CHAPTER 8

BUILDING TECHNOLOGY LEADERSHIP CAPABILITIES

We are stronger when we listen, and smarter when we share.

—RANIA AL-ABDULLAH

If, before you had read this book, we asked you to think about what makes leadership work, you would probably have thought of vision, governance, and engagement (among other things). These three tools are essential to guide any kind of major transformation.¹ But another essential element of digital leadership capabilities is not necessarily something you might think of as leadership. It’s the strong relationship that Digital Masters encourage between their IT and business leaders, and the way these companies use that relationship to drive change in their internal platforms and digital skills. These are what we call technology leadership capabilities, and they are essential for driving transformation that is based on digital technology.

TECHNOLOGY LEADERSHIP AT LLOYDS BANKING GROUP

Lloyds Banking Group (LBG), based in London, is one of the world’s largest banks, with more than $1 trillion in assets. In 2006, LBG executives began to understand that their existing online retail platform, while working well, could not scale to the new demands that the company was going to place on it in the future. Soon after, a merger with Halifax Bank of Scotland made the situation more pressing, as it would add millions more customers to the strained system.

The executive team asked a senior business executive, Ashley Machin, and a senior IT executive, Zak Mian, to rethink the company’s approach to digital retail banking. The pair knew each other only in passing, but soon developed a strong working relationship. Starting small, they put together a plan to replace the old platform with a new, more scalable one—a true foundational investment for the company’s future digital strategy. This first step was the start of a partnership that began to transform nearly all of the bank’s digital customer engagements, and then more.

Machin described how the transformation began:

In addition to rethinking the platform, the two leaders also rethought the way IT and business worked together. Understanding that their team needed to work faster than traditional IT development processes could, they created a new unit that merged both IT and business talents. Instead of business providing the requirements and IT delivering the technology, people from both sides of the house worked together to innovate the company’s processes. The team took responsibility not only for delivering technology, but also for ensuring the business changes that would be necessary to deliver the expected benefits. Machin and Mian hired staff from inside and outside the company, built a team with system development consultants in India and the UK, and went to work.

Once the basic platform was in place, the team started to take on new challenges such as credit card processing. Mian explained: “We had extended the platform for retail and also commercial, and then it was absolutely time to reenergize the transformation agenda rather than the re-platforming agenda.” Demand took off, and leaders of many units—from credit cards to mortgages to commercial products—asked for help in digitally transforming their businesses.

Looking back, Machin said, “One of the regular questions I get is, ‘How have you managed to get such an integrated and symbiotic relationship between IT and business?’ And quite simply, I think the answer is, you need to have a shared passion for the outcomes you want, and to have a highly trusting relationship that you are both determined to do the right thing for the customers and [to] be slightly agnostic, for want of a better word, about how you get there.”

The strong IT–business partnership and the ability to deliver great digital customer experiences, ROI, and flexible technology has paid off for the team and the company. In 2013, CEO António Horta-Osório recognized that the group had a further opportunity to strengthen and accelerate the company’s plans and to develop digital propositions across all customer-facing divisions in the group. In September 2013, Horta-Osório made “head of digital” a group executive-committee-level appointment, reporting directly to him, creating a new digital division under Miguel-Ángel Rodríguez-Sola, the director for digital, marketing, and customer development. This digital unit, now more than a thousand people strong, moved into a new dedicated location. Commenting on future plans, Mian added, “What gives me confidence is that although we know we need to continue to adapt and learn, the shared agenda and integration of business and IT teams is now in our DNA.”

THREE ELEMENTS OF TECHNOLOGY LEADERSHIP CAPABILITY

As the Lloyds story shows, technology leadership is not just about IT leaders, although they are part it. It’s not just about technical skills, although they’re essential. It’s about merging the skills and perspectives of business and IT leaders so that they drive transformation together.

When the IT–business relationship is strong, IT people can suggest new opportunities, and businesspeople listen. Businesspeople have an instinct for the problems that poor technical decisions can create, so they make better decisions, with no need for the CIO to lecture them on standards and procedures. IT and business groups are able to move faster together than they could separately, so they can conduct experiments, launch new capabilities, and transform outdated platforms better than other companies can.

