Rick Roy is a 34-year veteran of the technology industry and a strategic advisor to AHEAD. Throughout his career, he’s served as CIO and peer advisor to large enterprises in financial services, automotive, healthcare, pharmaceuticals, and professional services. He is currently Managing Partner of RER Advisors.
AHEAD’s EVP of Customer Success and CMO Tom Pohlmann sat down with Rick to get his perspective on the state of digital technology in the enterprise.
We’re bringing their conversation to you in a four-part Gimme Five interview series covering digital transformation, innovation, the role of infrastructure in both, and the imperative to deliver better software faster in the enterprise. The first of these discusses digital transformation.
Tom: Digital transformation is still a heavily used phrase. How do you define it?
Rick: It’s when an organization’s process of truly reinventing itself is made possible by digital technology. For example, a company asking itself, “Can we digitize a product or service that we’re offering that has been very much non-digital in the past?” Companies can create or monetize new revenue streams using digital assets, like when they own enterprise data that they can productize and make available to the market in a valuable way.
An extreme example of this would be Amazon. Everyone knows the story of Amazon starting as an online bookseller. Today they’ve created Amazon Web Services (AWS)—a completely different business with separate revenue and profit streams and it’s all the result of a progressive digital transformation.
Tom: So, you see a difference between digital optimization and a broad transformation?
Rick: Well, they’re different degrees of transformation. Are we really transforming something to become completely new and different or are we just taking what we have today and making it better? Some might say it’s just semantics, but I think it runs deeper than that. There are different investment levels required and certainly different risk profiles depending on the path you take. It’s always inherently riskier to start something from scratch than it is to improve upon something that is already established and proven.
Tom: Why do you think we’re seeing so many failed attempts at digital transformation?
Rick: Companies are struggling with applying new innovative technologies to create and execute digital strategy while ensuring their use of technology is actually grounded in business outcomes. I’ve seen a lot of companies struggle with this on both ends of the spectrum—trying to achieve transformation business goals with too little technology and conversely, spending heavily on technology that is not strongly linked to business value in a transformational way.
Digital transformation really needs to be a business initiative that just so happens to use leading technology to achieve outcomes.
Tom: What principles can CIOs follow to make sure their digital transformations are successful?
Rick: First, CIOs need to build a coalition of leaders in the company, beyond just IT and the CIO, to oversee the transformation. It sets the tone up front that what the company is working on is a strategic business initiative which happens to have a pretty strong tech component to it.
For example, if a company is interested in enhancing its customer experience, the CMO or head of marketing should be heavily involved. Rapidly mobilizing a senior-level, cross-functional group sets in place a team that can sponsor and champion the initiative. Research has proven this will significantly improve the success rate of the transformation.
Education is the next critical step. CIO’s can and should provide the cross functional group with real-world examples of what other companies have done in terms of digital transformation. This elevates everyone’s level of thinking and opens their apertures a bit to what’s actually possible. From there you can always trim back. Thinking bigger first builds energy and creativity around the project.
The transformation leadership team must then identify what the digital transformation actually needs to accomplish in measurable terms. In the customer experience example, they could define things like: What is the experience now? What do we want it to be? What should it look and feel like? What specific metrics are we looking to significantly change or improve? These are very much business questions and not technology questions. Then, as follow-ups to those questions they can talk about how it’s possible to create the desired outcomes using technology.