It's no secret that the Apples and Amazons of the world are on the cutting edge of digitalization, but how is the remaining 90-plus percent of the economy facing the challenges associated with developing or changing their digital strategies? In Leading Digital: Turning Technology Into Business Transformation, coauthors George Westerman, Didier Bonnet, and Andrew McAfee tackle this question, and detail their research on how companies across industries are becoming digital masters. Westerman shared some of their insights with Associate Editor Maria Minsker.
CRM: What was significant about the timing of this book? Why write it now?
George Westerman: When we started this research, we were hearing a lot about companies working on digital, mobile, and social strategies, and everything we heard was coming from technology companies. But 94 percent of the economy is outside of the tech space, so we started wondering about how they were handling these new technologies and channels. The timing was interesting because there was so much buzz around social this and mobile that, but few organizations actually knew what they were doing. Even now, plenty of companies are doing a combination of digital things, but few of them are doing it well.
CRM: You refer to companies that have reached digital maturity as digital masters. What sets them apart from others?
Westerman: Digital masters see digital technologies as a way to improve the way that they do business, whether it's through customer experience, operations, or business models, and often all three together. The masters look at digitalization and say, "This is a way to change how we work, and be far better than we were before." The nonmasters see it as a way to do incremental change. They think about each piece of technology individually instead of thinking about the entire strategy coherently. What the digital masters do better is transform and drive change across the organization.
CRM: So what does it take to become a digital master? What stands in the way?
Westerman: The biggest thing that differentiates digital masters from companies that are just doing digital things is leadership. Digital masters drive digital from the top down, and don't see it as just another technology investment. Companies that aren't quite there yet lack the vision, so their digital efforts are often repetitive and wasteful, and not where they need to be. Externally, regulation can get in the way as well. When you think about the pharmaceutical industry, for example, there are a lot of hurdles to clear. But what's important to keep in mind is that every single industry that we've studied already has some digital masters, and that includes the highly regulated industries, so it can be done.
CRM: Can you share some examples of digital masters?
Westerman: A good consumer-facing example is the Cleveland Museum of Art. What they're doing is neat because, usually, when you walk into an art museum, they just give you this little magazine or brochure and you try to figure out where certain pieces or exhibits are. But at the Cleveland Museum, when you walk in, there's a giant screen with over 3,000 art objects on it. You choose the items you want to see, and it transfers them to an iPad that you can borrow, which will route you around the museum and give you extra information on everything you want to see. On the B2B side, there's Asian Paints, which sells white paint to retailers in India. They've used digital technology to fundamentally change the way they work as an organization. They've changed from a regional operation to a centralized operation, which has allowed them to [offer] better service to their retailers, reduce costs in manufacturing, and increase quality. Now they're launching more services and expanding globally.
CRM: The book suggests balancing the roles that technology and people play in an organization. How can companies achieve that balance?
Westerman: Companies shouldn't necessarily have to decide between new technology and existing employees. It doesn't have to be an either/or question. It's all about empowering employees, and redesigning the organization so that humans have more fulfilling work, rather than designing people out of a job completely. Looking at Asian Paints again, when they switched to a call center so that customers could order paint that way instead of from their local salesman, they didn't get rid of the sales reps. Now those sales reps are relationship managers that look for upselling opportunities, work to keep the retailers happy, and improve relationships instead of just taking orders all day.
(George Westerman is a research scientist for the MIT Sloan School of Management initiative on the digital economy. Didier Bonnet is the global practice leader at Capgemini Consulting. Andrew McAfee is the associate director of the Center for Digital Business at the MIT Sloan School of Management.)