In talking about technology leadership, therefore, we won’t just focus on the leaders’ relationship. We’ll also look at what they do with that relationship—building digital skills and transforming the technology platform that underpins all digital processes, from customer engagement to operations to business models.

THE IMPORTANCE OF STRONG IT–BUSINESS RELATIONSHIPS

Many executives told us that, given their IT units’ poor performance, they were going to find a different way to conduct their digital transformations. The business executives were going to move forward despite their IT units, not with them. We did not find this to be true with Digital Masters, which have much stronger IT–business relationships than nonmasters do. In our research, the precise measure we used was a well-known concept from the IT research literature: shared understanding.³ The concept is a composite of four survey items that assess the extent to which IT and business executives share a view of the role of IT in the organization, including its potential in improving productivity and serving as a competitive weapon, as well as a common view of prioritization. Digital Masters averaged a statistically significant (32 percent) higher level of shared understanding than nonmasters did.⁴

Shared understanding is the starting point for larger changes in the IT–business relationship and the nature of IT itself. In Digital Masters, IT and business executives have deep trust and respect for each other. They are also very clear on their roles as they work together to make digital transformation happen. This translates to what they can do. Digital Masters reported feeling 21 percent higher control over their destiny than nonmasters, a difference that is also statistically significant.⁵ By working together, these leaders can do what they need, and they can get more done. Their companies’ digital skills are higher, and the state of their digital platform is better than in nonmaster firms.

When the relationship is strong, the IT–business partnership merges customer and product knowledge, technical knowledge, organizational change capabilities, and IT capabilities into a single, continuous collaboration. Unfortunately, in many companies, the relationship seems to be more like a troubled marriage than a smoothly functioning partnership.⁶ Conversations are full of conflict, and little collaboration takes place. The poor relationship serves as a handicap that can slow action and increase the risk of change.

The Causes of Poor IT–Business Relationships

Poor relationships between IT and business leaders can have many causes. Sometimes it’s the personality of the IT leader. A common complaint among senior executives is that their CIO seems to speak a different language from the business. Another is that the CIO doesn’t seem to understand what’s really important. For example, a chemical company CIO we interviewed described how he communicates regularly with business executives about the innovative possibilities of digital technologies. Yet none of his business executive peers (whom we interviewed separately) seemed to find the discussions credible.

Sometimes the issue arises from IT’s delivery capability. According to Bud Mathaisel, who has served as CIO in several large companies, “It starts with competence in delivering services reliably, economically, and at very high quality. It is the absolute essential to be even invited into meaningful dialog about how you then build on that competence to do something very interesting with it.”⁷ Unfortunately, some IT units today do not have this competence. One business executive we interviewed said, “IT is a mess. Its costs are not acceptable. It proposes things in nine or ten months, where external firms could do them in three to nine weeks. We started offshoring our IT, and now our IT guys are trying to change.” A legacy of poor communication, byzantine decision processes, and broken commitments is no foundation on which to build a strong IT–business relationship.

However, the fault doesn’t always rest only with IT leaders. In many cases, business executives share some of the blame. As we’ll show later in this chapter, high-performing IT requires a good digital platform, and good platforms require discipline. If your approach to working with IT can be characterized by impatience, unreasonable expectations, or insisting on doing things your way, then you’ll need to think about how to change your side of the relationship.

Regardless of the cause, if your IT–business relationships are poor, it’s essential to fix the problem. A bank executive stated, “IT has been brought closer to business during the last five years. It is very important to success because many of the important transformations in our business are enabled by technology.” With strong relationships, IT executives can help business executives meet their goals, and business executives listen when IT people suggest innovations. Executives on both sides are willing to be flexible in creating new governance mechanisms or shared digital units. At Codelco, Asian Paints, and P&G, the CIO even leads digital transformation for the company.

