Digital Businesses: IT as a Transformative Force
The transformation of businesses through the digital revolution is no longer a trend but a reality. The challenge for a company rooted in the analog world, transitioning to the digital realm, involves overcoming various barriers, ranging from mindset and culture to often significant changes in business models, organization, and processes.
It's a journey. Digital transformation is not an end in itself but a means to enable a company to operate in an agile, adaptable, and flexible manner to meet the demands of a highly volatile, uncertain, ambiguous, and complex business environment. However, the first step is to assess how digital or analog the company is. For example, assess its assets and products. Evaluate which ones are most important today, how intangible (or digitizable) they are or could become, and how much effort (time and investment) is being made to shift them from tangible to intangible. A common but applicable example is the difference in the hospitality business models between a traditional hotel chain like Hyatt and a digital one like Airbnb.
Benefits of Digital Businesses
- Global ReachDigital businesses can reach a global audience.
- Low Initial Costs: Often, they have lower initial costs.
- Flexibility: They offer greater flexibility for owners and teams.
- Data Access: They allow valuable data collection on customer behavior.
- Lower Entry Barriers: They require less bureaucracy and regulation.
- Agility: They adapt quickly to market changes.
- Automation: They facilitate process automation.
- Customer Interaction: They enable effective online customer interaction.
- Sustainability: They can be more environmentally sustainable.
- Scalability: They have opportunities for rapid growth.
The modification of organizational mental models is crucial. A traditional company often has a closed mindset, placing itself at the center and viewing customers as consumers of its products rather than co-creators. It maintains an organization in silos, often with a rigid hierarchy and command-and-control governance models. Its executive body sees digital technology merely as support for operations. The IT department is usually on the second or third tier of the organization, and the CIO often lacks easy and continuous access to the CEO and is not part of the board.
Once the mental model barrier begins to break, it is necessary to define a coherent strategy for the digital world. The business world is full of examples of robust companies that did not see or, even if they did, did not react in time to avoid changes in the business landscape that simply engulfed them.
Once the mental model barrier starts to be broken, it is necessary to define a coherent strategy for the digital world. The business world is full of examples of robust companies that did not see or even saw, did not react in time to avoid changes in the business landscape that simply swallowed it.
Kodak is an example. The company clearly identified the transition to digital technology (it invented the digital camera) but designed a strategy to maintain its successful traditional business, trying to delay the market transition as much as possible. Unfortunately, the market did not wait for it. Kodak exists today, but it is no longer in the photography business.
Transitioning to the digital world requires the company to allocate, in its strategy, investments and time for concrete and unavoidable actions in this direction. In general, most companies keep their strategic budgets for maintaining current models, with very little investment in transitioning to new models. They continuously allocate resources to the same businesses year after year, making it challenging to redesign the organization's strategy and change direction. It is a risk to their survival in an era of abrupt changes.
However, beyond strategy, to keep up with changes, it is essential that corporate leadership is fully engaged in digital transformation. Without the commitment of top management, no digital strategy is proposed, let alone put into practice. The leader of the digital world must think differently from the top-down control and organization model to be more open, playing a facilitator role rather than a supreme commander. Executives must be digital fluent. It doesn't mean they will program in Python, but they must have a clear perception of the impacts of digital technologies on their businesses and the risks of the decisions they make regarding them.
Most CEOs already have a long list of priorities, and relatively few feel comfortable enough with digital technology to promote transformative changes in their companies. Even some CEOs who are already tuned in to the threat of digital disruption and are thinking about how their companies can create value in an increasingly digital world tend to overlook the importance of the IT function in this journey.
Often, CIOs are not included in strategic discussions where they could help shape other executives' thinking about how the company can better use technology. CEOs are in an ideal position to correct this. In companies that successfully transition to digital, CEOs have defined a strategic role for the IT function.
This implies that aligning IT with the business is no longer sufficient, but IT becomes the business. In other words, strategic discussions revolve around the use of technologies and their effects on processes and business operations. Investments in technology become a higher priority, and previously neglected issues, such as modern technological platforms and hiring and retaining suitable digital talents, are now discussed in strategies.
What is the Role of IT at This Moment?
The potential of digital technology to change a company's journey and its consequent destination is simply too significant for CEOs not to fully integrate technology with business. CEOs who actively influence and shape the technology functions of their companies can position them to potentially succeed in a bit-driven economy.
How Can Executive Recruitment Help in Digital Transformation?
O Executive search for the technology industry plays an essential role in organizations' digital transformation, bringing technological expertise, leadership in formulating digital strategies aligned with business objectives, fostering a culture of innovation, effectively managing organizational change, expanding the company's network, maintaining a long-term vision, and establishing clear metrics to assess progress. These executives play a fundamental role in defining the company's digital vision and implementing initiatives that drive innovation, efficiency, and adaptation to the constantly evolving digital environment.
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