A few weeks ago I attended the Center for Digital Transformation (CDT) summit, “Road to Reinvention (R2R): Leadership in the Digital Age 2017,” held last month at the University of California, Irvine. Here is a summary of my key learnings:
Vijay Gurbaxani started the R2R summit by discussing the economic potential created by the iPhone and other smart phones as they moved from phones to digital platforms. Think about the capabilities that wouldn’t exist without the iPhone, and think about the economic value that has been created around these devices. Snap just went public and has a stock market value greater than American Airlines.
Gurbaxani then said, “when free exists, customers buy experiences… when you are good with data, you win.” He gave Netflix as the example. They are using data to compete against traditional media.
Gurbaxani then asserted something stark – that achieving value through purely physical products is going away, using CAR2Go which use smart phones and data to outdo Enterprise Rent a Car as an example. Software magically unshackles the constraints of the physical world – the reason I moved from semiconductors to software many years ago!
Gurbaxani said to think of the implications of smart cities and, to shock the room, claimed marketplace winners understand software and are already pulling away from their competition. He said traditional companies need to realize that the digital economy means getting to market first and being less than perfect initially.
Part of success in the digital economy, Gurbaxani insists, is a compelling, go-forward vision, with the example of Lyft imagining a world without cars. He claimed that winners understand digital trust is essential – digital businesses need to be built on protecting data.
Mike McNamara openly shared that Target lagged in the digital revolution for many years. While he acknowledged that digital retail is not yet making money, he said digital is where growth will be from now on.
McNamara said that part of delivering in the digital era is creating, “an adaptable architecture and agile processes.” Doing this, McNamara claimed, involves creating a business philosophy of test and learn, discussing effectively what Geoffrey Moore calls, “a crisis of prioritization.” Having 800 priorities just does not make sense; have just half a dozen at most. McNamara made his key executives put their priorities on sticky notes and place them on a white board in three categories: get done now, get done soon, and nice to get done someday!
Agreeing with Gurbaxani about physical assets, McNamara said that the trick now is to make the physical stores add value to a digital strategy. He said that he believes Chief Data Officer (CDO) and even Chief Information Officer (CIO) roles are transitional and to be responsive in the digital era. McNamara has brought all software development back in house, asking other CIOs, “How can you outsource your IP?”
When asked about privacy and security McNamara said, “We have to prove to our customers every day that their data is secure, it can never leave us again.”
Wuthrich said, “What makes digital disruption hard is it changes business models and creates organizational friction.” In our world, he said, just look at the impacts that YouTube and Netflix are having upon how we run our business.
Carnahan revealed that Ticketmaster has determined they need to get closer to fans. They are using data science to identify them and lock them into them. With the right data, Ticketmaster and artists aim to change the fan experience and get raving fans in every front row.
During the summit, CIOs agreed with presenters that most organizations are not ready for digital disruption. David Chou, CIO of Children’s Mercy Hospital said 90 percent of CEOs know there is a digital need but only 25 percent have digital strategy. Larry Larmeu, Managing Director L2 Digital insisted that organizations need to take a look at the organizations that have already been run over by digital disruption.
Mike Kail, former CIO of Yahoo, said that disruption is already here, and that if you aren’t helping drive it, you will be disrupted. He went on to also say, “Software is eating the world.” Alexander Bockelmann, CDO and Head of IT for UNIQA Insurance Group asked, “Is software eating the world or is successful customer experience?”
Educational CIOs shared how software is changing the learning experience. Melissa Woo, CIO of Stony Brook University, worried about creating a sense of urgency while CIOs in general said part of responding in the digital era is reimagining organizational offerings and helping to eliminate train wrecks when the business is challenged. Geoffrey Moore claims that most organizations cannot overcome these.
Willy Shih was open about the places that Kodak could have pivoted, including their capabilities. Fujifilm did, and most iPhones and touch products use them today. Early in his talk Shih contrasted Kodak and Apple, saying that Steve Jobs was excellent at understanding and experimenting with what technology transition points mean, suggesting the iPod touch really was an experiment getting ready for the iPhone.
Shih said what made it hard for Kodak to move to digital was the migration of value from hardware to software. Digital moved the advantage from coating skills to the semiconductor manufacturers. Shih, however, was frank that Kodak could not have withstood the migration of the camera to the phone. Shih said, “I even predicted this.” He said that management did know that it needed to move to digital. He showed a Wall Street Journal clip with Kodak leading the digital camera business.
Shih said that all businesses need to face the fact of migration from hardware in the digital era, and embed competitive advantage into software to achieve differentiation. Shih was open that while corporate culture was an asset for a long time at Kodak, it ultimately limited Kodak in responding to the initial wave of digital disruption. A flexible organizational culture, able to evolve, is the most important thing to digital success.
Vijay Gurbaxani asked, “Isn’t cybersecurity the elephant in the room for digital disruption?” Craig Boundy, CEO of Experian North America, said that protecting data is everyone’s job and not just governance, compliance, or risk. Bounty said that data security has moved from a separate department to IT, and now to the business as a non-optional goal.
Lyft started with the realization that 96 percent of cars are underutilized at any time. Baga shared just how much of an enabler Google Maps was on a Smart Phone and asked the audience to imagine a world in five years with no garages or parking lots. With the move to autonomous cars, Baga said, Lyft’s focus will move to the transportation experience. My friend and CIO of City of Palo Alto, Jonathan Reichental, indicated that this timeline is way too optimistic but regardless, the question seems to be when, not if.
CDT Founder Vijay Gurbaxani ended by asking the diverse group of business executives assembled to share their learnings from the summit, their answers varied according to experience and industry. All, however, agreed that digital disruption demands that they be ready to change business models to continue to succeed.
Business leaders compared digital disruption to waves as in Geoffrey Moore’s Zone to Win, they said it is about catching or coping with the next wave. Craig Boundy, CEO of Experian North America, poignantly summarized things this way, “If you don’t think your business has already been disrupted, you’ve missed it.”