Taking the Lead in Digital and Analytic Business Transformation

"The culture of a company is the behavior of its leaders. Leaders get the behavior they exhibit and tolerate." 
– Dick Brown, CEO, EDS

Working now across numerous startup, technology, and Fortune 500 companies, a common dilemma I find being contemplated across all levels of the organization (from the Board of Directors down) is, "Should we change our company and culture to truly become a digital and analytics competitor — and how do we do it?"

Now you’ll notice I used the word “dilemma,” which in the early 16th century denoted a form of argument involving a choice between equally unfavorable alternatives. This is intentional, as this decision often takes an established company down one of two equally unfavorable paths in its attempt to become a digital business.

1) First, there are those in the camp of “Do nothing,” don’t become an analytic and digital competitor, hope that those that do won’t beat you too badly, and continue to believe your company can “play not to lose” too much market share, consumers, and/or profitability. These companies will die a slow, painful death of a thousand cuts (layoffs, acquisitions and/or divestitures to structure their way out of it, and a strategy-of-the-month syndrome). Now they don’t specifically articulate this as their strategy, but their lack of action declares it.

2) Alternatively, there are those in the camp of “Talk a good game,” do everything, outspend others on rotating talent, expensive solutions, and hype-speak, but fail to truly become an analytic and digital competitor. They mistakenly believe that by pontificating on this topic that they are becoming a “new generation” company. However, the employees know better because nothing really changes in how they operate or how leaders behave. They continue to see the disruptive winners in their industry, category or market do it better and long to be like them.

Therefore, for many companies like these, the dilemma remains and, even worse, they simply fluctuate between these two equally unfavorable alternatives. Failure in the path they take emboldens opposing leaders to head in the other direction (often with new rotating talent) in a continued downward spiral of business results, employee retention/morale, and trust (from consumers, shareholders, and partners). Often the fear of digital transformation is driven by past success and the fear of cannibalizing it.

So, what is needed to take advantage of the exponential pace of technology capabilities in the areas of digital and analytic transformation? It truly comes down to business leaders and their ability to personally make the journey, to focus the transformation against business outcomes and change the culture of the entire company to do the same. You can have the best digital talent, data scientists/analysts, solutions, and partners, but that will not be sufficient if leadership doesn't lead and make the journey happen.

"Culture eats strategy for breakfast."
– Peter Drucker

Leading the Business Transformation
Whether you’re talking about digitizing your business model (e.g., direct to consumer), bringing analytics into key business processes, or even digitizing your packaging, the change will only be successful with strong leadership at the top. I’ve seen incredible leaders take this on and succeed. I’ve also seen incredible leaders sit on their hands and hope it somehow happens without them investing their time, leadership capital, and personal behavior change. In the latter case, regardless of investment — and I’ve seen hundreds of millions invested — it has failed.

Reflecting on these transformations, I've defined three attributes that define the strong leaders.

1) They have a passionate sense of ownership for the business model: Leading a digital or analytic transformation requires an intrinsic understanding of the current business model and passionate ownership of the future model. Too often, leaders don’t really understand their current business model (product, financial, role of innovation, supply chain, consumers, go-to-market strategy), and as such, fear making changes. They stay risk-averse, especially if they see it's still sufficient to play not to lose.

“We need to be alert and responsive to changing situations, anchored to only one commitment — doing the right thing to provide superior consumer value. We cannot be complacent or assume that yesterday’s formula for success will work today.”
— John Pepper, CEO, Procter & Gamble, about what really matters on changing the business model.

Changing the business model (by going direct to consumer or taking a joint ventures/strategic partner approach, digitizing consumer engagement, digitizing the package, leading on trends, introducing future breakthrough innovation that will cannibalize the current business) requires risk taking and leadership from the most senior leaders. Over and over again, I've seen small companies take the lead in this disruption because of this need.

It is very rarely the case that the market leader did not see the opportunity — it just lacked the leadership to make the move.

As a leader, are you:

— taking the lead on transformation, balancing the present with the future? I’ve recently seen the CEO of a major consumer healthcare company take this on and even set up an external advisory board — like a private equity startup would — to guide them and bring in outside thinking. They are doing what only the leader can do.

— engaged in all aspects of the business model, informed by the external and inspiring the internal? The best leaders surround themselves with top experts in each element of the business model. This is not to abdicate decisions, but to bring the best thinking together to inform the final call — which they make decisively.

2) They understand the importance of data and analytics: When data is growing exponentially and 90% of the world’s data is unstructured and unable to be analyzed in traditional ways, decision-making will be redefined and augmented by an incredible explosion in analytics capability. Leaders who can take advantage of this capability (versus getting paralyzed by it) and recognize it as a build on their years of experience will continue to lead the market, operate with a high sense of urgency, and instill trust to drive a culture and approach that cascades throughout the company.

“The key to good decision making is not knowledge. It is understanding. We are swimming in the former. We are desperately lacking in the latter.”
― Malcolm Gladwell, "Blink: The Power of Thinking Without Thinking"

The necessary “understanding” that Gladwell calls out is where “augmenting” analytic capability can make a significant impact for leaders. Strong leaders can iterate with analysts/data scientists on new approaches, algorithms, and solutions. They leverage data democratization as a driver of decision-making speed and not a culture-destroying hammer. They take the lead to transform business and issue reviews away from typical PowerPoint influencing exercises to truly leveraging analytic insights.

As a leader, are you:

— leveraging the latest analytic capabilities and talent to put yourself in a position to drive decisive decision-making — including decisions that require ongoing understanding?

— driving positive impact/behavior with data democratization, augmenting analytics with business experience and decision-making — or does the organization see you as a barrier to these changes? (What stories are they telling about you right now?)

3) They stay close to competitors and trends, but focus on their consumers: Successful leaders create a “streaming mindset” for thinking about insights, consumers, competitors and trends. They break away from the annual strategic planning mentality and live every day close to their consumers, putting the company's energy toward the long-term “obvious.”

“I very frequently get the question, ‘What’s going to change in the next 10 years?’ ... I almost never get the question, ‘What’s not going to change in the next 10 years?’ And I submit to you that [the] second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time. 
— Jeff Bezos, CEO, Amazon

Strong leaders need to be clear on how the digital or analytic transformation is going to impact the business and be a win for their consumers. Too often, I’ll hear leaders proclaiming digitization or analytics (“We’re moving everything to the cloud” or “AI will solve everything”) with no clear understanding or path to get there. The lack of leadership in many digitization efforts drives massive misses in both short and long-term impact.

As a leader, are you:

— truly understanding your consumer and ensuring your digital & analytic transformation will deliver a long-term, obvious win for them? Are you creating a regular “insights streaming mindset” within your culture and your behavior?

— instilling a consumer mindset as part of your culture at all levels? Your behaviors? What do you tolerate in others?

As the leader of a digital and analytic transformation, you need to lead!

About the Author:
Andy Walter is a business results-driven professional with extensive experience in strategy, development, execution, and operations across analytics, IT, and shared services. He has over 15 years experience working in board-level advisory roles. He’s now a strategic advisor to Fortune 500 and leading analytic & digital transformation companies.