As digital becomes central to achieving growth, organizations that are generally slow in uptake can still manage to realize reasonable gains if only they can adopt a fast-follower strategy; learning from the environment and  engaging in short but continuous digitization.

The advancements in digital technologies and emergence of new-age businesses have forced the traditional companies to rethink their strategies and defend their positions in order to survive in the increasingly dynamic and competitive environment. While the leaders among them have realized the need to reinvent themselves and become digital, many others have struggled to hit the right path and withered away in the market place. The reasons for the failures are many but the common ones are:

• Leadership disconnect – Inability of the top tier to comprehend the threats of competition and adequately connecting with their ecosystem to understand changes.
  
• Legacy drag – Compulsion to sustain archaic IT systems and processes that are high on maintenance and demand more management attention.
  
• Lack of champions – Dearth of brave hearts in the second line of leadership who can challenge the top tier/ Board on their outdated strategy and showcase the path to recovery.
  
• Siloed structures – Very functional and siloed organization structure that operating towards conflicting objectives thus preventing collaboration amongst the employees.
  

These negative forces weigh them down to be laggards in digital adoption and they tend to scramble to keep pace with the leaders. Instead of giving up, they can still recover and reap rewards of credible performance- if not superlative - if only they can adopt a smart follower strategy. However, this comes with a rider that they need to be FAST at that. Once they establish a momentum as a fast-follower, they can accelerate their digital quest and aspire to be among the leaders.

This article presents some actions companies can practice as a fast follower. Any business wanting to gather pace of digitization needs to strengthen one or more of the fundamental building blocks; a digital strategy that aligns with the overall direction of the company, market and customer orientation to understand and influence customer decisions, a collaborative culture among the workforce and an understanding of the applicability of digital technologies such as Cloud, Analytics, IoT etc. However, there are certain specific considerations fast followers should focus on to accelerate their digital pursuits.

Galvanize Support

The success of a fast follower strategy depends on, without doubt, the conviction of the CEO who is best placed to lead a digital transformation by setting direction and fixing responsibilities for actions. If the CEO is not on board, the battle is lost even before it has begun. He/she may, however, wish to appoint the CMO, CIO or any influencer to be the ‘chef de mission’ to take charge of execution. The first step is to build a small team –may be just 3 to 4 – of likeminded influences across functions that can together impress upon the leadership and peers to act. The team will be involved in all aspects of digital programs and involve their colleagues and subject matter experts as per need.

A blunder companies commit is to expect an individual such as a CIO or a management executive who may not have the authority within the organisation to spearhead the digitization. By appointing a small set of cross-functional influencers, the chances of furthering an idea to execution is much higher.  The team could make the right interventions and support each other to promote the ideas for organization buy-in.

Listen to the Environment 

Fast followers‘s strategy should be built on learnings from diverse sources.  Engaging with customers, connecting frequently with employees, observing competitors’ actions - not just traditional but also non-traditional, enlisting the industry experts, assessing the outcomes of digital ventures of leaders are crucial to constructing their own digital programs. These actions require one fundamental quality to be perfected – listening, a deep listening that goes beyond mere understanding but results in constructive ideas and plans.  Participating in industry events, focus groups and other platforms that bring leaders and experts together can be useful sources of inspiration.  The learnings will have to be contextualized to company’s needs and translated into actionable programs that feed into the Learning Lab.  

Institute a Learning Lab

Establishing a lab that actions on the learnings from the industry should be the next focus area for Fast Followers. The lab can develop prototypes of solutions or test third-party solutions to evaluate the fitment to the organization’s context. The lab can also be used to demonstrate to relevant stakeholders to get their feedback. It should be made to work with minimum resources to avoid high outlays. A common approach that can be considered is to run pilots using open source tools where relevant and move to enterprise specific products when proven.

Keep it Simple

Digital leaders tend to take high risks in improving existing solutions or deploying new ones in a ‘fail-fast’ mode and continuously augment their digital offerings. Followers may not have the organisation backing to take such risks. Instead they should execute short projects that are built and executed in multi stages than as a big-bang. Drawing from the labs, the team should cherry pick small bets that can leverage on the traditional strengths of the organization but brings in a digital swap.  They should showcase wins to gain more support from the management and the organisation.

