CIO Matters

Mastering digital business: This is not your father's Oldsmobile

Ransom E. Olds founded Oldsmobile in 1897. Nearly a century later, in 1988, General Motors created the now-ubiquitous tagline "This is not your father's Oldsmobile" to market their then next-generation Cutlass Supreme. Marketing prominently promoted the technological achievements that propelled the new Olds from "the family album to Road & Track;" four-wheel independent suspension, front-wheel drive, four-wheel disc brakes and multiport fuel injection, to name a few of the innovations, were truly state-of-the-art features (for 1988). The last Cutlass Supreme was produced in 1997 and the last Oldsmobile rolled off an assembly line in 2004.

Harvey KoeppelHarvey Koeppel

What makes this mini-tale about the birth and death of an iconic brand interesting is less about whether Oldsmobile did or did not have the best technology, than about how using technology to differentiate a product rapidly became the business model of the 20th century. 

Fast forward to the new era of digital business, and enterprises are moving beyond technology-enabled innovation and channel expansion -- including car companies. In 2009, Fiat embarked upon a major initiative to design and build the world's first truly crowdsourced car. More than 17,000 subscribers in 120 countries made extensive use of social media networks such as Twitter and Facebook to submit more than 11,000 ideas. The wisdom of the crowds has continued to gain currency, with Forbes predicting in 2011 that crowdsourcing will outshine innovation:

Crowdsourcing is entering maturity with a culture that is distinct from the innovation game. Whereas the innovation community engages in plenty-of-discussion-but-too-little method, crowdsourcers go straight to the fridge and take what they want.

The traditional role of the CIO as manager of the IT cost center, primarily focused upon process efficiencies and expense reduction, must now be transformed into the role of enterprise leader who understands … how to enable new digital business models.

Individually and collectively, technologies such as social media, cloud, mobile, big data, digital marketing and cybersecurity are fueling the creation of innovative business models that are enabling new sources of revenue, expense management, risk management and security.

IT and business professionals must now embrace the idea that these technologies are fueling a transformational shift in the relationship between business and IT. As CIOs, we need to move beyond the conversations about business and IT alignment that characterized the e-business generation. We now need to evolve our ideas and activities into business and IT integration -- the notion that IT doesn't just enable the business, but rather that IT is the business. I believe this is the fundamental notion that will characterize the next chapter of the d-business (digital business) enterprise.

Getting from e-business to d-business

A major factor that distinguishes the d-business model from its e-business predecessor is the relationship between the enterprise and its customers: It is much less about buyers and sellers and much more about facilitators and collaborators. I will go out on a limb here and assume that many of you reading this column also watched Super Bowl XLVII, played on February 3rd, earlier this year, and that you probably saw the Budweiser commercial, during which you were asked to participate in a contest to name the three-week-old Clydesdale foal. Two days later, Anheuser-Busch announced that the collaborative approach to naming the foal had generated more than 60,000 Tweets, Facebook comments and other messages. The 60-second spot that chronicled the bond between the foal and its trainer was the winner of USA Today's Ad Meter for Super Bowl XLVII. If you missed the commercial, you can see it here and, by the way, the foal was named Hope.

Brewskies not your thing? Then what about the chips? Last July, Ann Mukherjee, chief marketing officer of Frito-Lay, announced on CNBC that the company had just launched a contest to challenge consumers to choose the next Frito-Lay potato chip flavor. "We have now had 30 different countries around the globe create ideas for our consumers and some of the flavor ideas have been fantastic: everything from Caesar Salad to Builders Breakfast; we have even had a flavor called Cajun Squirrel," she reported. The voting continues through May 4th this year via Twitter, Facebook and text messaging. In case you think that chips and contests are just for kids, the winning entry will earn its creator a prize of $1 million or 1% of 2013 sales of the new product, whichever is greater.

More SearchCIO coverage on the CIO role in the digital era

Steps CIOs can take to harness digital disruption

Will CIOs survive the big data revolution?

CIO does heavy lifting in Bally business transformation

The new IT-enabled productivity is about personalization

Crowd computing drives value, so why aren't you doing it?

Still not convinced? Consider the following from two recent studies: IBM's 2012 CEO Study "Leading Through Connections," based upon interviews with 1,709 CEOs and senior public sector leaders representing 64 countries serving 18 industries; and McKinsey 2012 global C-level survey, "Minding Your Digital Business," including responses from 1,469 executives representing all major regions, industries and company size:

  • Seventy-three percent of CEOs are investing significantly in ways to better gain meaningful insights from their customers (IBM).
  • Fifty-two percent of companies rank use of digital business trends within their top 10 corporate priorities (McKinsey).
  • Outperforming companies are 30% more likely than their peers to aggressively collaborate with partners on innovations (IBM).

Digital business trends are already making, and will continue to make, enormous impacts upon enterprises, consumers and stakeholders. There is an equally large shift in the way that we as IT professionals need to think and act with respect to our IT and business agendas.

Role of the CIO must adapt to digital business

As e-business is being transformed into d-business, the traditional role of the CIO as manager of the IT cost center, primarily focused upon process efficiencies and expense reduction, must now be transformed into the role of enterprise leader who understands how to leverage these technologies and how to enable new digital business models. Here are a few of the key dynamics that all CIOs should be thinking about:

Traditional e-business CIO skills  Proposed d-business CIO skills
  • Leadership
  • Innovation and growth
  • Business strategy and process
  • Relationship management and communication
  • Business management
  • Risk management
  • All traditional skills
  • Shared vision, shared power
  • Member-driven decision making
  • Stakeholders linked horizontally, not vertically
  • Convener of effective collaborators
  • Clear, efficient structure
  • Trust and respect for all
  • Ungrudging participation
Source: IBM Center for CIO Leadership    Source: Fgreen@IdeaEncore.com

Are you already engaged in digital business conversations or activities within your enterprise? What are you doing to prepare yourself and your enterprise for the significant shifts in people, processes and technologies that digital business will require? Are there opportunities to evolve internal-external, customer-vendor relationships into more collaborative partnerships?

Let me know what you think. Post a comment or drop me a note at hrkoeppel@aol.com. Discuss, debate or even argue -- let's continue the conversation.

About the author
Harvey Koeppel is the president of Pictographics Inc., a management and technology advisory and consulting services firm. He is also vice chairman of the World BPO/ITO Forum. From May 2004 through June 2007, Koeppel served as the CIO and senior vice president of Citigroup's Global Consumer Group. Write to him at hrkoeppel@aol.com.

This was first published in April 2013

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