Improving the IT–Business Relationship

So, how can you start to improve your IT–business relationship? Angela Ahrendts, CEO of Burberry, told her CIO he needed to help drive the bus with the executive team.⁸ However, leadership changes or top-down mandates are only the start of the change. Few CIOs can change the business by themselves, and not all business executives will climb on the bus with the CIO, even if the CEO demands it.

Fixing the IT–business relationship can take time, as people learn how to trust each other and redefine the way they work together. As with any struggling relationship, the best starting point is to fix the way you communicate. Does IT really cost too much, or are costs reasonable, given what IT has to do? Is the IT unit really too bureaucratic, or do all of those procedures actually serve a useful purpose? Are you a good partner to IT or a difficult one? How can IT make it easier for you to get what you need, while still making sure things are done correctly? What investments can help IT improve its technology, internal processes, cost-effectiveness, quality, or speed?⁹

MIT research into IT turnarounds has identified a series of steps that can change IT from a poorly respected cost center to a high-functioning business partner.¹⁰ The key change mechanism is transparency—around performance, roles, and value. The first step is to help IT employees think, and talk, differently about what they do. The second step proceeds to showing very clearly how well (or how poorly) IT delivers value for money—the right services at the right quality and right price, and where problems still exist. And then the third step moves to changing the way IT and business leaders make investment decisions and assess the returns that projects deliver. Through transparency around roles, performance, and investments, both sides can make smoother decisions and work together to identify and deliver innovations.

Creating Dual-Speed IT

Changing the IT–business relationship is well worth the effort, but doing so takes time. Your company may not have the time to wait before starting your digital transformation. Rather than improving the IT unit, some companies try to build digital skills into another unit, such as marketing. They try to work around IT rather than with it.

Although building digital skills is useful, trying to work around IT can be fraught with challenges, especially if people do not understand the reasons for IT’s systematic, if sometimes ponderous, processes. This kind of flanking action can waste money, make the digital platform more complex, and, even worse, open the company to security and regulatory risks.

A better approach is to create a dual-speed IT structure, where one part of the IT unit continues to support traditional IT needs, while another takes on the challenge of operating at digital speed with the business. Digital activities—especially in customer engagement—move faster than many traditional IT ones. They look at design processes differently. Where IT projects have traditionally depended on clear designs and well-structured project plans, digital activities often engage in test-and-learn strategies, trying features in real-life experiments and quickly adding or dropping them based on what they find.

In a dual-speed approach, the digital unit can develop processes and methods at clock-speeds more closely aligned with the digital world, without losing sight of the reasons that the old IT processes existed. IT leaders can draw on informal relationships within the IT department to get access to legacy systems or make other changes happen. Business leaders can use their networks to get input and resources. Business and IT leaders can even start to work together in the kind of two-in-a-box leadership method that LBG and other companies have adopted.

Building dual-speed IT units requires choosing the right leaders on both sides of the relationship. Business executives need to be comfortable with technology and with being challenged by their IT counterparts. IT leaders need to have a mind-set that extends beyond technology to encompass the processes and drivers of business performance. Leaders from both sides need to be strong communicators who can slide easily between conversations with either business- or IT-focused people.

Dual-speed IT also requires perspective about the value of speed. Not all digital efforts need the kind of fast-moving, constantly changing processes that digital customer-engagement processes can need. In fact, the underlying technology elements that powered LBG’s new platform, Asian Paints’ operational excellence, and Nike’s digital supply chain enhancements required the careful, systematic thinking that underpins traditional IT practices. Doing these big implementations in a loose learning-by-doing method could be dangerous. It could increase rework, waste money, and introduce security risks. But once the strong digital platform is there, building new digital capabilities can be fast, agile, and innovative. The key is to understand what you need in each type of project and how much room any project has to be flexible and agile. Great IT leaders know how to do this. If teamed with the right business leaders, they can make progress quickly and safely.

