CIOs and business leaders recognize that innovation will deliver new digital business opportunities. So, they know that guiding an organization’s digital business transformation necessitates a shift from managing the probable to leading the possible.
In the recent study, Digitizing IT, SAP worked with the Economist Intelligence Unit, with input from Digital Bridge Partners, to learn how enterprise-wide and IT-department contexts, attitudes, and intentions drive and/or hinder the transformation of digitally driven companies. Over 800 C-level business and IT leaders at major international organizations across Europe, North America, Latin America, and Asia Pacific shared their experiences and thoughts.
Study respondent Klas Bendrik is CIO at automobile manufacturer Volvo Cars. Sitting on the company’s executive management team and reporting directly to CEO Håkan Samuelsson, he sees digital innovation as a core responsibility for his department.
“As IT-related capabilities become more an everyday part of every interaction we have with connected drivers and connected cars, it’s only natural that IT should take an active leadership role,” he argues.
“Digitalization is on everyone’s agenda, certainly, but IT has special skills to bring to the conversation. The traditional relationship of IT being an internal supplier to the business still exists, yes, but a new role is emerging rapidly, and that’s as a leader in wider conversations in the business about how we, as an organization, combine the digital technologies available and the innovative ideas that we have to drive customer and product innovation.
“It’s a role I’m happy to take: we in IT must be helping the business to explore what’s possible,” he adds.
The portfolio of opportunities for digital innovation extends across two primary domains:
- The creation of digitally enabled efficiencies – value derived from process and asset utilization improvements, business agility, and new cost models
- The creation of digitally driven new revenues – digital sources of value derived from new products and services, new customers and optimized channels, and new pricing and business models
Some industries are already well down the digital transformation path while others are just beginning the process. In the short term, many organizations will focus on digitally enabled efficiencies, but over time, digitally driven innovation will eclipse the benefits of digitally enabling existing processes. General Electric is a great example of this – its digitally driven revenue and value are growing rapidly and projected to reach $6 billion in 2016.
We observe these trends playing out in both Digital Bridge Partners’ clients and in SAP customer use cases. Successful CIOs in companies creating new digital business revenue are:
- Implementing best practice innovation platforms and “solutioning” approaches, including design thinking and lean startup methodologies that allow teams to ideate, test, and deliver new offerings and evaluate:
- Problem/solution fit – Does the solution solve an important problem?
- Product/market fit – Will the minimum viable product produce a valuable result?
- Scalability – What will it take to grow?
- Moving fast and measuring constantly to support management of the portfolio of innovations, ensuring that efforts and investments are optimally focused