Overview

Webinar Recording

Webinar Transcript

Mark Roberts:
It's a warm welcome from Columbia Business School Executive Education. I'm Mark Roberts, and I'm here with David Rogers for today's webinar, Define a Shared Vision: The First Step to Digital Transformation. Before introducing David, I'm just going to run through a few light logistics. First of all, please note that we are recording the session, and in the coming days, a recording of the webinar will be sent to you along with a version of David's slides. Please do submit your questions using the Q&A box throughout the session. And then at the end in the last 10 minutes, we'll aim to get through as many of those as possible. And finally, for our latest news and updates, you can follow us on LinkedIn by searching for Columbia Business School Executive Education.

It's my real pleasure to introduce David Rogers. David is a long time faculty of Exec. Ed here at Columbia Business School. And he directs our programs on digital business strategy and on leading digital transformation. His recent research is focused on digital business models, innovating through experimentation, governance for growth, and barriers to change in digital transformation. David has consulted and developed custom programs for Google, Microsoft, Citi, Visa, HSBC, Unilever, Proctor and Gamble, Merck, GE, and dozens more companies. He delivers keynotes to conferences on six continents, and he's appeared on CNN, ABC News, CNBC, Channel News Asia, and in the New York Times, The Financial Times, The Wall Street Journal, and The Economist.

David really is a globally recognized leader on digital transformation and he's the author of five books including The Network is Your Customer, The Digital Transformation Playbook, and his new book, The Digital Transformation Roadmap, is coming out later this year. David, welcome. The floor is now yours. And I'll join you again for the last 10 minutes or so of the session when perhaps you can be brave and tackle some of the questions that flow in. Many thanks. 

David Rogers:
Absolutely. Thank you, Mark. I'll look forward to that, you rejoining us, and to everyone's questions as well. So thanks, everyone, for joining us. I'm going to start a few remarks on this topic of digital transformation. The conversation around this has really shifted since I first wrote on it in the book, The Digital Transformation Playbook. Today, digital transformation is really no longer a question of if, but a question of how and very often, as I hear it, how fast can we do this? And at the same time, my last book has been published in 13 languages. It's taken me around the world, speaking with thousands of companies, hundreds of leaders. And what I've discovered is tremendous interest in and concern around digital transformation, but still a fair amount of confusion about exactly what it is that we are trying to get our hands around and to do a better job of. So, let me start by just offering my definition of what we mean by digital transformation, from what I've observed and seen, the opportunities and the challenges and what companies are trying to achieve. To me, digital transformation is simply the transforming of an established business so it can thrive in a world of constant digital change.

I'll point out three things about this. First of all, digital transformation is about business. It is really fundamentally not about technology. Of course, technology will be involved with the strategies and implementation, but the heart of the challenge is not about technology. It's about your business. A second, transformation is about changing an existing organization. This is quite different than the challenge of seeing a new opportunity and starting a new business, a startup from scratch. And third, digital transformation is a continuous process. It is not some sort of project to be run by your project management office with a start date and end date. It is about becoming a more adaptive, agile, nimble organization that will respond to continuing waves of change in the digital era into the future.

Last thing to note about digital transformation is that it is quite hard. You've probably seen a lot of surveys and results over the last couple years from pretty much every major management consultancy, looking at success among the many, many, many companies who have invested and hired them and others and tried to pursue a digital transformation. And all sort of found that about 70% of companies report they are failing to achieve the results that they set out and hoped for. And as you talk to them, and as the surveys ask them, you will hear a litany of what I would call symptoms of digital transformation not working, inertia, and friction, and failure to change, and lack of alignment, and so forth.

But the focus of my research has been really trying to understand what are the underlying causes of this failure? And what I've identified is five underlying barriers to digital transformation, which any organization must overcome if we want to have success here. Those are no shared vision, no growth priorities, no focus on experimentation, no flexibility in governance, and no change in capabilities. And in order to try to address this, what I've developed in my own work and in my forthcoming book is a framework that I call the Digital Transformation Roadmap, designed that it can be applied and adapted to any organization in any industry seeking to successfully transform and adapt for the digital era.

