Tech Savvy

Is Your Company Winning the Race to Digital Transformation?

What’s happening this week at the intersection of management and technology.

Midpoint in the race to digital transformation: In some respects, the digitization of business is a pretty nebulous subject. It’s not like a company achieves digital transformation on some specific date — the darn target moves as new technologies and applications appear. That’s one reason why Jane McConnell’s 10th annual inquiry into “The Organization in the Digital Age” is worth a look.

McConnell frames digital transformation as an organizational imperative that manifests itself in three dimensions: people, workplace, and technology. Over the past decade, she has been gauging the progress that a broad, international group of 300+ companies and other institutions has been making toward this imperative in three stages.

The Starting stage is defined by an individual (rather than organizational) digital awareness — digital initiatives are ad hoc and infrequent; senior leaders are minimally involved; most decisions are made by traditional hierarchy; work mainly takes place in established channels, with some virtual venues. The Developing stage is defined by mobilization — a compelling vision for digital transformation exists; senior managers are leading the charge; most functions, levels, and entities are involved in digital initiatives. The Maturing stage is defined by trust — digital is considered a strategic asset; it is embedded in work practices; much decision making is decentralized; information and collaboration is organization-wide and includes customers and external partners.

“The 2016 data shows 16% of the survey participants in the Maturing stage, 52% in the Developing stage, and 32% in the Starting stage,” McConnell reports. Where does your company place?

Questions for digital disrupters: It’s good to see that the companies that create the technologies that are forcing the rest of the business world to undertake digital transformation are not immune from its dictates. Turnabout, after all, is fair play.

“The technology, media, and telecommunications (TMT) sectors are in the vanguard, bringing these new opportunities to market — even as their legacy businesses are threatened by them,” writes a team of BCG consultants in a white paper aimed at the disruptors. “TMT companies have begun to digitize their core businesses and enter new disruptive businesses, often through M&A and partnerships. Still, they are subject to massive dislocation and attack.”

In order to keep their edge, BCG says that TMT companies will need to focus on three trends that shouldn’t come as much of a surprise if you’ve been reading this column over the past few months: artificial intelligence, the internet of things, and cybersecurity. The authors offer a set of questions for each one that any company can use:

AI: How can AI provide effective decision support for strategic decisions, such as entering new markets, engaging in M&A, and finding prospective customers? How can AI drive productivity by automating routine white-collar responsibilities such as compliance and technical support? How can AI enhance customer engagement? What role can we play in contributing to AI itself?

IoT: Given the developments in IoT, to what extent are we at risk of disruption? Do we have a product or service we can leverage to capitalize on IoT? In which areas of the stack should we play, given our assets and strengths? Do we have the infrastructure in place to succeed? Where do we need to partner, and what do we want to own? Which services should we monetize, and which should we give away or subsidize?

Cybersecurity: Do we have a structured approach to identifying, prioritizing, and mitigating cybersecurity risks? Is our senior leadership team actively engaged in cybersecurity issues — not just as participants in meetings but as key decision makers and doers? How do we manage for both speed to market and security? How much of our revenues do we stand to lose as a result of brand damage if the company suffers a public data breach? How preventive are our cybersecurity systems?

Blockchain in the supply chain: Fortune writer Jeff John Roberts has declared the blockchain hype cycle over. But he cites only one example — the aborted attempt by the state of Vermont to use the distributed ledger technology to track land titles — that falls into the hype cycle’s trough of disillusionment. So, the declaration is more likely to be wishful thinking — and a bit of defensive hyperbole — than reality.

There are signs, however, that blockchain is moving through Gartner’s famously inexact cycle that really isn’t a cycle at all. One of them is the development of prêt-à-porter blockchain software by organizations such as open-source nonprofit Hyperledger Project. “If we do our job right,” Hyperledger’s leader Brian Behlendorf tells Tom Simonite in MIT Technology Review, “you won’t ever hear about us — we become plumbing.”

Another sign is the spread of blockchain applications and their integration with other technologies, as described by IBM’s Harriet Green in VentureBeat. Using a bad burger as an example, Green, IBM’s Watson IoT, commerce, and education general manager, explores how blockchain ledgers and IoT sensors can be used to track materials through multiple, complex supply chains.

“The combination of these technologies creates a permanent, shareable, actionable record of every moment in a product’s trip through its supply chain, creating efficiencies throughout the global economy,” declares Green. “That means that if a restaurant company was managing its supply chain using IoT and blockchain, and a problem was found in burgers it was serving, the restaurant could have visibility all the way back through its supply chain to pinpoint and solve the problem.”

In case that sounds like leftover hype, Green offers a couple of examples of IoT/blockchain solutions that are in the works: One is an Everledger project to track diamonds; the other is a U.K.-based startup named Provenance that is running a pilot program to track tuna.