Engage with the People

The success of digital programs hinges on acceptance of the employees and their buy-in can hardly be overemphasized. The senior management should be on-board at every stage. Towards this, the team should continuously engage with the key stakeholders; the management and the employees to enhance awareness, seek ideas and suggestions and encourage participation in the on-going programs.  The team may do well to consider deploying platforms that bring the employees together for collaboration and also bring in a sense of competitiveness among the functions. They should evaluate leveraging social influence and gamification tools to drive change in attitudes and behaviours by integrating such principles into the collaborative platforms.

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By continuously studying the digital successes of the leaders and contextualizing them for their businesses, fast followers can still achieve gains and be in a position to thwart competition reasonably well. The success lies in the perseverance of the fast-follower strategy and bringing changes that are in line with the organisation capacity.

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Digital efforts due to their profound impact on business landscapes require establishing a Board Committee with a mandate to guide the company’s strategies and govern the realization life cycle spanning opportunity identification, investment decisions and implementations.

Businesses pursuing a strong growth agenda are realizing that technology is inextricably linked to their actions on the ground.  Their business strategy and technology strategy are increasingly becoming indivisible as they attempt to harness IT solutions to effectively compete and sustain growth in the market place. A study by Gartner on CEOs’ priorities for next two years indicates the importance CEOs have placed on technology.  In the study, IT is ranked 5^th surprisingly ahead of profits and new product that are ranked 6^th and 8^th respectively.

There is no industry that has not been impacted by digital. The intensity may vary but not the intent. Companies can hardly take a ‘will not affect us’ position when they witness changes around them. Hence, it is impinging on them to be pro-active and continuously reshape their strategy fusing strong business models and impactful technologies.

As digital takes the centre stage in the strategy conversations, companies try to ascertain who should lead the digital programs; whether it is CEO, CMO or CIO or the need for a new role like Chief Digital Officer and who the principle stakeholders are. However, while this debate gets traction, one group of key stakeholders does not seem to appear frequently in the deliberations; the Board of Directors. The Board’s involvement seems to be largely limited to providing approvals for digital investments and possibly review them if they come up during Board meetings.

When we try to investigate the extent of Board’s involvement, a quick scan of the constitution of the Board of a few randomly picked companies, would tell us that most of them, including a few leaders, do not have a Board committee for technology. While it is common to find committees for Audit, CSR or Shareholder Relations there is not one for technology and /or innovation. There could be reasons that are legacy related but as the businesses are increasingly driven by technology, one wonders whether the Board should play a more active role than be a passive participant. Consider the following:

• Technology is no longer seen as a mere enabler of business process but a strategy that can shape and employ new business models
  
• Nimble and new age competitors that have technology as the core of their businesses have the potential to disrupt the incumbents to the extent of even marginilising them in the market place
  
• Relationships with customers and vendors are increasingly determined by technology savviness than purely based on traditional strengths like brand or products.  A study by McKinsey suggests that about half of M&A successes depend on IT, which emphasises the strategy play of IT.
  

Given the high stakes, the rationale for the existing committees could well be applied to justify the need for a technology committee or better, a broad based digital committee. It can be modeled along the constitution of other committees with an aim to provide guidance and conduct periodic reviews of the digital programs.  The charter of a Board committee normally covers the mission, membership, meeting frequency and duties and responsibilities. Let us see how these apply to a digital Committee.

The Mandate

The mandate of the digital Committee would be to assist the Board and guide the company in the digitization efforts.  The committee can support the executives to strategise transformative digital programs to be an early mover in the market or quickly respond to competitors’ actions that may threaten the company’s position. The role of the Board committee becomes more prominent for small and mid-sized companies that may lack credible leadership across levels and resources to pursue successful digital programs.

Membership and Meetings

The committee should ideally be chaired by an independent director in the Board and can consist of fellow directors with need based support from executives. They can enlist experts and consultants to guide them where required. The committee can work with a structured plan that can act as a baseline and meet as frequently as possible with agreed minimum number of meetings.

The Responsibilities

The digital Committee needs to focus inter alia on 4 areas:

1. Digital Strategy

2. Portfolio Management

3. Leadership and Resource Management

4. Program Management

Digital Strategy - Asses Strategic Importance of Technology

A starting point for the committee could be to measure the effectiveness of existing technologies in their capability and flexibility to address the current business issues, respond to changing market conditions and scale up for future possibilities. The committee should guide formulating a digital strategy that can propel the company into the desired growth trajectory. The committee should also help move the strategy exercise beyond the CIO’s office by encouraging organization-wide participation and enlisting customers, business partners and industry experts where required.

