Jeanne Ross, Principal Research Scientist at The MIT Center for Information Systems Research (CISR), studies how companies architect themselves for success in the digital economy and how they can effectively implement new technologies like social, mobile, analytics, cloud, Internet of Things, and cognitive computing. Ross teaches in several MIT Sloan Executive Education programs, the newest of which is the online course Organizational Design for Digital Transformation.
In a recent interview with Forbes, Ross expounded on some of the ideas from her latest book, Designed for Digital: How to Architect Your Business for Sustained Success. One of the biggest takeaways from the book is that there are generally three steps companies need to take for a successful digital transformation:
1. Experiment repeatedly
Ross says that instead of having a master plan, businesses need to recognize opportunities when they present themselves and then test whether those opportunities will result in success. This is the model that has worked so well for Google, Amazon, Apple, and similar companies. Ross presents the example of Airbnb: their initial idea wasn’t as much about homestay lodging as it was about community building. A host would put an air mattress on the living room floor for their guest, cook them breakfast in the morning, and tour them around the city, thus becoming friends in the process. But Airbnb discovered customers weren’t into this idea and so the company adapted, seizing the opportunity that was there. According to Ross, “every startup we studied has this history of saying, ‘When we started, this was our idea, but where we are now is somewhere pretty different.’”
When it’s time to test an opportunity, Ross says “you want to state a specific hypothesis around what you think will work so that you gain a sense as to whether you are right or wrong.” Ultimately, she says it’s all about “finding the intersection between what you can do and what your customers will pay for.”
2. Co-create with customers
“If we believe that we know what our customers want, we are in for a surprise,” says Ross. The key is to invite feedback from customers, and then improve the business based on that feedback. She uses the example of Philips, which has workshops with potential customers where they say, "We are interested in solving the biggest healthcare problems. Tell us yours." This has led to a variety of improvements to the electrocardiograms, x-ray machines, and electronic medical records that Philips already provides to customers. You can even see the above Airbnb example as an illustration of co-creating with customers, who let the company know they weren’t interested in community building, but they were interested in a home away from home while traveling.
3. Assemble cross-functional development teams
Even though it might be a company’s instinct to leave digital transformation up to their IT unit or their R&D unit, Ross says that all factions of a company should be involved: “We want to have people from commercial land, the IT piece, and the customer service piece to stay in touch with customers, test ideas, imagine what is possible, and road map ideas.”
She also advises companies not to get too hung up on traditional ideas of what technology-based roles like CIO or CDO should look like—companies should use a model that works for them specifically, and “if you are a technology-savvy leader, there are any number of roles you could play.”
As far as the future, Ross says that companies don’t need to worry about completely transforming to digital operations, but instead keeping a foot in both the physical and digital world: “We thought that all retail stores and paper newspapers would go away, but they did not. Every business should assume that we have to sustain the old, and we have to get better and better at the new.”
Jeanne Ross is the Principal Research Scientist at The MIT Center for Information Systems Research (CISR) and the author of Designed for Digital: How to Architect Your Business for Sustained Success. She teaches in the Advanced Management Program, Leading Change in Complex Organizations, and Organizational Design for Digital Transformation (self-paced online).