The digital CEO

The next industrial revolution is digital, and it is upon us now. The recent Facebook scandal – in which millions of users were subject to a data breach and led to Mark Zuckerberg testifying to the US Senate – may result in some tighter regulations, but in my view the train has already left the station and things are moving very rapidly.

With most people’s lives an open book on the internet, and most money transactions racing to become mostly digital, what else is left? Whatever it may be, I believe the old saying ‘look before you leap’ is still valid. You do not want to get ahead of yourself or, more importantly, your customers in this so-called race against time.

Here’s a story to illustrate my point. I recently met the CEO of a leading global bank, one that has been investing heavily in digital transformation with the genuine intent of doing better for their customers and also being competitive. They run hundreds of  ‘cool tech’ projects every year, worth hundreds of millions of dollars. A significant part of our conversation focused on accelerating time-to-market for a number of digital innovations they were planning, including an attempt to successfully update their mobile app two to three times a month.

That really got me thinking. While I am all for rapid digital transformation, I think there are a number of things one needs to keep in mind before racing ahead.

I am a strong believer that everything in life needs to be paced, even if one is moving at a high speed. The reality is that human beings can only absorb so much change at one time. It’s not just that the change has to be for the better, but there has to be a clear need for it. Not only that, but each change needs to be supported by an active campaign to drive change not only with the customer but also within the organisation. And we all know creating organisational change is not easy. Digitisation is a cultural change that has never experienced before.

Technology is rapidly impacting companies and the marketplace in many ways. Customer interaction is not just online, but channels now include virtual relationship managers, self-service and chatbots. In the area of process-transformation, robotic process automations (RPAs) could easily cut processing headcount by 30 per cent. AI/machine learning can allow you to use computing technology to make rapid decisions, and business intelligence and predictive analytics has the power to become your crystal ball. This could tell you which of your customers is going to buy from which channel and when.

The server room is also dead – Amazon read it right. Do you think they make all their money from selling you books? No. A lot of their profits come from the cloud; and everything now is in the cloud.

The good news is that if you appreciate and assess each of the above technologies carefully, you could make a significant positive impact to your business model and, more importantly, your finances. You could drive revenue from existing business, successfully enter new businesses, optimise profitability and risk, and significantly reduce costs.

This is all great, but pacing becomes important. Firstly, all of the above areas have interdependencies, and depending upon your business model, and which part of the cycle you are at, you will have to prioritise, and run the calculation of return on investment (ROI). All projects with significant opex or capex impact require this discipline and my concern is that in the race to be first to market, some of this discipline has been forgotten.

As has the discipline of proof of concept testing, or a careful review of use cases and previous success stories with the technology. I’m not even sure that people know how to make a quantitative and qualitative assessment of their digital decisions.

So, what’s the bottom line here?

As you plan for your 2018–2020 tech strategy, do an honest stock taking of your existing tech investments, shut down what has not worked, accelerate what has worked, and don’t be starry eyed in your future investments.

There is an old Huey Lewis and the News song that says, “the future’s so bright, I’ve got to wear shades”. That’s how it feels with the coming of digital; but wouldn’t it also be great to use some common sense, before AI takes over?

Sanjiv Anand is chairman of Cedar Management Consulting