The committee should continuously challenge their CxOs to ably leverage technology to further gains in areas such as business performance, employee comfort and customer satisfaction.  Their readiness should be measured against the new-age or technology savvy competitors’ efforts that may have the potential to threaten the position of the company in the immediate or near terms.  Armed with such reviews, the committee should periodically monitor the progress of technology strategy execution and ensure alignment and refinement to the changing business contexts.

In short, the committee should direct digital strategy in the following ways:

• Establish a ‘Digital Maturity’ scale that can reflect company’s position and market actions and that can measure the effectiveness of the current usage of technology and plans for the future.
  
• Collaborate with the leadership team, customers and business partners  to jointly formulate or refine technology strategy
  
• Periodically review the technology strategy execution and jointly address implementation issues.
  

Portfolio Management- Construct a right portfolio of digital programs

IT Portfolio management would typically mean optimizing the IT assets of the company by refreshing the portfolio through introducing or dropping IT assets due to technical reasons such as obsolescence, scalability etc. Such decisions normally fall in the domain of CIO. However, companies need to take portfolio management to a more strategic level where the decisions are based on business imperatives and future demands. This is where the Board committee can step in and guide the executives.

In most organizations, a substantial portion of the IT budget, even to the extent of 70% go to maintenance of existing IT assets and the rest on fresh investments. This undermines the company’s ability to explore and invest in future-ready technologies. The Board should guide the company to swap the ratio in gradual manner.

The future-ready can be looked at in two categories – the near future state and future state; the near future state is those technologies that have been proven but not yet part of the mainstream usage. An ideal company would have tested and accepted prototypes or already using these technologies in a small way. SMAC stack can be a good example for this category. The future state is the technologies that are in early stages of development, not yet proven but the company can start building prototypes. A good example could be IoT or Cognitive solutions. The Board would need to ensure appropriate investments in the future technologies while optimizing the spend on operational systems.

To summarise,  the Board’s involvement in this area could cover the following:

• Ensure the company bets on immediate and future technologies
  
• Budgeting that  commensurate with the bets
  
• Align performance measures and reviews to the investments
  

Leadership and Resourcing- Enlist right owners and adequate resources empowering them for success

Some companies still see digital as a technology foray and any attempts on digitization land at the door of CIO.  A seasoned CIO could be qualified to lead digital programs, however it may not always be effective as digital is often and should be deeply welded into the differentiators be it customer service, marketing or operations.  Hence, in order to realize the intended benefits and to fix end-to-end ownership, the efforts may need to be led by the most appropriate head. It could be function heads such as the CMO or Chief of Operations by a CDO.

The Board Committee is best placed to formulate guidelines on ownership and governance for digital programs that can cut out layers of decision making and minimize ‘baton-passing’ risks. The framework thus developed could empower and encourage the right owners to lead and navigate through the complexities of business models, technology and people alignment. A number of digital programs may need to be executed rapidly to either grab an opportunity or solve a pressing problem. Such fast paced moves bound to have their share of missteps, hence it is important that the framework encourages owners to take risks without the fear of failures.  The Board may choose to intervene to sufficiently resource the programs to ensure there the programs do not face any hurdles.

Hence, the Board can assist in the area of leadership and resourcing in the following ways:

• Formulate guidelines and mechanisms to plan and execute digital programs
  
• Bring in the right leadership to own the programs and ensure adequate resources to support the programs
  
• Evaluate business case and approve investments
  
• Help bring an high performing culture and encourage the teams to take risks and not intimidated by failures
  

Program Management – Provide for execution oversight and course corrections to ensure benefit realization

Execution is where the rubber meets the road and comes with inherent risks due to complexities involved. Many technology projects fail due to increased costs, inordinate delays and poor outcomes. According to an Oliver Wyman analysis, the world’s largest 500 com­panies lose more than $14 billion every year because of failed IT projects. 

The Board has to take active role in reviewing the progress of the digital initiatives periodically and ensuring the value is realized on the investment.  Where possible, one of the members of Board digital Committee can be drafted into the Steering Committee of implementation projects to monitor the progress and intervene when required.

Digitization is generally an enterprise-wide effort and depending on the areas could also focus on extended enterprise involving business partners and customers. The transition could be quick and may disturb the existing structures and positions.  Hence, driving change is crucial to achieve desired results.  The committee needs to strategise change management programs, communicate frequently with stakeholders to demonstrate that they are fully behind the initiative and ensure participation across groups. 

