BRITE Conference '19
Last March, I attended the BRITE 2019 conference at Columbia University. I was extremely excited to attend this conference to learn from global leaders about businesses and branding.
The conference’s focus was on “Digital” and the power of digital on businesses. One of the speakers was Sunil Gupta, Carter Professor of Business Administration, Harvard Business School. He is also the co-chair of the executive program on Driving Digital Strategy. He holds a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, an MBA from the Indian Institute of Management, and a Ph.D. from Columbia University.
Sunil was speaking passionately about digital strategy and he discussed in detail
To mitigate the effects of digital disruption while also exploring new opportunities, companies have typically followed some combination of these three strategies; creating small, independent units or startups within the larger organization; doing series of digital experiments; and/or leveraging technologies to cut costs and improve efficiency. However, in most cases these initiatives have led to limited success.
Almost every large company launches independent digital units or has outposts in Silicon Valley, with the hope that a handful of young entrepreneurs will spark innovation for the firm. The Spanish telecom giant Telefónica, for example, launched an independent unit, Telefónica Digital in September 2011. While the parent company had its headquarters in Madrid , The new digital unit was housed in London with a separate CEO and an independent budget like most telecom companies Telefónica had failed to benefit from the mobile revolution instead new players such as Skype and WhatsApp were beginning to threaten the very core of this business Telefónica management hoped that the digital group would come up with new innovative ideas for products and services that would provide a future direction for the company.
With an ambitious agenda, the freedom to operate independently, and a large budget, the Telefónica digital team started coming up with just as such ideas. As expected, many of these ideas were quite new for a telecom company at that time. After developing, testing, and piloting them, the Digital group sent the promising ideas to get to Madrid headquarters for potential global Launch. However, Telefónica faced resistance from country heads who were neither convinced about these ideas nor had the capabilities to implement them. After three years of this experiment, the company shut down its Digital unit in London and moved all activities back to Madrid.
Next companies tend to run experiments which makes a lot of sense given the rapidly changing environment and uncertainty about the future the journey often begins with a few tactical experiment typically in my in marketing department where employees are quick to try new social media tools or no mobile platforms as the excitement around digital spreads throughout the organization new initiatives start emerging all over the company leading to a proliferation.
In 2012, Kasper Rorsted, CEO of Henkel at the time realized this when he asked a team of senior leaders to catalog all of Henkel’s digital initiatives He was shocked to find all the 150 supreme Digital initiatives throughout the company many of these started as small experiment is designed to solve a specific problem faced by one department or country. Soon new and very digital initiatives began to pop up all over the company: “hundreds of flowers,” as Rorsted described them.
Realizing that this proliferation Does not lead to any synergy, companies often start consolidating these disparate initiatives. A team of Leaders takes inventory of various digital projects in different functions, brands, business units, and regions, to figure out a way to rationalize and combined them. Often, a governance body is created to approve the future digital projects. At this stage, projects that used to view region often, a governance body is created to approve the future digital projects. At this stage, projects that used to view regional might become global, and single brand initiatives might be scaled up to include multiple brands.
Each stage of the journey may be useful, and even essential, at a certain point in time. Experiments help a company test novel ideas and explored future trends. Proliferation of ideas across business units is a sign of entrepreneurship and enthusiasm. Consolidation is a necessary and effective way to rationalize processes and allocate resources. However, doing experiments without a roadmap or a sense of direction may give the illusion of success in the short run without making any impact in the long run, and ideas that proliferate without scaling may only waste valuable time and resources. More important, this bottom up approach tends to be tactical in nature and does not address fundamental strategic issues that the company should be debating.
A third approach is to leverage technology to reduce cost and improve the efficiency of operations. For instance, banks close branches as customers move to online and mobile banking. Retail stores reduce their real estate footprint and close marginal stores. Processes are digitized and streamlined to minimize overlap and increase efficiency. Many of the internal tasks are redesigned to allow customers to self-serve, thereby reducing labor costs.
Companies should always try to improve efficiency and minimize cost. However, if you rely solely on this approach, you are implicitly Assuming that technology will not fundamentally change your business. Effectively you are assuming that banks, for instants will still operate as before and that fintech companies won’t have a major impact on their business. In many cases this may be a flawed assumption. For example, Alibaba’s four-year-old Yu’e Bao fund, set up as a repository for consumers’ leftover cash from online spending, has become the world's largest money market-fund, with $165.6 million under management, overtaking JP Morgan’s one $150 billion money-market fund.
Essentially, through initiatives like these, managers are using a band aid for a deeper problem. To be successful, you can just create a separate digital unit, or run experiments, are used technology to improve efficiency. Instead you must make digital strategy and integral part of your overall business strategy. That is, rather than treating digital strategy as a separate exercise, you must embed it into the operations and DNA of your organization, in a way that that is all aspects of your business.
