Digital Business Means Platform Business

According to the Gartner 2016 CIO Agenda survey of 2,994 CIO respondents across 103 countries, CIOs expect digital revenues to grow from 16% to 37% in next five years

By Dave Aron

From the world’s first fully robotic hotel in Japan to the world’s largest online grocery retailer, digital business has taken hold in organisations with CIOs saying that they have largely been tapped to lead the charge. According to the Gartner 2016 CIO Agenda survey of 2,994 CIO respondents across 103 countries, the average CIO expects digital revenues to grow from 16 to 37 percent in the next five years.
Essentially, we are now knee-deep in the era of digital business, with many companies reimagining their business and operating models based on digital capabilities. But traditional static infrastructures will not take organisations from here to there. Rather, innovative digital businesses look less like fixed systems and more like platforms where resources come together quickly, temporarily or in a fixed way to create value. Take note, this transformation to a flexible structure spans from the technical platform and delivery, right up to talent and leadership.

Gone Digital

While digitalisation is still quite operational, the potential is much greater. In the Gartner survey, CIOs responded that the top three digital impacts on their businesses are: more revenues from better operations (66%), more business through digital channels (48%) and tighter partnerships (37%). Though fewer CIOs have yet to see the impact on serving new markets or their basis for competition, some digital innovators are paving the way.

In one striking example of deep digital progress, Henn-na Hotel, the world’s first “robot hotel,” opened in Japan in July 2015 with the aim of learning about, and ultimately pioneering, low-cost, low-environment-impact hotels using robotics, alternative energy and other strategies. A humanoid or dinosaur-like robot greets guests at the front desk and helps them check in.

A robotic cloakroom helps guests store bags, and a robotic porter takes guest to their rooms where they are admitted by facial recognition. Inside the room, a lamp-size robot answers simple questions, such as the time or weather and controls the lights. This type of deeper digital innovation comes not from the attention-grabbing robots, but rather from the digitally powered vision of a new form of low-cost, low-environmental-impact hotel that could prove to be a game changer for the industry.

It’s a Platform World

For businesses to build and operate digital opportunities, they need to rethink the structures they’ve built for the industrial and information eras. The digital era requires flexible systems and structures that can swap resources in and out and change partners based on shifting priorities. Digital visionaries harness platforms to create value through connections and interactions rather than ownership of individual resources. This creates semi-porous boundaries between the organisation and the resources and components outside of its domain.

Ocado, an online-only grocery company, started as a fusion of two businesses – retail and technology. drives innovation and the meeting of customer requirements while the technology business builds solutions that are deployed into the .com retail business and sold as a white-label service to its competitors. Now Ocado is becoming a retail, technology and platform company.

Turn a Talent Crisis into a Talent Platform

According to the CIO Agenda survey, 65 percent of CIOs believe there is a talent crisis, with the biggest gaps in information/analytics and business knowledge/acumen. Yet they indicated surprisingly little talent innovation. Gartner believes that talent must also be treated as a platform. 65 percent of CIOs believe there is a talent crisis.

CIOs can apply the filter of semi-porous boundaries to how they think about talent management by tapping into universities and offering courses that deliver skilled talent, performing reverse mentoring, implementing job rotations and holding hack-days. In my view the CIOs must look at digital talent beyond the boundaries of the IT organisation, and indeed beyond the boundaries of the enterprise.
Ocado took a novel approach: Hiring in the U.K. got off to a slow start until Ocado switched its brand from that of a retailer to a tech company.

Build a Leadership Platform

CIOs indicated that they are leading the digital transformation (40 percent) and more than 30 percent are the innovation leaders in their organisations. This spawns the need for them to adapt their leadership styles to exploit platform effects in leadership by building a network of digital leadership inside and outside the enterprise. Overall, without this type of platform approach, enterprises may create bottlenecks across delivery, talent and leadership and risk their customers’ perceptions of how they add value.

The author is Vice President and Gartner Fellow

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