Digital Transformation does have the word ‘digital’ in it. That doesn’t mean:
It should be the responsibility of the CIO,
You need to be able to build technology to do it.
Technophobia is a real problem in business today. Business executives who book Ubers on their iPhones, do Zoom calls with a Bluetooth headset, and order DoorDash while going home in their self-driving cars are often paralyzed by the technology that their business uses. It’s easy enough for them to use Facebook or buy on Amazon, but HubSpot and Salesforce are daunting. They’re fine with Excel. It’s ‘good enough.’
The problem is that Digital Transformation will happen whether or not you’re a part of it. It’s your choice to be the transformer or the rubble left in the dust. I call it Digital Transformation, but others prefer Digital Business Transformation. The whole reason you’re using digital is to transform your business. Not just because it’s cool. The issue is that Digital Business Transformation at nine syllables is too long. Even though it’s the right idea, that’s too many syllables.
If you want to be in business in ten years, you need to be transforming your business today. The only way to transform at scale is with technology. If you are a technophobe, then you need to ask for help. In my earlier articles, there are explanations of most/all of the important technologies for business. That’s a good start. At that point, you know enough to ask questions. Then talk to your colleagues which is a lot less painful than you think.
If you’re still hesitant, let me tell you a couple of stories that I’ve heard recently. These illustrate how crippling it can be for business executives to opt out of anything technology related. These are true stories with a few minor details changed so as to not embarrass people or companies.
Example 1
The CMO of a company was given the opportunity by the board to make a significant investment in technology to modernize his department. He asked his team to pull together a recommendation. The team came back with a proposal for $20M+. He asked them to explain the proposal to him in terms of the recommendations and the benefits. The problem was that he didn’t understand the value. The bigger problem was that he was afraid to ask his team to explain. Rather than showing that he didn’t understand the trade-offs between these tools and others, he signed off on the investment.
It may have been the right choice—he had a good team. However, he put his reputation on the line without being sure of what he was proposing and $20M is not a small number.
The CEO and board were confident that their CMO could make the right decisions about marketing. Their CMO was confident in making all decisions about marketing as long as they didn’t involve technology. Unfortunately, at this point, technology is an integral part of marketing. The CMO was ducking a crucial part of his job by running away from learning about technology.
Example 2
Two CEOs were talking, one from an IT company, the other from a financial services company. The financial services company was in a revenue decline. The CEO of the IT company talked about using technology to transform the business. They talked about data, AI, ecosystems, etc. The financial services CEO was sold! These were areas where his company could differentiate itself. At the end of the meeting, the two CEOs confidently shook hands, believing that working together would benefit both of them. The IT CEO placed one of his sales leaders in charge of this joint effort. The financial services CEO put his CTO in charge.
In the first meeting between the sales lead and the CTO, the CTO explained how the ideas that the two CEOs had discussed weren’t actually priorities. His team had determined that their biggest problem was that the infrastructure and middleware portions of their tech stack were not differentiated. (This is like a call center deciding that they need special ‘call center cabling’ for their telephones and so they’re going to stop using an existing telco and build their own.) He announced he was going to build a tech stack similar to those offered by AWS, Google, IBM, Microsoft and VMware. If the IT company wanted to work with him, it could help him build, for internal use only, that stack. Those other companies actually sell their tech stack to multiple clients. He planned to build a minimally differentiated tech stack to, in the future, allow him to build more differentiated financial services products on top. Because his development team was really strong, he was confident that he could build a better tech stack for their financial services company. He had no plans to monetize his tech stack competing with the above players. He would use it simply to run his financial services business.
Last time I checked, his company’s stock price was still sliding.
The CEO was confident that his CTO was a great technologist. He assumed he was also a great business thinker. Unfortunately, the CTO did not think about the business tradeoffs. Yes, his development team was stellar. They did know about both financial services and infrastructure/middleware. They could probably build a (marginally) better tech stack for their company. However, he did not think about the tradeoffs. The company did not have an endless amount of development resources. He would have his developers build infrastructure/middleware. This would mean that he wouldn’t have developers working on financial services or even data/AI. He estimated 3-5 years for building the stack. He ultimately was condemning the company to zero innovation in their area of differentiation (financial services) for those 3-5 years. During those 3-5 years, his competitors would be investing in differentiated capabilities. While he was building something that was minimally better and not differentiated. He would be building something he could have bought for a smaller investment of both time and money.
The CTO made a terrible decision. But in the end, the fundamental problem was the CEO shying away from engagement in ‘the technical stuff.’ This allowed the CTO to prioritize solving an interesting technical problem. No one was watching to make sure that he made the best, or even a good, business decision.
Summary
It’s not enough to have a CIO/CTO. It’s not even enough to have a CIO/CTO that you can trust.
Every single business leader needs to know enough about technology to be able to think about how it could transform the business and what the business’s investment priorities should be. All executives in a company need to know enough finance to run their budgets. Similarly, they all need to know enough technology to run and improve their business effectively.
We can’t treat technology like a vertical (i.e., the CIO’s responsibility); it needs to be a horizontal—underlying everyone’s roles.