Digital Disciplines. Wiersema Fred

return processes. In the old days, consumer purchasing decisions would be based on history with the vendor and word of mouth. Today, those decisions are based on vendor relationships and social selling, often created and maintained by social media, and referral marketing – that is, word of mouth, which has become word of Twitter, Foursquare, Instagram, Facebook, TripAdvisor, or Yelp.

      The Leadership Agenda

      The digital disciplines are not merely a matter for IT managers to squeeze in between discussions of approved mobile devices and upgrades to the email system, but a board-level agenda item. In fact, according to a recent McKinsey survey,22 a majority of executives believe that the most important technology issue for the board to address is a strategic discussion regarding the impact of technology on the company's industry. Even the venerable Wall Street Journal just retitled its Marketplace section – after 27 years – to Business & Tech, explaining that “…it's likely that your company's next CEO is currently a CIO…”23 If she isn't now, she will be soon: the most popular class at venerable liberal arts icon Harvard College is now “Introduction to Computer Science,” handily surpassing “Principles of Economics.”24

      Unfortunately, only a quarter of CIOs self-report as true chief information officers. This minority focuses on driving innovation, aligning with the business units, and developing business strategy. A substantial fraction of the rest of CIOs are more like computing implementation organizers; managers, rather than leaders. Their focus is on IT operations improvement, systems deployment initiatives, and cost control.25 The good news for all these CIOs and the companies that employ them is that the four digital disciplines can turn managers into leaders, cost-cutters into revenue-generators, and also-ran companies into market leaders.

      Some have argued that “IT Doesn't Matter,”26 because IT has become ubiquitous. Therefore, the thinking goes, it is accessible to all, and therefore can't be strategic, because everyone can employ it. But how could IT not matter when much of the greatest revenue growth and wealth creation globally has been through IT and IT-enabled companies: Alibaba, Amazon, Apple, Baidu, Facebook, Google, Instagram, Tencent, and Tesla? Sure, some IT doesn't matter: conference room reservation systems and expense reporting apps are probably not the key to competitive dominance.

      But Mark Andreessen, one of the most successful venture capitalists,27 serial entrepreneur and creator of Mosaic, the first usable browser, has declared that “software is eating the world.”28 He points out that newly hatched software companies are beating the incumbents: Amazon in books; Netflix in movie rentals; Apple (iTunes), Spotify and Pandora in music; Zynga (at that time) in entertainment; Shutterfly in photos; Google in direct marketing; Skype in telecom; LinkedIn in recruiting; Square and PayPal in payments.

      Andreessen keenly observes, “Software is also eating much of the value chain of industries that are widely viewed as primarily existing in the real world.” He points out, “In today's cars, software runs the engines, controls safety features, entertains passengers, guides drivers to destinations and connects each car to mobile, satellite, and GPS networks.” And, he continues, software is critical in retail/distribution, logistics, oil and gas, agriculture, financial services, and so forth.

      Mary Meeker, Internet guru and a partner at Silicon Valley's legendary venture capital firm Kleiner Perkins Caufield & Byers, calls this effect “re-imagination.” In other words, longstanding industries are being rethought from the ground up. Of course, this also means that legacy players are in danger of being re-imagined into oblivion. The details of her annual Internet Trends report change each year, but the underlying message29 doesn't: exponential growth of connectivity due to mobile and fixed broadband; exponential growth of data; previously unheard of adoption rates for new devices such as tablets and smartphones; new-age monetization through mechanisms such as mobile advertising.

      Because of the effects of software and reimagination, digital strategies are now core to virtually any business and corporate initiative. This is one reason that Laura McClellan, an analyst with Gartner, the prestigious global technology research firm, predicted30 that by 2017, the chief marketing officer will spend more on IT than the chief information officer. Although her conclusions have been fodder for debate,31 they may not be much of a surprise to CIOs; after all, a substantial fraction of enterprise IT projects are already funded or approved by business units.32

      A related force is the consumerization of IT, as employees desire the latest devices with the coolest features and the greatest flexibility at work that they already have at home. Long gone are the days when enterprises were the first to have expensive functionality such as mainframes and green-screen terminals or data communications gear, which eventually trickled down to consumers. Now enterprises eventually deploy what consumers already have.