Dual-speed IT also takes new processes inside IT. Few digital businesses have the luxury to wait for monthly software release cycles for all of their applications. Digital-image hosting business Flickr, for example, aims for up to ten deployments per day, while some businesses require even more.¹¹ This continuous-deployment approach requires very tight discipline and collaboration between development, test, and operations people. A bug in software, missed step in testing, or configuration problem in deployment can bring down a web site or affect thousands of customers.

A relatively new software-development method called DevOps aims to make this kind of disciplined speed possible. It breaks down silos between development, operations, and quality assurance groups, allowing them to collaborate more closely and be more agile. When done properly, DevOps improves the speed and reliability of application development and deployment by standardizing development environments. It uses strong methods and standards, including synchronizing the tools used by each group.¹²

DevOps relies heavily on automated tools to do tasks in testing, configuration control, and deployment—tasks that are both slow and error-prone when done manually. Companies that use DevOps need to foster a culture where different IT groups can work together and where workers accept the rules and methods that make the process effective.¹³ The discipline, tools, and strong processes of DevOps can help IT release software more rapidly and with fewer errors, as well as monitor performance and resolve process issues more effectively, than before.¹⁴

Whether your CIO takes it upon himself or herself to improve the IT–business relationship, or you decide to help make it happen, forging a strong link between business and IT executives is an essential part of driving digital transformation. Strong IT–business relationships can transform the way IT works and the way the business works with it. Through trust and shared understanding, your technology and business experts can collaborate closely, like at LBG, to innovate your business at digital speeds. Without this kind of relationship, your company may become mired in endless requirements discussions, failing projects, and lackluster systems, while your competitors accelerate past you in the digital fast lane.

BUILDING DIGITAL SKILLS

Creating great customer experiences or market-leading operational capabilities is more than a technology challenge. It’s also an organizational change challenge requiring new skills and new ways of working. Yet, 77 percent of companies in our first year of research cited missing digital skills as a major hurdle to their digital transformation success.¹⁵ To compound the problem, most companies are chasing after similar skills—social media analysts, mobile marketers, cloud architects, or data scientists, to name a few.

How Digital Masters Are Building Skills

So what are Digital Masters doing differently when it comes to skills? First, they are investing. Of the Digital Masters we surveyed, 82 percent are building the digital skills they need to support their digital transformation efforts. Only 40 percent of nonmasters are doing so.

Second, Digital Masters are accelerating and creating a gap. Our survey research shows that the masters had greater digital skills than nonmasters, reporting 31 percent higher social media skills, 38 percent higher mobile skills, and 19 percent higher analytics skills.¹⁶

But Digital Masters did not start with higher skills. Burberry did not become excellent at digital marketing and channels overnight. CEO Ahrendts hired a new, dynamic marketing team whose members mirrored the behaviors of the millennial customer.¹⁷ Nor did Caesars excel at delivering personalized customer experience solely because its CEO, Gary Loveman, has a PhD in economics from MIT. Caesars’ executives actively incorporated quantitative skills into the marketing area. In these companies, like other Digital Masters, top executives worked hard to build the digital skills they needed.

The skills difference extends beyond technology. Digital Masters report 36 percent higher skills in digital leadership than nonmasters.¹⁸ Digital transformation requires changes to processes and thinking—changes that span your internal organizational silos. The clear delineation between technical skills and leadership skills is blurring fast.

The impact of digital technologies is now felt not only in the IT and technical departments, but also across the entire organization. Digital transformation’s need for cross-functional collaboration creates a huge demand for hybrid digital skills—technical people who need to be more business savvy and businesspeople who need to be more technology savvy. A retail executive explained: “We are trying for the first time to work across the company. That implies going through a new level of complexity in the organization, and requires people to manage and network differently. That, I think, is the most important skill that needs to be developed.”

The need for new skills can also result from the need to bridge the communication gap between digital and business competences. One executive said, “I need a charismatic quant—somebody who’s an influencer and can carry his weight in a senior meeting, but at the same time, someone who can roll up his sleeves and look at data tables and build models and enjoy it.”