I've developed it through working and advising and learning from a host of companies in very different industries, different sizes, different parts of the world. And broadly speaking, there are five steps to this roadmap. The steps are define a shared vision, pick the problems that matter most, validate new ventures, manage growth at scale, and grow technology, talent, and culture. These are five steps that overlap. They are iterative. They keep going. It's not a sort of a neat sequence and then you're done. But they are at the heart of driving real change at scale in complex organization.

Now this is a short webinar, so I'm just going to share some thoughts on the first step, defining a shared vision. What does that mean? Why do we need it? What does that look like a little bit? And take a few questions from you at the end as well. I'll start by just saying that change is sometimes easy. It is easy in a true crisis. And I think we've all gotten a taste of that the last couple years. We've seen that over the last three years in our organizations, in our economies and countries, as the case may be. As my friend, Lucy Kueng, a media researcher, observed in the early months of the pandemic, some smart leaders really took advantage of the fact that their organizations were un-stuck, if you will. Everyone understood just without you needing to even explain it that things had to change and we had to change fast.

And everything was up in the air and up for grabs, and people were willing to try things new and different. Fortunately, we are not most of the time in most organizations in a state of true existential crisis. But when you are not in that state of crisis, transformation is actually very hard. There's all kinds of organizational inertia working against you. Now how do you overcome that? The common phrase I have heard most commonly from consultants and others is for digital transformation to happen, you need a burning platform. This is sort of a narrative or a story of how your company is going to go up in flames unless you change quickly. Right? There's this external threat that's going to gobble you up and disrupt you.

The term burning platform actually comes from a famous memo written by Stephen Elop. At the time, he was CEO of Nokia, and he was trying to get people within Nokia to sort of shake off their torpor and realize that, look, you've been the leading company in mobile phones for years, but Apple has introduced the iPhone and Google has just acquired and launched Android into the market. And they are going to eat our lunch. It's a really interesting memo if you take the time to Google it and look it up and read it. But the telling fact is that it failed. Right? The quintessential, the seminal burning platform was not enough to drive change within an organization, so Nokia wound up selling its entire phone business and getting out of the business entirely.

So, I would argue it is critical to drive change in any organization, you need a positive case for change. Right? What is in it? How will we benefit? How will we create value by undergoing and pursuing this transformation? I like one example, Satya Nadella, as he came in to take over Microsoft and really shift the direction of that company, he stressed this positive vision of Microsoft saying, "We aim to improve the productivity of both individuals and enterprises through technology," a very positive vision. 

And as you try to make your own case for change in any organization, psychology has shown us you really need to tap into two kinds of motivation. The first is extrinsic motivation. Now within a business, that really comes down to things like ROI, new revenue. What's the impact on my EBITDA? Financial terms. You need to provide these answers to motivate people to change, particularly this will matter to your shareholders if you want them to invest in you and keep the value of your company up. It will matter to your CFO if you want to get them on board with this initiative. And really, anyone who owns and is responsible for profit and loss, P&L of a specific business unit. They need to understand you need to make this case for change, the extrinsic motivation.

At the same time, you also need intrinsic motivation. This is about what is the value that going down this path and doing this hard work and transforming and evolving your business, what is the value it will deliver to customers, to our partners, to society at large? This is critical because to the average employee inside your business, if your EBITDA shifts a point this year versus last year, it really doesn't touch them. It doesn't shift their lives unless you've got a stock sharing throughout the entire company and everyone's vested. But generally speaking, this is not the most important thing to the average employee. So, if they're going to go through all the hard work of changing their job and the work they do, and the nature of your organization, they need to see some kind of purpose and meaning in it. And that is where intrinsic motivation comes in. So, we need both of these to come together in what I call a shared vision for the digital future of your business. And that, again, is a step that we're going to talk about here today. A shared vision is two things. One, it needs to be shared, meaning it has to be something that is not just sort of cooked up in a small room by a few people at the top of the organization. It has to be something that everyone at every level of the organization understands and is aware of and has in the back of their mind as they're going about their work.

