Leading Digital: Turning Technology into Business Transformation

303 Pages·2014·1.06 MB·English

by  George Westerman

l
management Harvard Business review Press us$30.00 / caN$34.50
george Westerman is “Successful transformation of your organization to digital doesn’t just happen—you need to lead e
a Research Scientist in the it. Leading Digital shows the key elements and processes that have made Digital Masters out of
MIT Initiative on the Digital companies around the globe, in many different industries, not just high-tech. A must-read.”
Become a Digital master—No
Economy. His research
—Pete BlackshaW, Global Head of Digital and Social Media, Nestlé
and teaching help senior matter What BusiNess You’re iN
executives drive competitive D
l e D i n g
“The days when senior executives could delegate technology issues to their technology people i
advantage with digital f you think the phrase “going digital” is only
technology. He is coauthor of two award- are over. Digital leadership capability is essential to thriving in a world of fast-changing relevant for industries like tech, media,
winning books: The Real Business of IT (2009) technologies. Westerman, Bonnet, and McAfee provide a clear and readable guidebook i and entertainment—think again. In fact,
and IT Risk (2007). to help any leader or manager play an effective role in turning technology challenges into n mobile, analytics, social media, sensors, and
transformation opportunities, both now and in the future.”
cloud computing have already fundamentally
didier bonnet is a Senior —michael tushmaN, professor, Harvard Business School; coauthor, Winning Through Innovation changed the entire business landscape as
Vice President at Capgemini g we know it—including your industry. The
Consulting, where he serves “To stay relevant in this new, always-connected digital universe, businesses in virtually problem is that most accounts of digital in
as Global Practice Leader
every industry are reinventing their business models for unprecedented customer access, D ig ita l business focus on Silicon Valley stars and
and heads Capgemini
interaction, speed, and scale. Leading Digital shows how transformative companies are tech start-ups. But what about the other 90-plus
Consulting’s Digital navigating this disruptive era successfully—and why others are falling behind.” D percent of the economy?
Transformation program. He
In Leading Digital, authors George
has more than twenty-five years’ experience in —Joe tucci, Chairman and CEO, EMC Corp.
Westerman, Didier Bonnet, and Andrew
strategy, internet economics, globalization, and i
McAfee highlight how large companies
g
business transformation for large corporations.
“Leading Digital provides comprehensive, fact-based insights into how multinational in traditional industries—from finance to
companies can leverage digital technology to transform their businesses’ performance. manufacturing to pharmaceuticals—are
andreW mcafee is Co- In this book, the authors provide not only the inspiration, but also the practical guidance i using digital to gain strategic advantage. They
Director of the MIT Initiative
required for CEOs to successfully navigate this complex transformation.” t illuminate the principles and practices that
on the Digital Economy. He
—Pierre PriNguet, Vice Chairman of the Board and CEO, Pernod Ricard lead to successful digital transformation.
has also held appointments
a Based on a study of more than four hundred
at Harvard Business School
global firms, including Asian Paints, Burberry,
and Harvard’s Berkman “Technologies—whether based on stone, steel, or software—are tools. They deliver results only
Caesars Entertainment, Codelco, Lloyds
Center for Internet and when wielded effectively. Westerman, Bonnet, and McAfee’s careful and insightful research l
turNiNg techNologY
Banking Group, Nike, and Pernod Ricard, the
Society. In 2008, McAfee was named number 38 reveals the patterns common to the most effective leaders of the digital revolution and shows
on the Ziff Davis list of the “100 Most Influential how they are using digital technologies to deliver impressive results.” book shows what it takes to become a Digital
People in IT.” He was also named one of the Master. It explains successful transformation
—erik BrYNJolfssoN, professor, MIT Sloan School; Director, MIT Initiative on the
fifty most influential people in business IT, by iNto BusiNess traNsformatioN in a clear, two-part framework: where to
Digital Economy; and coauthor, The Second Machine Age
Baseline Magazine. He is coauthor of The Second invest in digital capabilities, and how to lead
Machine Age (2014) and Race Against the Machine the transformation. Within these parts, you’ll
(2011), and the author of Enterprise 2.0 (2009). “Digital is no longer the responsibility of a few tech-savvy executives—in the age of digital learn:
Westerman
customers, it needs to be the responsibility of every leader in the organization. Leading Digital
How to engage better with your customers
provides a blueprint for digital transformation.” bonnet
—charleNe li, founder and CEO, Altimeter Group; author, Open Leadership; How to digitally enhance operations
mcafee
and coauthor, Groundswell
How to create a digital vision
How to govern your digital activities
jacket design: faceout studios
author photos: david sella (Westerman); evgenia eliseeva (mcafee) george Westerman | didier bonnet | andreW mcafee The book also includes an extensive step-by-
step transformation playbook for leaders to
ISBN-13: 978-1-62527-247-8
This book results from a joint 90000 follow.
staY iNformeD. JoiN the DiscussioN.
research program between Leading Digital is the must-have guide to
Visit hBr.org/Books
folloW @harVarDBiz oN tWitter Capgemini Consulting and the help your organization survive and thrive in
fiND us oN faceBook, liNkeDiN, YoutuBe, aND google+ MIT Center for Digital Business. hBr.org/Books 9 781625 272478 the new, digitally powered, global economy.
“Imagination, capability, and opportunity take on a new dimension in
the digital age. Leading Digital provides a framework for creating sus-
tainable business differentiators across the value chain. A must-read for
all those who aspire to become Digital Masters.”
—Manish Choksi, President of Home Improvement,
Supply Chain and IT, Asian Paints

