On June 30th OMMAX invited David Rogers, international expert in digital business strategy and author of The Digital Transformation Playbook to deliver an exclusive speech for a selected audience of C-level executives from industry, private equity firms and venture capitalists.
After his talk OMMAX took the opportunity to ask Mr Rogers a few questions:
OMMAX: Let’s say I’m the boss of a mid-sized business – and I don’t really see the need to undergo a Digital Transformation since none of my competitors seems to have taken steps in that direction so far. What would be your advice?
David Rogers: First I would suggest to take a broader view of your competitors. You are maybe defining them in the same way that you would have done 10 or 20 years ago. But the real source of competition is coming more and more from outside of your own industry. The biggest threat is someone who approaches your market from a completely different angle. Let’s take a big hotel chain for example. Probably you would say that its biggest competitors are other big hotel groups. But you forgot about firms like Airbnb, which have a complete different business model but solve the same problem for your customers.
Digital Transformation sounds like a long-winded, very expensive process …
Many companies are realizing that there are a lot of opportunities that don’t have to cost a lot of money. That is mostly because the speed at which you can identify new opportunities has increased. It means you realize much earlier in a digital market if ideas are going to fail or have success without spending millions of dollars. Doing so, you can discover opportunities that will create value for your business much faster and with lower capital investment.
When you transform a traditional company where would you locate this new project within the organisation?
I don’t believe there is only one right answer to that as there are different possible models. The most extreme one would be the venture capital model: You just invest in new start-ups and try to let them grow and in the end you acquire them. Second, you have the approach with an “innovation team”: You create a team that’s isolated from the rest of the company; you let them explore new, maybe even crazy ideas and let them develop them before bringing them in-house. Then there are other companies which prefer the competition model. They say: “We want innovative ideas from anyone in the organisation.” The people with the best ideas will get resources to actually develop these ideas into new business models. The hardest way is probably trying to train people throughout the organisation so that even your legal team and your procurement team and anyone else in your firm will undergo their own Digital Transformation. Which approach you choose depends a lot on the culture and the risk tolerance of the company.
What do you mean by risk tolerance?
The Bank of America for example lately wanted to try new retail banking models. So they set up a series of “test banks” and they calculated that 30 percent of them would fail. In the end only 10 percent of the ideas had failed – and they considered that a failure! They concluded from that that they hadn’t thought enough outside the box because they obviously only created ideas they were pretty sure they would work. They would have preferred a higher risk tolerance – which apparently was not part of their culture yet.
What are the right kind of people for Digital Transformation: Would you rather suggest getting brilliant 24-year-old graduates or, let’s say, 35-year-old people who already have experience working in digital field?
From what I have observed I can say if you have a more traditional company where there’s more resistance to change probably the second purchase. The risk of the first approach is that you are going to get a lot of good and fresh ideas but you’re not going to know how to sell them. You also may need both of the types: someone who has experience with internal politics and who understands how systems and organisations work and someone who has great ideas for the technology.
See some photos of the event: