In the business world, everyone is talking about digital transformation—from AI to robots to the Internet of Things. But according to George Westerman, most people are missing the point.
Technology doesn’t provide value to a business. Instead, “technology’s value comes from doing business differently because technology makes it possible,” Westerman writes in his recent MIT Sloan Management Review article, “Your Company Doesn’t Need a Digital Strategy.” Creating a “digital strategy” can focus the organization in ways that don’t capture the true value of digital transformation. Westerman, who is a Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy, suggests that the right focus is on a better strategy that is enabled by digital.
Focus on strategic transformation, not technology adoption
According to Westerman, technology helps you do business differently, but the right strategy is not technology-focused. It incorporates the right technologies for the right jobs. Regardless of your industry, Westerman suggests keeping these four points in mind to avoid common pitfalls:
- Get away from silo thinking. Focusing on the technology can direct aspirations toward what technology can do (mobile, big data, VR, etc.) rather than what a transformed business should look like. For example, a mobile strategy comes to a screeching halt when the company fails to consider opportunities that are not enabled by mobile. This kind of incremental thinking misses much bigger opportunities across silos.
- Don’t push the envelope too far, too fast. Looking too far forward toward advanced digital innovations can make other technologies seem mundane. However, business leaders leave easy money on the table if they ignore incremental steps and pursue risky opportunities that may not be ready to pay off yet.
- Don’t ask your tech leaders to drive transformation alone. Even the best IT leaders won’t be able to transform a business if they don’t run that part of the business. “While I’ve seen many successful digital transformations led by great tech leaders, the transformation comes from working with them, not asking them to do it alone,” writes Westerman.
- Build essential leadership capabilities, not just technical ones. Think of digital transformation not as a project but as a capability. When you focus on transformation instead of digital, you shift the weight to creating real business value from technological innovations.
“As an engineer turned manager turned management researcher, I love technology,” writes Westerman. “I’ve spent my life making, using, and studying some of the greatest innovations of the past few decades, and I have studied digital transformation for the past six years, starting before it was even a thing. I would never tell a company to avoid new technologies, and I would never tell managers to ignore fast-emerging digital innovations. But I will continue to warn managers when I see digital transformation conversation going in the wrong direction.”
George Westerman is a principal research scientist with the MIT Initiative on the Digital Economy and coauthor of the award-winning book Leading Digital: Turning Technology Into Business Transformation. You can learn from him firsthand in these MIT Sloan Executive Education programs: Essential IT for Non-IT Executives, Internet of Things: Business Implications and Opportunities (self-paced online), and Executive Program in General Management.