with extensive experience as a Strategy Consultant with top tier consulting firms and successful startups. He is an alumnus of MIT Sloan School of Management.
All opinions expressed by Udey Chaudhry are solely his own and do not reflect the view of any professional organization.
© 2015 Udey Chaudhry All Rights Reserved
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