Most companies miss out on learning and gaining knowledge. What one arm of the organization does is not known to other arm. It is critical to bring in a learning culture in the company to know what works and what doesn’t and use the learning to improve in the execution of digital programs.  The Board committee should address this common flaw and force executives to share experiences across functions and group companies.

In short, the Board can involve in execution in the following ways:

• Measure value of incumbent IT projects and ensure they are in right track, adjust project mandates on the fly to suit business conditions
  
• Drive change, connect with stakeholders more frequently to know their feedback and ensure course corrections
  
• Encourage organizational learning that cuts across past and on-going programs
  

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The responsibilities outlined may indicate a higher involvement of Board in areas that normally fall in the executive domain. So do we expect the Boards to be more ‘hands-on’?  To what extent can they question and challenge the plans and proposed decisions of the executives?  The answer lies in recognizing what digital can bring in. It can both be an opportunity and a threat; when pursued incisively by the company it has the power to shape the business for the future, on the other hand competitors can potentially destroy the position of the company by their calculated moves.  The companies thus face opportunities beckoning growth on side and threat of even closure due to early start competitors on the other side.  Because such changes are rapid, Board’s direct involvement will ensure that the company’s sails are set in the right direction to navigate through a rough and highly competitive business environment.   

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An IT-OO can help a CIO take up a more strategic role in the company by taking over and running the IT operations much as the same way a COO would run the operations at a company level. 

A major consequence of the digitization journey is the changing role of a CIO – a subject that is often discussed among the CIO fraternity, in the management forums and even in the Board rooms. A variety of perspectives can be seen in thought leadership articles and debates.  If we have to summarise the substance of such discussions it could run as follows: CEOs expect CIOs to play a more strategic role and contribute towards setting the direction for the company, a CIO has to step up as an advisor to the business and even seek a position in the Board and he/she should get away from operations mindset and devote more time towards enabling new business propositions.

One of the approaches suggested as part the IT re-organization and the role of CIO is for companies to implement a two-speed IT architecture that brings in the capability to develop customer facing processes rapidly and at the same time follow the regular possibly slower speed for the back-end systems management.  As we see the focus shifting to futuristic IT structure and CIO and recommendations on achieving them, a key aspect that is not deliberated much in this debate is continuity that is required for core back-end systems that support the existing operations of the companies. Several companies have implemented ERP solutions or equivalent investing heavily in software, infrastructure and training with the expectation that they will serve the company for several more years. Moreover, such investments require adequate maintenance so as to get the best out of them.  Hence, this article is not about the changing role of CIO, instead is on creating a leadership role for managing the back-end core systems. The role can be compared to that of a Chief Operating Officer (COO) that oversees the operations of the company and hence can be called as IT Operating Officer (IT-OO).

Explaining IT-OO

The need for an IT-OO can looked at from the following lines of argument:

a.  to give due importance to existing operations of the company

b.  to avoid possible dilution of the emerging role of a CIO

c.  to align the IT operations and changes to the strategy of the company

The mandate for the IT-OO could be:

• Provide necessary support to running the business on a day-to-day basis
  
• Keep the costs as low as possible
  
• Assemble and manage a team with the requisite expertise and provide the ample opportunities for career growth
  
• Adopt leading practices in the areas of governance, risk management and security
  

IT-OO will work under the overall direction of the CIO but will be empowered in matters related to legacy systems.  We propose three major work areas of an IT-OO.  There could be areas bordering existing and emerging businesses which need not be construed as conflicts but balanced as deemed right by the CIO.

Business Partnership

The business partnership requires an ‘external’ focus. Key responsibilities will include effectively engaging with businesses (internal customers and through them possibly external customers) on one side and vendors / service providers on the other side.  IT-OO would work closely with the business to understand and fulfill on-going requirements, provide the required support and bring about improvements where necessary. On the other side, he/she would work with the vendors supporting the legacy systems to get the best value from them.

A key aspect of the business partnership is to manage the expectation of the customers and to moderate their demands that require investments beyond the plan. This may be crucial when improvements that are brought in at the customer facing front-end processes that are work-in-process conflict with the back-end demands. To achieve this, an IT-OO will have adopt a more pro-active approach to engaging with the business and learn the art of stakeholder management.