These bridging roles may soon become the responsibility of every manager. “I believe,” said Markus Nordlin, CIO of Zurich Insurance, “that the successful leaders of tomorrow, in any business or industry, are going to be true hybrid professionals who have spent some time in IT but have shifted to operations and vice-versa.”¹⁹

A Two-Pronged Arms Race for Digital Skills

Aspiring Digital Masters are all chasing the same technical skills. The shortage of digital skills in the current marketplace is unprecedented. In Europe alone, forecasts point to nearly a million vacancies for IT-related roles by 2015.²⁰ And globally, out of the 4.4 million big-data jobs to be created by 2015, only a third will be filled.²¹

But by the same token, business professionals will increasingly need to be comfortable with digital tools and technologies to perform their core roles. By 2015, research firm IDC expects that 90 percent of all jobs will require IT skills.²² Some business functions are already adding technology skills to their mix. Gartner reports that 70 percent of the companies they surveyed have a chief marketing technologist to support the digitization of the function.²³

This skills race won’t slow down anytime soon. Having the right digital skills is an important source of competitive advantage and a key enabler of digital transformation. Companies that build skills faster will get ahead.

To win at the digital skills race, you will need to tap into multiple approaches—hiring, partnering, incubating, and the like. It’s not easy, as one executive explained: “Our recruiters don’t know where to go to find these people, and people with the right skills don’t look to our kind of company for opportunities.” HR organizations will need to get up to speed quickly. A recent Capgemini Consulting survey found that only 30 percent of HR functions were actively involved in digital skills development.²⁴ This needs to change. Many Digital Masters have a carefully crafted plan to fight and win the talent race. In chapter 12, we’ll show you how to do this.

THE DIGITAL PLATFORM AS A LEADERSHIP CHALLENGE

Our research confirms a wide body of research in the IT management field: the most fundamental technology foundation for digital transformation is a strong digital platform—well structured, well integrated, and only as complex as absolutely necessary.²⁵ We’ve seen this in case after case. Burberry fixed its IT backbone before it could transform customer engagement. Asian Paints created a unified platform before transforming operations. LBG reengineered its digital platform before expanding its digital services. The growth and innovativeness of Seven-Eleven Japan rides largely on the real-time visibility that its unified operational platform provides. Well-structured digital platforms are the foundation for new digital business models such as Nike+, Airbnb, and Hailo.

If this is true, then why do so many large companies have poorly designed technology platforms? Large companies often operate in silos, each with its own systems, data definitions, and business processes. The systems are confusing, sometimes duplicative, and often tied together in complex (and sometimes unknown) ways. Generating a common view of customers or products can be very difficult.

Every request for a nonstandard technology, every demand to do things your own way, every choice to go around corporate governance processes so you can move faster, and every integration meeting that your staff people miss will create more complexity. Sometimes that complexity is necessary, but often it is not. According to the head of the disability business for a major insurer, “We have, through the last fifty years, proliferated our IT systems and applications. We don’t retire systems. We just add on top of them, which creates a tremendous amount of expense and complexity.”²⁶

Technologists have a term for this type of systems arrangement: legacy spaghetti. Companies mired in legacy spaghetti find it difficult to make sense of their information and even more difficult to make change happen.²⁷ Research shows that unnecessary complexity in the platform is the number one driver of IT risk in firms; it makes processes harder to change, harder to test, more prone to fail, and tougher to restore after it fails.²⁸ Spaghetti happens only because leaders let it happen. And removing spaghetti requires strong leadership.

The Power of a Strong Digital Platform

A well-designed digital platform is one reason that web-based companies are able to perform analytics and personalization much more readily than traditional firms.²⁹ Amazon.com, knowing everything you have purchased over many years, can make good recommendations for what you might buy next. Facebook and Google, knowing what you have written and read in the past, can target advertising to you much more effectively than can less informed firms.

But this capability is not limited to born-digital companies. The personalization and mobile capabilities at Caesars are built on its unified Total Rewards database, which records all interactions the company has with each customer. At Codelco, the unified digital view of its mines allows the firm to synchronize operations smoothly while identifying ways to innovate its processes.

