CEOs entering 2016 convinced they can succeed by doubling down on what worked in the past may be reading from the wrong playbook.
According to a recently released Forrester / Odgers Berndtson study, "The State of Digital Business 2015," most companies remain unprepared for digital transformation" -- an absolute must for growth. Yet executives representing the diverse sectors examined in the study expect the majority of their sales to be digital by 2020. How will they get there?
If your transformation plan to capture at least a fair share of an expanding digital sales pie is not well underway, and you feel behind the eight ball, that may be for good reason - digital transformation leading to adopting a meaningful new business model or new technology can take years. And it demands operating along a different set of practices that used to work.
Growth is within reach of any CEO ...
- Moving at least as fast as the pace of technological change,
The CEO is also the Chief Culture Officer. Culture is not the job of HR or any other designee. Culture is the sum of the hundreds of choices everyone makes every day. People respond to the behaviors of their leaders. What do growth behaviors look like? Think about orchids in a greenhouse. Like orchids, new and different ideas are fragile and require special care. They may need protection from the outdoors -- the conditions through which a mature business can operate, but which will kill a still-emerging concept. The CEO must advance a culture of a greenhouse, using governance to support both the work wherever growth businesses are being incubated, and a smooth transfer to the mainstream at the right time.
A lot has changed, but strategy is still the starting point for execution that gets results. Good strategy means having a clear view of where you are, an intended destination, and a map of the terrain with a logical path to get there. Good strategy allows for good prioritization of short and long-term moves, including the digital agenda. Strategy is still what gives all members of an organization a common view of goals.
Strategy must evolve from what it has become in too many companies -- a financial extrapolation supported by sales-y PowerPoint and ungrounded assumptions.
Govern to engage and create accountability. Bring the whole c-suite into the act -- no bystanders or anonymous choristers allowed. It's a great idea to ask your CMO or CIO (or both) to lead the digital acceleration effort, but what about the rest of the c-suite? Put a governance process in place that fosters a constructive dialog with all directs to the CEO, including the P&L leaders and functional heads. Governance must reinforce that every member of this team has "skin in the game" to achieve growth results. No one is exempt from being part of the solution.
Update the risk/reward equation. Face it - the traditional American corporation was built to be predictable - to control risk. But nowadays, avoiding deviation from the status quo may be the riskiest path of all. I'll paraphrase how Joi Ito, director of the MIT Media Lab, described the issue at a recent talk: To the corporate leader, downside risk is determined by aggregating variables that are stress-tested through complex analyses in an attempt to account for unknowns. And the potential of digital is full of unknowns, so it can easily be discounted down to just assumed incremental impact.
But here's a whole different view: To a venture capitalist, the maximum downside is the loss of 100% of his or her investment, which is meted out in small chunks as milestones are passed, so exposure is clear, measurable, and contained. And the upside is viewed as low-odds, but exponential in its eventual potential.
Food for thought: reframing the risk/reward inputs and calculation can be a liberating and responsible course of action.
Digital transformation is a non-starter without the right talent. Seek evidence beyond the skills that seem urgent now but come with an expiration date -- what matters is hybrid thinking, continuous learning, and a delivery record of meaningful results. Is "fit" simply a euphemism for "people like me"? Go after your complements, and even some people who don't fit your mold, but for whom you are committed to make room. The continued homogeneity of the faces on the "Team" section of most corporate and startup websites in this day and age reinforces the untapped opportunity to invite others in and reap the rewards.
Measure client outcomes. What gets measured gets done. And, the wrong metrics stifle innovation. Applying yesterday's metrics with blunt force is a death sentence for new ideas. The CEO must take a stand on how to gauge digital progress. Implement metrics that: 1. Align to the strategy, 2. Reveal how well you are delivering client outcomes (i.e., fulfilling the benefits that brought them to you in the first place). 3. Focus on how well the team is delivering results to clients, and 4. Relate to drivers of the P&L and overall franchise health now and in three to five years.
Generate speed and momentum through constant progress in small chunks. It beats all-at-once precision that misses the market. Iterate, iterate, iterate, as fast as you can. Make live prototypes and show them to clients. Test and learn. Be flexible to new data and insight. The word "failure" does not appear in this playbook. "Failure" is something you bring upon your team when you don't take the learning from a study, a test, a prototype, a client conversation and have it fuel the next improvement however large or small to allow you to move closer to success. "Failure" is what happens when the water cooler talk echoes with, "that doesn't work so we killed it." A culture of "failure" has gum in its gears.
Pursue three stages to finding your digital leverage: Step one: Identify the sources of revenue from new clients or relationship expansion (see above point on speed) and the drivers to win this business. Step two: Define the profit model. Step three: Go for scale. I worked under a CEO who set up this one-sentence approach during our early days of digital transformation: "Find the unit profit model and then see if you can scale it."
Collaborate. Some people are wired to collaborate. Others are expert at advancing their own goals through silos. Evidence of growth effectiveness: an environment where colleagues proactively build on each other's ideas with the goal of shared success. Make collaboration a hiring competency that is taken seriously. Make it an expectation and demonstrate through your own behavior what that means.
Finally, get out there and get your hands dirty. We all learn by doing. Fast and valuable knowledge exchange takes place when corporates and startups interact. Corporates will find the speed, iteration, and absence of failure as a concept inspiring. Startups are always looking for mentors and advisors with financial, marketing, and operating experience. This quid pro quo can be the basis for a mutually beneficial and mind-expanding relationship. Make the meeting ground an any space that is not a corporate conference room.
Amy Radin connects customers to companies to create growth. She brings an unexpected combination of insight, reinvention and pragmatism to companies in transformation.