Taking the lead in the digital era

Guest blogger – Dr. Carsten Linz, Business Development Officer and Global Head of the SAP Center for Digital Leadership

We all know that business is changing unbelievably fast these days. New technologies like cloud computing, smart sensors, artificial intelligence and block chain are growing exponentially. Because of this our stakeholder map changes consistently due to the blurring borders of business IT and operational technology (OT), also due to new evolving roles such as the Chief Digital Officer or the Digital Transformation Officer which often overlap with existing CxO profiles. Startups scale much faster as they innovate on top of platforms and elastic cloud infrastructures, hence the founder team has more time to focus on truly innovating customer use cases and new business models. While data is becoming the golden asset for companies, the key question is: who is taking the lead in your company to drive through digital transformation and the new age of innovation?

At our SAP Center for Digital Leadership, we have strategic discussions with more than 150 digital leaders per year. As digital has become a managing board topic, these discussions have morphed into business-centric decisions that often bring together the CEO, CIO, and CFO of various companies, sometimes with CDOs and CTOs – and sometimes without. What becomes evident in these discussions is that digital transformation is not a technology discussion, but more a leadership challenge. Questions from these leaders are now: how to convince our customers, the capital markets, our board of directors, our leadership team, and all employees so that our digital strategy hits scale, and helps to gain the competitive edge for the company?

Leadership patterns to succeed digitally

Based on the anonymised answers from close to 100 CxO's, who used our Digital Innovation and Transformation Framework for transforming their respective organisations, clear patterns can be derived: Relatively seen, CxOs rank ‘leadership’ and ‘end-to-end process capabilities’ still lowest and at the same time have the highest ambition to grow these areas.

Lead to Grow the Market Playing Field

Much has been written about a new breed of leader who needs to be data-driven, highly business-centric, and super technology-savvy to successfully master digital transformation. It is doubtful if any human will be able to fulfil all new requirements – especially as the existing ones will not go away. Instead of having a capability-focused discussion in the first place, it is much more powerful to establish the right strategic intent for the organisation. Too many digital initiatives have a strong efficiency and cost saving focus – especially in Europe, unlike the US and China. Instead the transformation focus must be on growing new digital revenue streams. It seems that there is also a leadership reason in Europe, and why this region still has not brought any unicorns to life. Therefore, we need more digital leaders who act as a catalyst for growth instead of focusing solely on automation for efficiency. Once this is achieved, we can argue if the current leaders have sufficient entrepreneurial leadership DNA to lead a digital revolution, take risks, and break down organisational silos.

 

“Failure is only postponed success as long as courage ‘coaches’ ambition. The habit of persistence is the habit of victory.”

As Herbert Kaufmann framed it

Focusing on end-to-end processes in combination with an excellent user experience is important – however not enough. Given the digital redefinition of many markets, the blurring industry boundaries, and innovation at the edge as the new normal; many organisations still rely on business models which were fundamentally suited to an era of the past. As organisations try to adapt to a new environment, they risk relying on marginal improvements of their existing business models. What's needed is to radically change gears in order to achieve the next business model and gain the competitive edge. Our three years of research on Radical Business Model Transformation shows that – to be sustainable – a business model change requires fundamental shifts 

  • in the front-end, namely the value proposition and new delivery models, e.g. stores and marketplace
  • in the back-end, hence reconfigurations of the value creation network and the processes, e.g. agile manufacturing and generating a partnership network
  • in the monetisation mechanics with new subscription or outcome-based pricing schemes 

If the new digital leader wants to capture the full potential of a new business model, she or he needs to align all domains in the long run to truly gain the competitive edge.

This approach will help you frame your digitalisation efforts strategically, build new digital revenue streams, and deeply embed digital innovation into your company’s DNA. Stop projects if they only aim at digitising incremental improvements of existing businesses. In other words: don’t digitise the past! Focus instead on pilot projects that generate new revenue streams. Transformations of the business model or operations model which ‘shoot for the moon’ can encourage idea generation, set the stage for new ventures, and attract and develop digital talent. Communicating clearly about vision and strategy is a leadership imperative that transcends any boundary.

In the end, leaders will be forgiven for many mistakes, but never for the lack of a compelling vision and a winning strategy.

If the new digital leader wants to capture the full potential of a new business model, she or he needs to align all domains in the long run to truly gain the competitive edge.

This approach will help you frame your digitalisation efforts strategically, build new digital revenue streams, and deeply embed digital innovation into your company’s DNA. Stop projects if they only aim at digitising incremental improvements of existing businesses. In other words: don’t digitise the past! Focus instead on pilot projects that generate new revenue streams. Transformations of the business model or operations model which ‘shoot for the moon’ can encourage idea generation, set the stage for new ventures, and attract and develop digital talent. Communicating clearly about vision and strategy is a leadership imperative that transcends any boundary.

In the end, leaders will be forgiven for many mistakes, but never for the lack of a compelling vision and a winning strategy.

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