IT Operations

IT Operations demand an ‘internal’ focus. The operations cover primarily application and data centre maintenance, data management, governance and team management. In addition to regular maintenance tasks, IT-OO should be in a position to take up projects that bring about improvements towards on-going maintenance. The governance may include adopting industry leading practices for systems maintenance and upgrades that cover areas like security, risk mitigation, regulatory compliance management and quality audits.

A key aspect of IT operations will be budgeting and control. Studies show that in most of the companies more than 70% IT costs is incurred towards upkeep of the legacy systems leaving very little share for investing in emerging areas.  IT OO would be tasked with preparing and controlling a budget that could be clearly distinguished from the budget for emerging areas. Deviations, if any could be allowed only with a support of a strong business case.

Another key aspect of IT-OO’s responsibilities will be to direct and oversee the performance of the team associated with the legacy systems. This assumes greater significance if there is a parallel team working on emerging areas leading comparisons such as new Vs old.  IT-OO could work out methods like job rotation that would give the team chances to work on new technologies and experience new ways of solving company’s problems.  

Alignment to two-speed architecture

The alignment decisions will cover transitioning new technologies that are rolled-out into maintenance portfolio after a settling time, sun setting legacy applications and adopting a continuous process to re-organize the legacy portfolio for better upkeep.

A key aspect of the alignment is to synchronise the legacy back-end with the emerging front-end and take care of the integration demands. This assumes greater significance when the alignment has to consider a number smaller scope services being rolled out in the front-end sometimes may be quickly discarded or revamped based on customer feedback. Overall, IT-OO has to ensure the ‘business-as-usual’ is not disturbed and at the same time ensure the two-speed approach works efficiently. 

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As Companies are testing out two-speed IT, a CIO may have to spread his/ her efforts really thin if he/she has to manage the two-speed structure. By bringing in an IT-OO, CIO can focus more on strategic aspects leaving the running of the operations to IT-OO. The success of this position would depend on the autonomy provided to the role and not a subservient one to the CIO.

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Digital’s progress is signified by six trends we have witnessed in the recent times. Digital initiatives in turn influences these trends to become mainstream.

The terms ‘Digital’ and ‘Disruption’, either independently or combined with each other or combined with other terms (‘Digital Economy’, ‘Digital Quotient’,  or ‘Disruptive Models’) can be found in the top  bracket of the business lexicon now-a-days and so much so that if the usage trend continues these will possibly stake claim for the ‘word(s) of the year’.  In the recent times, there have been many definitions, point-of-views and scholarly discussions on ‘what’ and ‘how’ of Digital. We also see some early actions as service providers rush to their clients with their digital offerings and claim break-throughs in deals and CIOs indicate digital as their top priority justifying the hype.  However,  there is still a lot of mystery surrounds these concepts and the fact remains that the businesses are still unsure of what is in it for them though there are making attempts to explore and learn from the early forays of the peers.

If we read through some thought leadership articles,  hear what CIOs have to say or go through the service offerings of vendors, Digital seems to mean different things to different people. More content gets added every passing day. In such a situation, adding more substance may possibly add to more confusion; alternately if we think positive such content may also help get more clarity. Hence, here is a stab at unpacking Digital and the impact it may have on the businesses.

This perspective is influenced by six trends we have witnessed in the technology domain in the recent times. These trends have caused considerable shifts in the way technology is perceived and used and may have played a role in shaping the advancement of Digital either independently or collectively.  Before we look at these trends, it may be worthwhile to share what we consider as the basic tenets of digital. There seems some agreement on these tenets in the industry albeit at a high level. One, digital is not a technology or a set of technologies but ways of running the operations efficiently with technology at its core; two, it is not a pre-defined template that is applied to business problems but an approach to anticipate and avoid problems; three, it is not just automation of customer processes but ways of converging the organisation towards better customer engagement and experience and finally it is not a goal or a destination but a journey to achieve sustained growth.

Working from this premise, we can see how these trends have influenced the advancement of Digital which in turn is transforming these trends into mainstream and thus the evolution becomes iterative.  There is nothing like a project or a method when completed would make a company Digital. However, riding on these six trends may make an organisation become more digital. 

2. IT in the Board

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The business environment is getting more complex and volatile and companies have come around to accept the ‘new normal’ in their respective domains.  Technology can play a crucial role in managing the complexities by helping companies become Digital.  These trends signify the shift to become Digital is multi-dimensional and as the adoption rate in these dimensions increases, we will see more developments resulting in strong technology driven organizations of the future.

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