“Westerman, Bonnet, and McAfee have done a masterful job of
describing the essential characteristics of Digital Masters and present-
ing a thoughtful and pragmatic leader’s playbook for digital trans-
formation. This book is an exceptional contribution to strategy and
management practice.”
—John Glaser, CEO, Health Services, Siemens

“The authors have lived on the cutting edge of how global organiza-
tions use digital technology to change and improve the way they do
business. With this book, they bring us along on the transformation
journey. If you want to prepare yourself to lead your organization
through this profound change, Leading Digital is a must-read.”
—Jean-Christophe LaLanne, Executive Vice President and
Chief Information Officer, Air France–KLM Group

“Using powerful examples, this impactful, evidence-based book dem-
onstrates that mastery of digital technologies drives significantly high
levels of profit and productivity across almost all industries—and shows
you how to become a Digital Master yourself.”
—F. Warren McFarlan, professor, Harvard Business School
“We are living in a time where technology is impacting everything we
do and touch like never before, where being connected is becoming a
basic human right, and where the unshared certainties of all businesses
are turning into shared uncertainties. Leading Digital offers a powerful
and refreshing approach to what needs to be done during each stage of
this journey.”
—Osman Sultan, CEO, Du, United Arab Emirates
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LE DING
➤
DIGITAL
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LE DING
➤
DIGITAL
TURNING TECHNOLOGY
INTO BUSINESS TRANSFORMATION
GEORGE WESTERMAN | DIDIER BONNET | ANDREW McAFEE
HARVARD BUSINESS REVIEW PRESS
Boston, Massachusetts
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For details and discount information for both print and
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tel. [phone], or www.hbr.org/bulksales.
Copyright 2014 George Westerman, Didier Bonnet, Andrew McAfee
All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval sys-
tem, or transmitted, in any form, or by any means (electronic, mechanical, photocopying,
recording, or otherwise), without the prior permission of the publisher. Requests for per-
mission should be directed to [email protected], or mailed to Permissions,
Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
The web addresses referenced in this book were live and correct at the time of the book’s
publication but may be subject to change.
Library of Congress Cataloging-in-Publication Data
Westerman, George, 1963-
L eading digital : turning technology into business transformation / George Westerman,
Didier Bonnet, Andrew McAfee.
pages cm
1 . Information technology—Management. 2. Strategic planning. 3. Organizational
change. I. Bonnet, Didier. II. McAfee, Andrew. III. Title.
HD30.2.W4645 2014
658.4'038--dc23
2014013859
eISBN 978-1-62527-248-5
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CO NTENTS
Introduction: Are You Ready? 1
1. What Is Digital Mastery? 9
PART I:
BUILDING DIGITAL CAPABILITIES
2. Creating a Compelling Customer Experience 29
3. Exploiting the Power of Core Operations 47
4. Reinventing Business Models 73
PART II:
BUILDING LEADERSHIP CAPABILITIES
5. Crafting Your Digital Vision 97
6. Engaging the Organization at Scale 115
7. Governing the Transformation 133
8. Building Technology Leadership Capabilities 153
PART III:
BACK AT THE OFFICE:
A Leader’s Playbook for Digital Transformation
9. Framing the Digital Challenge 175
10. Focusing Investment 189
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vi  Contents
11. Mobilizing the Organization 209
12. Sustaining the Digital Transformation 225
Epilogue: You Ain’t Seen Nothin’ Yet 245
Appendix: Digital Mastery Self-Assessment 251
Notes 255
Index 275
Acknowledgments 287
About the Authors 291
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Let us be grateful to the people who
make us happy; they are the charming gardeners
who make our souls blossom.
—Marcel Proust
From George
To Clare, Henry, and Marilyn, who transformed my
life in ways I never could have envisioned.
From Didier
To my wife Kathryn, for her immeasurable love and
support, and to my two own digital masters,
Alexandra and William, for keeping me on the
right side of the digital divide.
From Andy
To my coauthors, who have taught me much about
scholarship, writing, professionalism, and good cheer.
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