The second, it needs to be unique to the organization. I see so many companies trying to embark on a digital transformation. And I say, "What's your mandate? What are you trying to achieve?" And they say things like, "We want to get a digital first company. We want to future-proof ourselves. We want to be a true leader in our industry, pioneering new digital methods." All this language that could be said by any company of any size, in any industry, in any part of the world, completely generic. So, what we need to define here is a view of where your world is going, your customers, your particular industry, your particular organization. What is the role you are going to play in that digital future, and why? 

Now shockingly, very few companies have this. When I speak to companies, when I survey them, what I find is this is typically one of the most common and most highly rated barriers to effective digital transformation. Recent conversation, very typical, I was speaking with an incoming CEO of an insurance firm. And I asked him, and he said, "Look, honestly, if you ask three people at our company," really meaning his leadership team, "what is our vision for digital transformation?," which they were all talking about, he said, "you’d get three completely different answers." So, very common lack of any alignment around a shared vision and a shared understanding. 

So, we're going to look very briefly at what I believe are the four essential elements of an effective shared vision if you're going to align people around case for change and real action and transformation. The first is what I call a future landscape, and this means you need to define where do you see your world and your business's context going in the future? And this involves looking at a lot of really important topics on a continual basis, continually learning and tracking and studying and observing. What's going on with your customers, for example? How are their behaviors changing? How are their expectations changing? Often influenced by other companies and services outside your industry. What are their changing and unmet needs? What's happening in technology, new technologies, emerging technologies, ones that are already on the market, new products that are coming, being tested within your space? What about competition? Who are the new entrants? What are the new business models being tried out? If you are in different markets or different lines of business, what is the relative pace of change in different parts of your business that you operate in? And of course, you need to look at broader structural trends as well. What's happening in terms of demographics, macroeconomics, governmental trends? All of these will help to inform and shape this view of where your particular world is going. 

As my friend, Sami Hassanyeh, who is the chief digital officer at AARP said, "You have to ensure that your organization culturally, technologically, strategically, that you are living up to this ever-changing demands of your customers and the world around you."

The second piece which you need to have in a shared vision is not about the world outside, it's about the world inside. It's about what is unique in your organization. And particularly what strengths do you have that will define the role that you're going to play in this digital future among all the other companies in your space and in your industry? I call this your right to win. And this is something that Jim Hackett, when he was CEO at Ford, talked about quite a bit. He said, "Look, the true challenge for us as an established business, we have to have everybody inside Ford to be able to see the future, and secondly, to see that it's our right to win there. That we don't have to cede that future to Tesla or any of these other new entrants in the latest digital startups. We have a right to win there ourselves."

Everyone has to understand that. And that starts with really taking a careful inventory and understanding what are your unique advantages as an established business. You must have some or you wouldn't still be around. Those may be assets, tangible or intangible, they may be capabilities or relationships. It may be strategic differentiation within the marketplace. Maybe your cultural, your processes and ways of working, but you need to identify what are the things that are unique and different about your organization that aren't just different, but actually give you an advantage in the market competing with your peers. Right?

And then think about, how do you design strategies, digital strategies, new business models, innovations that leverage those unique advantages? So, for example, Walmart, long established as a physical retailer, of course has been going into e-commerce. Now what is it going to pursue in e-commerce? To understand its strategy, you really have to understand how Walmart thinks about its unique advantages. And there are several, but I'll point out one in particular. Walmart has nearly 5,000 stores in North America. Most importantly, it's not just stores, but proximity to the customer. Ninety percent of Americans live within 10 miles of a Walmart store. So, they are thinking about that continually when they look at different digital strategies.

So, e-commerce, is Walmart going to sell books? Well, probably. They probably consider that for their customers because they're trying to provide a wide assortment of products, that that may be a category that customers expected to include. But they don't have any particularly unique advantage. There's very little likelihood they're going to become the number one online seller of books. Right? On the other hand, if you look at strategies around e-commerce, there's an opportunity around what's called BOPS, buy online, pick up in store. And this is something where obviously Walmart has a tremendous advantage because of that proximity that is has driving from those 4,700 stores. And so this is one of the areas of e-commerce that Walmart has really invested in and pioneered, and done better than anyone.

For example, in the grocery category, it has allowed them to enter with a varied market offering so the customer can at one price point pay to have groceries delivered to you, but with absolutely no cost at all, they can place the whole order online and then drive by the store and someone will bring out their whole order, already bagged and ready, and just put it in the back of their car. Right? Great service for the customer, absolutely free, very competitive, something that Walmart is uniquely able to do because of their particular advantages as a business. So, this is why it's essential to know what is your right to win?

The third piece that we have to have is what I call your North Star Impact. This is understanding what are you actually seeking to achieve long term through this transformation and as a business? What impact do you seek to have on the world? What problems are you uniquely able to solve? Or, as I often as ask companies, why would the world miss you if you were to be disrupted by the digital newcomers and go out of business? I find many executives actually struggle with answering that third question, but it's a really critical one. 

Now Ford, who I mentioned before, has been guided for a number of years now with a really clear vision of impact, which their chairman, Bill Ford Jr., who's the great-grandson of the founder of the company, he laid out in a famous TED Talk a number of years back. And he talked really about these twin problems in the world that they were going to try to address or help to address. He says, "Ford's mission is to meet the environmental and the mobility needs of a growing urbanizing planet, and to do so with connected vehicles and transport systems." So, Ford has zoomed out a little bit from just thinking about building cars, but looking at vehicles and the systems around them. And how do we connect them, meaning connecting them with data and connectivity, and the internet and so forth in a way that we will be addressing these twin challenges of environmental needs and mobility needs? Right? 

MasterCard is a great example of an incumbent that's really been pursuing a very focused and very effective digital transformation. Their core business is of course credit card payments. As they've focused on the digital strategy, they're not just bringing their credit card network into digital payments online, but they are also looking more broadly at how do they power and protect commerce? Making commerce secure in the digital world across every device, every partner, and every platform? Because they have an incredible range of partners across the world already from their core business. And so this is leading them to invest and pursue innovations in areas around cybersecurity, for example, around fraud prevention, around digital identity solutions, which can not only verify who is making a given payment, but solve all sorts of other problems around security for their partners in the digital era. So again, having this clear sense of what is the impact you hope to have? 

This is really a matter of focusing on the why before you start to focus on the what. Not figuring out yet which strategies you're going to pursue, what digital products or business models you might try to build. But first, try to articulate why. What is the impact we want to have? That becomes as I say, your North Star. 

The fourth and last piece of a shared vision for digital transformation is a business theory. This is where you spell out how you expect to actually earn back the money that you are putting in, the resources, financial and otherwise, that you're investing here in the future. This is not a new idea. It's critical at times of change in any organization. If you look in the history of the Walt Disney Company, their founder, Walt Disney, back in 1957, was leading a tremendous change in the company. They were expanding beyond their core business of theatrical films, moving into most notably for the first time, theme parks with the launch of Disneyland. But also, into other ancillary businesses, merchandise licensing, television, music, publications and so forth. And so he laid out a business theory, actually in the form of this famous visual map, showing that these are not separate isolated business, but how they are connected to each other, how each of these other businesses are drawing on the characters and stories and assets of the core, the theatrical films, generating revenue, creating new experiences for customers, but also feeding back into and supporting that core business. This is the kind of theory that you need to have as you're embarking on a transformation.

When Amazon was first getting started, Jeff Bezos laid out a very clear vision that as the company succeeded and grew in scale and economies of scale, for example, reduced costs of warehousing and so forth, at every stage, they would not be using the growth of the company to sort of fatten the margins, but rather to keep pushing prices down for the customer. Now why would you do that? For ultimately, you're trying to be a financial successful company. This was his theory. He said, "By keeping our prices very, very low, what we earn over time is customer trust. And that customer trust over the long term will maximize our free cashflow." That was his theory that he built the whole business on, and which he has spelled out very clearly and used that to guide decision making from the start.