To understand platform quality for the firms in our survey, we asked respondents the extent to which they had an integrated view of different aspects of their firms. Digital Masters average 17 percent higher than nonmasters for integrated views of operational performance and supply-chain status.³⁰ Beyond operations, the difference was even higher. Digital Masters average 25 percent higher than nonmasters for integrated views of customer data and 26 percent higher for integrated views of product or service performance.

If you don’t have a common view of customers, it’s extremely difficult to accomplish advanced customer-engagement techniques such as personalized service or location-based marketing. The challenge grows as you engage in multichannel operations. As a marketing executive said, “It’s very difficult to get a good understanding of the customer when customer data is spread across so many systems.”

For many traditional companies, the first step in preparing for digital transformation is to invest—sometimes heavily—in integrating data and processes across the enterprise. In this respect, firms that have already implemented ERP and CRM systems are a step ahead of others. Burberry’s transformation required much more than digitally enabling stores or starting to do social media marketing. The company needed to invest millions into an ERP system that could help the company become digital end-to-end. Through unified systems and processes, Burberry could improve operations, understand sales patterns, and start to provide seamless service across channels.

Well-structured platforms can also to help manage the centralization-versus-decentralization challenge in globalization. At Caesars, for example, each hotel’s website around the world is served by a single global platform. Each property’s manager can customize the site’s content and marketing campaigns locally, while headquarters supports the technology for all sites. Global media company PRISA’s content management system means that a soccer video clip recorded in Barcelona can easily be used by a TV station in Madrid, a newspaper in France, and a radio station in Argentina on the same day.

The Scaling Power of Digital Platforms

Well-structured digital platforms have benefits beyond efficiency and agility. As we discussed in chapter 3, platforms can help leaders to drive unwanted variation out of key operations. But good platforms can also help a company scale volume faster than it needs to scale its labor. And they can help to roll out innovations quickly across a large and geographically distributed company.

US pharmacy retailer CVS is an example of how a well-structured platform can scale not only volume but also new practices. Customer service levels are a critical measurement in the retail pharmacy business. So when CVS experienced a decline in customer satisfaction in 2002, the drop got senior management’s attention. Further analysis uncovered a key issue: 17 percent of prescription orders experienced delays from problems with the customers’ insurance. Staff typically checked insurance after the customer had already left the store, meaning that problems could not be resolved until the customer returned to pick up a prescription. Moving the insurance check earlier in the process could resolve the problem.

CVS embedded the process change into its enterprise pharmacy fulfillment system, thereby ensuring 100 percent compliance. It was simply no longer possible to accept a prescription without doing the insurance check. Through its platform, CVS was able to replicate the new process throughout its 4,000-plus retail pharmacies within a year. Performance of the prescription processes improved sharply, driving customer satisfaction with it. During that year, overall customer satisfaction scores rose from 86 to 91 percent—a dramatic difference within the highly competitive retail pharmacy industry.³¹

Great Digital Platforms Won’t Happen Without Leadership

Great platforms provide clear information to decision makers. They serve as the bases for advanced analytics capabilities and new digital services. They are both efficient and agile. And they constantly provide new digital transformation options.

But great platforms don’t just happen. In complex companies, platforms tend to grow in many directions at once, creating copies, customizations, and offshoots like so many weeds in a garden. Like good gardens, good platforms take constant attention to pull weeds, kill pests, and shape them into beautiful designs. You cannot get a single view of customers, or an integrated view of operations, without strong, top-down leadership.

IT leaders can help shape the platform. They can translate the digital vision into a vision of the technology platforms that will make it a reality. They can establish management tools such as architecture reviews to kill weeds and to move the platform in the right direction. They can adjust technology funding methods to support the right kind of growth. Intel’s IT unit, for example, increases the priority of projects that align with the firm’s architectural direction.³² Business unit requests that that build on the company’s standards are more likely to be funded than those that don’t.

