So where should an organization begin?
Though market and customer-facing functions are critical for any organization, it might be a good idea to start with back-office functional workstreams such as finance, HR, or R&D as it can help an organization mitigate risks and build confidence and digital skills in the formative years of its transformation journey.
This is helpful in another way because transforming back-office functions can be more meaningful, as they might help in realizing quick operational benefits and significant efficiency gains. For instance, if we consider a functional transformation of the finance function, a more digitally mature function might be using chatbots, cognitive assistants, and self-service tools and assets to improve users’ access to financial data, optimize the data collection process, and use advanced analytics to constantly identify opportunities for performance improvement. Additionally, concentrating efforts to reinvent the “heart of the business” in the preliminary stages of a transformation is a critical precursor to a full-fledged front-office transformation. Once a back-office transformation is successful, the organization can then reapply the learnings from a back-office functional transformation to more front-end/market-facing functions such as customer operations and marketing.
The portfolio of initiatives should be designed in a way that it will not only balance
the need for short-term improvements with longer term strategic objectives and business model evolution, but will also allow the organization to respond within a risk profile that the stakeholders are comfortable with.
- For instance, in the beginning organizations can embark on this transformation journey with initiatives which have a narrow scope within the value chain and will not fundamentally change the existing offerings or business model. The focus here is on improving both operational efficiency and sales effectiveness.
- Once organizations realize quick wins like these, they can try reinventing offerings or business models simply by combining products and services in new and innovative ways, making better use of analytics, designing new economic models, or repackaging an existing offer.
- Once the leadership is quite confident with the success of such initiatives, organizations can then look at initiatives aimed at transforming the value-chain. These initiatives often cut across organizational boundaries (e.g., functions or geographies) and the change management can be substantial.
- When these reap benefits as expected, organizations can then think of entire business-model reinvention. However, such transformation will invariably involve an external ecosystem of partners, and a substantial re-skilling and skill acquisition exercise.
What is the role of the CDO (chief digital officer)?
Digital technologies have opened up myriad opportunities to fundamentally alter the way organizations have traditionally conducted businesses. However, this requires vision, creative skills, and more often than not innovative leaders who can support the organization in this reinvention.
The role of a CDO/CIO is of utmost importance in a digital transformation journey. The CDO is not only responsible for building forward-looking capabilities, but is also entrusted with preparing multiple perspectives on the organization’s strategic portfolio with digital being a central aspect of it. The CDO is also an influential change agent, and hence it’s his/ her onus of develop strategic communications and enable a culture of change.
Additionally, it’s the job of the CDO to appoint governance committees, for maintaining a mechanism to govern firm-level digital transformation. In fact, some organizations have innovation committees to stay ahead of fast-moving digital technologies and business practices. Innovation committees have the onus of both identifying technology-enabled business opportunities and to adjust to evolving employee or customer behaviors.
However, a digital reinvention journey is never an easy transformation for any organization, and adoption of such digital technologies and initiatives tend to raise a lot of challenges and questions for CDOs such as: How to prioritize and fund digital initiatives despite unclear business objectives? How to optimally allocate resources? What kind of policies are necessary to ensure regulatory compliance? What steps have to be taken internally to ensure a consistent customer experience?
In the subsequent articles, we will see how a CDO or for that matter an organization leverage digital technologies to completely revolutionize its customer experience and build a seamless and comprehensive immersive experience.