As you're thinking about your own business theory for digital transformation, think about what are the value drivers for your business? How will transformation actually create and capture value back for your own firm, and those who are going to depend on your company, your industry? This is a common sort of three bucket categorization I've seen, thinking about are we creating value for the customer experience, maybe selling new products or improving customer loyalty? Are we creating value for operational excellence, like reducing our costs or our risks? Are we creating value through launching new business models? Right? Think of what are the value drivers to your business of this transformation? 

There are many benefits to have this business theory. First of all, perhaps most important, it aligns everyone on expectations. What are we actually hoping for out of this effort? So common, I see companies start a digital transformation, and even within the leadership team at the top, there are very different expectations of what are we thinking we're going to see? What would success look like in 12 months or 36 months? If you're not aligned on what you're expecting and aiming for, it is going to be impossible to pull people together and actually work effectively. It will guide your resource allocation. It will help you choose the right metrics to judge progress as you go. If you don't get this right, then what I see time and time again is companies are just relying on these generic off-the-shelf maturity metrics. How mature is your digital journey of your company? And these are just completely generic non-business metrics that could be applied to any company and, therefore, have really very little insight about the progress you're making. 

Lastly, a business theory, if you are a public company, has a really important benefit, which is shareholder communications. Warren Buffet is famous for observing that, in his metaphor, about public companies, he said, "You can hold a rock concert, and that's okay. You can hold a ballet, and that's okay. Just don't hold a rock concert and advertise it as a ballet." The job of a public company is to be clear about what you're doing, whether you're holding a ballet or a rock concert, and then the investor can choose to opt into that. So, having this business theory is critical to speaking to shareholders, to external investors and saying, "Here's what we're doing, why we're doing it. Now you can make an informed decision about whether you want to support that with your own investments.” 

This shared vision, it's just the first step, but it is absolutely so critical to digital transformation. If you do not get this right, time and time again, I see companies who lack this shared vision. And what happens? Their employees fear change. They have no clear sense of where the firm is going. The backing for investments is weak, whether it's from investors, or P&L heads. Companies rely on these generic maturity metrics. Their initiatives are generic. They simply are doing the exact same things as all the other peers in their industry, and launching the same digital products. They're following the market, reacting to trends, and always surprised by the latest new digital entrant.
If you get this right, if you're able to define a shared vision effectively, what you will see is very different. Employees at every level of your organization understand what the digital agenda actually is and are able to push it forward. Right? You will have support for your investments from investors, from P&L heads, from your own CFO. The business impact of digital is actually clearly defined, and therefore, you can find metrics to measure and effectively track the results of the work you're doing. Only digital initiatives where you have a competitive advantage or right to win will receive investment and support. And lastly, it allows your company to lead the market, to be alert to shifts, and just make choices about where you'll go and why while there is still time to choose a course of action.

So, every digital transformation starts with this, with a shared vision of the future of your business, one that will inspire, align, and make the case for change. This is, as I said, the first of five steps. I actually, as Mark mentioned, I have a book coming out later this year. I just submitted the manuscript, which will spell out the entire roadmap framework in detail. But I ask you to please if you're interested to learn more, keep in touch. If you follow me on LinkedIn, I will be sharing more content on this framework in the months ahead. And you will be first to hear about when the book is coming out, can be ordered. With that, let me jump into some questions, and welcome back Mark Roberts. Mark. All right. Here we go.

Mark Roberts:
Thanks, David. You've covered a huge amount in just 30 minutes. We've got tons of questions came in. I've tried to curate a few. We're going to hit some of the questions that sort of replicate some of the themes, I think. The first one links directly to what you've just been talking about. So, what's the single biggest blocker to creating this shared vision?

David Rogers:
I think, well, the first blocker probably is companies don't even realize that they need it and they just start throwing money and investments because somebody tells them they need to buy some technology. Once you actually realize you need a shared vision, I would say the biggest obstacle is what Phil Bobbitt at Columbia's Law School calls the Parmenides Fallacy, which is a funny Greek name that just means the assumption that the future will look like a continuation of the past. And so many companies, they don't even realize this, but they expect next quarter to look like last quarter. And everything is based around sort of all the history that they've had to date in the company. And that is an extremely risky assumption to act on. As John F. Kennedy said, "Yes, there are risks and costs to any program of action. But there are far greater risks and costs long term to a program of comfortable inaction." And so we very often find it more comfortable to sort of look at all the things that could go wrong and what this will cost, and whether we should really do it, and then sort of stay the course as if the world is not changing, and if we don't change our own strategy at our own organization, that what worked for us last year ought to work for us again next year. And that's really not the case.