In my opinion, Sunil’s session was an eye-opening and informative lesson on understanding the power of digital strategy and how it can impact the business. I have learned that leaders who achieve transformative results go all-in on digital. They don't treat digital strategy as separate from their overall strategy. Instead they lead with a digital-first mentality and make sure that their digital strategy touches all aspects of their organizations.
The conference’s focus was on “Digital” and the power of digital on businesses. One of the speakers was Sunil Gupta, Carter Professor of Business Administration, Harvard Business School. He is also the co-chair of the executive program on Driving Digital Strategy. He holds a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, an MBA from the Indian Institute of Management, and a Ph.D. from Columbia University.
Sunil was speaking passionately about digital strategy and he discussed in detail
“Where Companies Go Wrong”
Almost every large company launches independent digital units or has outposts in Silicon Valley, with the hope that a handful of young entrepreneurs will spark innovation for the firm. The Spanish telecom giant Telefónica, for example, launched an independent unit, Telefónica Digital in September 2011. While the parent company had its headquarters in Madrid , The new digital unit was housed in London with a separate CEO and an independent budget like most telecom companies Telefónica had failed to benefit from the mobile revolution instead new players such as Skype and WhatsApp were beginning to threaten the very core of this business Telefónica management hoped that the digital group would come up with new innovative ideas for products and services that would provide a future direction for the company.
With an ambitious agenda, the freedom to operate independently, and a large budget, the Telefónica digital team started coming up with just as such ideas. As expected, many of these ideas were quite new for a telecom company at that time. After developing, testing, and piloting them, the Digital group sent the promising ideas to get to Madrid headquarters for potential global Launch. However, Telefónica faced resistance from country heads who were neither convinced about these ideas nor had the capabilities to implement them. After three years of this experiment, the company shut down its Digital unit in London and moved all activities back to Madrid.
Next companies tend to run experiments which makes a lot of sense given the rapidly changing environment and uncertainty about the future the journey often begins with a few tactical experiment typically in my in marketing department where employees are quick to try new social media tools or no mobile platforms as the excitement around digital spreads throughout the organization new initiatives start emerging all over the company leading to a proliferation.
In 2012, Kasper Rorsted, CEO of Henkel at the time realized this when he asked a team of senior leaders to catalog all of Henkel’s digital initiatives He was shocked to find all the 150 supreme Digital initiatives throughout the company many of these started as small experiment is designed to solve a specific problem faced by one department or country. Soon new and very digital initiatives began to pop up all over the company: “hundreds of flowers,” as Rorsted described them.
Realizing that this proliferation Does not lead to any synergy, companies often start consolidating these disparate initiatives. A team of Leaders takes inventory of various digital projects in different functions, brands, business units, and regions, to figure out a way to rationalize and combined them. Often, a governance body is created to approve the future digital projects. At this stage, projects that used to view region often, a governance body is created to approve the future digital projects. At this stage, projects that used to view regional might become global, and single brand initiatives might be scaled up to include multiple brands.
Each stage of the journey may be useful, and even essential, at a certain point in time. Experiments help a company test novel ideas and explored future trends. Proliferation of ideas across business units is a sign of entrepreneurship and enthusiasm. Consolidation is a necessary and effective way to rationalize processes and allocate resources. However, doing experiments without a roadmap or a sense of direction may give the illusion of success in the short run without making any impact in the long run, and ideas that proliferate without scaling may only waste valuable time and resources. More important, this bottom up approach tends to be tactical in nature and does not address fundamental strategic issues that the company should be debating.
A third approach is to leverage technology to reduce cost and improve the efficiency of operations. For instance, banks close branches as customers move to online and mobile banking. Retail stores reduce their real estate footprint and close marginal stores. Processes are digitized and streamlined to minimize overlap and increase efficiency. Many of the internal tasks are redesigned to allow customers to self-serve, thereby reducing labor costs.
Companies should always try to improve efficiency and minimize cost. However, if you rely solely on this approach, you are implicitly Assuming that technology will not fundamentally change your business. Effectively you are assuming that banks, for instants will still operate as before and that fintech companies won’t have a major impact on their business. In many cases this may be a flawed assumption. For example, Alibaba’s four-year-old Yu’e Bao fund, set up as a repository for consumers’ leftover cash from online spending, has become the world's largest money market-fund, with $165.6 million under management, overtaking JP Morgan’s one $150 billion money-market fund.
Essentially, through initiatives like these, managers are using a band aid for a deeper problem. To be successful, you can just create a separate digital unit, or run experiments, are used technology to improve efficiency. Instead you must make digital strategy and integral part of your overall business strategy. That is, rather than treating digital strategy as a separate exercise, you must embed it into the operations and DNA of your organization, in a way that that is all aspects of your business.
In my opinion, Sunil’s session was an eye-opening and informative lesson on understanding the power of digital strategy and how it can impact the business. I have learned that leaders who achieve transformative results go all-in on digital. They don't treat digital strategy as separate from their overall strategy. Instead they lead with a digital-first mentality and make sure that their digital strategy touches all aspects of their organizations.