But IT leaders can have limited ability to force change in business practices. The typical CIO has little power, on his or her own, to change the actions of a strong business unit chief. That’s where the company’s senior-most executives need to play a role. Pages Jaunes CEO Jean-Pierre Remy did this when he stopped funding updates to the systems that supported paper-based books. P&G’s digital czar, Filippo Passerini, uses a more positive approach. He promises business unit chiefs that his global services unit can reduce the cost of their purchasing, HR, and other processes by 10 to 30 percent—but only if they use his standard processes.³³

Platform issues are not limited to big incumbent companies. Even Amazon.com—a company that was born digital—encountered platform issues. In the 2002 time frame, during a period of rapid growth and innovation, the firm’s powerful platform began to suffer from a proliferation of spaghetti and nonstandard designs. It took top-down leadership from CEO Jeff Bezos to fix the problem. Bezos issued a strong mandate that all new development would follow a set of very clear design rules. The letter ended with this admonition: “Anyone who doesn’t do this will be fired.” Bezos then empowered a senior executive to make sure that the mandate was being followed.³⁴ Over the next several years, the company’s culture of standardization evolved, and so did its platform. Now, more than ten years later, Amazon.com’s well-structured digital platform continues to power the firm’s ever-growing volume of online sales. It has also made possible new business models, such as Kindle books and streaming video. Amazon.com has also begun to sell cloud-based infrastructure services to other companies, transforming Amazon.com’s internal platform into a product of its own.

The same can happen with your platform. Health insurance companies are already using their health claims platforms to create analytics-based products about trends in prescribing and medicine. A logistics company in China is able to sell forecasts of regional demand using the trends it has discovered in its historical sales platform.³⁵ And as Boeing makes its “airline of the future” a reality, it will have a rich platform, crossing the boundaries of many companies, which it can mine for new information-based services and products (see chapter 5). But all of these developments require leadership—to develop the right platform and skills, to keep them properly aligned, and to capitalize on the opportunities that they create.

TECHNOLOGY LEADERSHIP AND YOUR COMPANY, EVOLVING TOGETHER

Regardless of how you build your platform, our research highlights an important point. The real value of digital transformation comes not from the initial investment, but from continuously reenvisioning how you can extend your capabilities to increase revenue, cut costs, or gain other benefits. Initial investments become the foundation upon which you can make additional strategic investments. When Asian Paints first centralized its order-taking processes and implemented an ERP system, executives did not envision the many successful business model changes they would be able to make in the future. They just knew that the unified data and standardized processes would help the company reach a new level of performance.³⁶ Then, with unified data and a strong call center, they were able to envision new things. Mobile-equipped salespeople, armed with up-to-date sales and order information, could focus on growing the relationship with each retailer. Call center personnel could do outbound calling to serve retailers or let them know when a shipping truck would be in their neighborhood. By delivering to customer work sites instead of retail stores—a capability none of its competitors had—the company got closer to its end customers. Then, executives started exporting their processes to countries outside India.

The firm’s digital foundation provided Asian Paints executives with options they’d never had before. But the leaders needed to be ready to seize the opportunity. The company started with business-savvy IT leadership paired with a business leadership team that understood the power of IT to change the business. The leaders worked closely together to make each change to the platform and then let platform changes create new opportunities. And they invested heavily in developing skills—from digitally enabling salespeople to growing internal analytics talent—that would help the company take each new step in the transformation journey.

The same pattern occurred at LBG, Codelco, Burberry, Caesars, and other companies. When your technology leadership capabilities are weak, everything is a risky struggle. When they are strong, you can do great things. And when you constantly pay attention to the link between IT–business relationships, skills, and your digital platform, you can constantly extend them to create valuable new digital transformation opportunities.

WHAT’S NEXT

So far, we’ve shown you what it means to be a Digital Master and why you should care. We’ve walked you through the process of building each dimension of digital mastery: digital capabilities in chapters 2 through 4 and leadership capabilities in chapters 5 through 8.

Now it’s time to put these ideas to work for your company. In chapters 9 through 12, we’ll provide a playbook to help you get started on your own digital transformation journey.