Cargill is developing new data analytics products and services built on the cloud, showcasing how digital can enable new where-to-play prospects for the legacy agriculture company. One example: its iQuatic service, which crunches sensor data from shrimp farms using cloud and machine learning to generate alerts and recommendations that help farmers improve efficiency and yield. The service also provides Cargill with more insight into customer needs to inform potential new products and where-to-play opportunities.
Technology leaders should be change instigators that bring creativity to the planning process and inspire new art-of-the-possible thinking for where to play and how to win.32 Integrating competitive strategy with digital strategy to form one cohesive enterprise strategy is a shared task that should manifest itself in clear, aligned, and mutually reinforcing choices that are well understood across C-suite business and technology leaders.
Strategy guides technology investment. Strategic intent—the capabilities and management systems needed to compete—must inform an organization’s technology choices, architecture, and spend. As organizations digitally mature, their technology efforts typically shift from the back office to become a central component of strategic efforts such as product and service innovation and customer relationships. This is why, in more digitally mature organizations, IT and product development work closely together. Capital One, for instance, integrated cross-functional teams of product developers, IT professionals, and design experts to rapidly deliver new product innovations using agile methodologies and design thinking.33
Additionally, digitally mature organizations combine technology budgeting and planning with strategic planning into a process that occurs more frequently and in a less centralized fashion. This fosters agility and scalability while sharing accountability for results between business and technology. The CIO of one health insurance provider, for instance, told us that digital budgets were planned in six-month horizons and reviewed and revised quarterly to support greater agility in revamping the company’s customer experience. Measuring returns on digital investments is critical in this process. When the results are positive, these metrics can boost confidence that technology creates desired outcomes and ROI.
Digital technologies can improve the strategy process itself. Digital can improve the strategy-setting process as well as strategy-setting outcomes. The always-on strategic thinking needed in an uncertain environment can benefit greatly from using digital capabilities for developing, testing, and monitoring strategy. Digital platforms and artificial intelligence can help C-suites think more expansively and confidently about future possibilities. Data and analytics technologies can continually track internal and external outcomes to inform ongoing leadership discussions and decisions regarding performance against strategic choices. Trend-sensing technologies can be deployed to continuously scan the environment, collecting, analyzing, and clustering leading indicators that challenge or confirm strategic assumptions. For instance, the US Department of Homeland Security uses automated tools that scan news articles, patent filings, and more to identify emerging technologies that might disrupt or improve the process of securing the United States.34
Dynamic scenario tools and simulators are another set of technologies that can help leaders identify threats and opportunities, quickly test potential outcomes of strategic choices, and prioritize critical uncertainties. For example, Airservices Australia is developing digital twin modeling of its air traffic network to test new methods of optimizing flights and air traffic controllers’ workloads in real time to boost safety and on-time arrivals. The technology can also help the organization test the impact of emerging technologies, such as drones, on air traffic.35
In all this, leaders must remember that strategy goes nowhere without execution. To build the foundation for superb execution, organizations should establish an executive-level transformation “nerve center” and a supporting digital function to drive funding, accountability, strategy, and execution for digital initiatives.36 They should also design and implement an operating model that properly supports the strategy with the right capabilities.37
Digital transformation is a journey that never ends
Uncertainty and change are unavoidable, and so is the intensifying need to set oneself apart from the competition. Under these circumstances, in the words of Amit Zavery, VP/GM and head of platform at Google Cloud, organizations must “think of digital transformation less as a technology project to be finished than as a state of perpetual agility, always ready to evolve for whatever customers want next.”38 Future winners will continuously evolve in how they seek growth and profitability by approaching digital transformation as though there is no finish line. Yet the true power of digital transformation goes beyond continuously building digital capabilities. Committing to a strategy that places digital at its core—set with a deep understanding of what digital makes possible, and that aligns digital priorities with strategic goals—is what will empower organizations to shape and secure their future in an uncertain world.
Appendix A: Methodology
This report is based on a global survey involving 2,860 executives sampled across industries. Responses from US executives were collected in November 2020; responses from executives in Asia-Pacific and European countries (China, India, Japan, France, Spain, and the United Kingdom) were later collected from January to February 2021 (figure 11 has a breakdown of respondents by region).
Qualifying responses came from organizations with at least $100 million in annual revenue and global headcount greater than 500 (figure 9). Respondents also had to indicate they were “very” or “highly” knowledgeable of their organizations’ digital transformations (figure 10 has a breakdown of the respondents by their executive title).