      And, the bars for usability and user experience have been raised by rich, elegant interfaces incorporated into today's leading consumer devices. It's not just usability, but engagement. The same tricks that make games so addictive are being applied to business applications as well.33 Elements such as points, scorecards, badges, leaderboards, challenges, puzzles, reputation rankings, and progress feedback via levels and maps hit us in primal brain systems, as research in psychology, behavioral economics, and neuroscience has shown. By building these elements into products, processes, relationships, and applications – called gamification– companies can benefit through greater adoption and engagement, as we'll see in Chapter 18. We'll also take a look at Opower in Chapter 19, a company that is applying gamification to electricity consumption.

      Information Technology in Context

      All that notwithstanding, let us admit that IT isn't the only factor in competitive strategy. I purchase my groceries at Shop-Rite, not because its cash registers have patented, proprietary algorithms running on an advanced computing architecture but because it is the closest grocery store to me and its avocados seem to stay fresh a couple of days longer than those from the competition. So, let's clarify the context in which IT and thus digital disciplines matter.

      At a high level, CEOs have a broad variety of tactics at their disposal. Going public, going private. Divestitures, mergers, and acquisitions. Global expansion, local focus. Cost-cutting, leasebacks, hedging, reverse takeovers, tax inversions, downsizing, and rightsizing. Stock sales, stock buybacks. Financial engineering, debt restructuring, organizational restructuring. Hiring, firing, training, compensation, and retention. Out-tasking, outsourcing, offshoring, onshoring, reshoring, insourcing.

      Although these tactics may be helpful, they are not the essence of growth. Even a company that grows through acquisition has to acquire companies that are or can be successful. Companies need to look to innovations in business models, distribution, customer relationships, design, branding, endorsements, certifications, regulatory policies, positioning.

      And, technology, of course.

      But even if we restrict ourselves to technology, there are many technologies, not just IT. Nanotechnology is inventing new materials such as carbon nanotubes with unprecedented strength-to-weight ratios. Biotech is creating breakthroughs in everything from pest-resistant plants to new medical treatments. Chemistry breakthroughs are enabling new battery technologies and the manufacture of plastic literally from thin air.34

      Even within IT, for every elegantly crafted application, there are many applications that are convoluted, unusable, late, overbudget, insecure, intrusive, or don't scale. Applications that ask you to press “3” for this and “#” for that or that offer cryptic Zen koans such

22

Michael Bloch, Brad Brown, and Johnson Sikes, “Elevating Technology on the Boardroom Agenda,” McKinsey.com, October, 2012, www.mckinsey.com/insights/business_technology/elevating_technology_on_the_boardroom_agenda.

23

“'Marketplace' Section Renamed ‘Business & Tech,’” Wall Street Journal, February 16, 2015, www.wsj.com/articles/marketplace-section-renamed-business-tech-1424138463.

24

Emmie Martin, “One-Eighth of Harvard Undergraduates Are Enrolled in the Same Computer Course, and It Says a Lot about the Future,” BusinessInsider.com, September 11, 2014, www.businessinsider.com/most-popular-course-at-harvard-2014-9.

25

Nash, “State of the CIO 2014.”

26

Nicholas Carr, “IT Doesn't Matter,” Harvard Business Review (May 2003): 41–49.

27

Alex Konrad, “The World's Top 10 Venture Investors For 2014,” Forbes.com, March 26, 2014, www.forbes.com/sites/alexkonrad/2014/03/26/midas-top-ten-list-for-2014/.

28

Marc Andreessen, “Why Software Is Eating The World,” Wall Street Journal, August 20, 2011, online.wsj.com/news/articles/SB10001424053111903480904576512250915629460.

29

Liz Gannes, “The Best of Mary Meeker's 2013 Internet Trends Slides,” AllThingsD.com, May 29, 2013, allthingsd.com/20130529/the-best-of-mary-meekers-2013-internet-trends-slides/.

30

Arthur, “Five Years From Now.”

31

Michael Hickins, “Debunking the Ascendancy of the CMO IT Honcho,” Wall Street Journal CIO Journal, July 3, 2013, blogs.wsj.com/cio/2013/07/03/debunking-the-ascendancy-of-the-cmo-it-honcho/.

32

Nash, “State of the CIO 2014.”

33

Joe Weinman, “4 Ways to Win at Business by Playing Games All Day Long,” Forbes.com, October 15, 2013, www.forbes.com/sites/joeweinman/2013/10/15/4-ways-to-win-at-business-by-playing-games-all-day-long/.