Mark Roberts:
Okay. Thank you, David. I've got another one here from Jamie, who asks, "What are a few of the top digital transformation initiatives that you're seeing today?" 

David Rogers:
Well, the good news is we now have ... Everybody talks about that 70% failure rate; the 30% provides a lot of lessons now. Those who are actually succeeding, so I'll point to a few on the consumer side. I do think Disney I mentioned is a great example, really challenging, really traumatic transformation of the business as they're going direct to consumer. Walmart, I touched on another great example. Nike is a great consumer business that's really transforming around data and direct relationships with customers, experimenting with new business models. If you're an industry company, if you're B2B, great places to start, a look the John Deere is a really fascinating and agricultural business. Also, Zoetis and Merck Animal Health, two pioneers in the animal health, also agriculture, industrial. Air Liquide is a French-owned global company providing gases to industrial sectors around the world. Really remarkable digital transformation over the last several years. So, those are all companies I would encourage anyone to dig into. 

Mark Roberts:
Thanks, David. And Marina is asking, "What practical advice do you give to companies that have failed in their digital transformation initiatives?"

David Rogers:
So, my advice is good news, success is often preceded by failure. So, do not give up hope. Right? One of my favorite cases for this reason is the New York Times. Today, New York Times is often given as an example of successful digital transformation. Not everyone realizes that they did it all wrong for over a decade. They committed every possible mistake you could in digital transformation when they first started back in the '90s and into the new century. So, it's all right that if you have had failure to date that absolutely does not prevent you from turning around the ship and starting to have success. Again, it starts with simply addressing these underlying issues, which is what the Times did. You've got to define that shared vision, pick the problems that matter most, learn to experiment and validate new ventures, manage growth differently at scale, and invest in growing your capabilities over time. 

Mark Roberts:
Thanks, David. We've been stretching time, so we're going to squeeze one more question in, and then we'll have to wrap up. But Shwahib has just asked, "Is there a blueprint framework that can create a digital strategy roadmap for any business?" 

David Rogers:
Right. So, as I mentioned, that is kind of what I've been working on over the last four or five years, really since the last book came out, and trying to develop a framework, what I call the Digital Transformation Roadmap that can be applied to any organization as you adapt it to your particular needs, your market, your customer, your organizational structure and size and complexity. So, as I said, I have a book that'll be coming out later this year. But you actually don't have to wait until then for that. I am already teaching a program, one of our newest programs at Columbia Business School, called Leading Digital Transformation, which is designed around ... We look in much more detail at defining a shared vision and all five steps of this framework, really what it takes to drive organizational change in an established business to become successful in this digital era. And in addition to the frameworks and case studies and very applicable tools that we break out into working on within your own business, you also get a chance to because of the great experience of executive education, you get to learn from other executives, chief digital officers and others, who are in the trenches in very different kinds of organization. And that's both the peers in the classroom and also outside speakers, who I will bring into the classroom. So, I would encourage anyone who's looking for that to take advantage of the class coming up.

Mark Roberts:
Yeah. Thank you, David. Thank you so much for your energy and insights as ever, that you shared with what's been quite a big group today. Thanks as well for sharing that heads up about the Leading Digital Transformation program. That will be running in-person on our brilliant new campus March 20th to the 22nd. So, we'll make sure that we circulate some information on that specific program to this group as well. But to everybody that's joined on behalf of Columbia Business School Exec. Ed, thank you very much for joining us today. It was great to have you with us. And have a good day. Thank you.

David Rogers:
Take care. Thanks, Mark. Be well, everyone. 
 

Faculty

David Rogers - Academic Director at Columbia Business School Executive Education

David Rogers

Academic Director in Executive Education

Author, The Digital Transformation Roadmap

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