July 14, 2014
Mark McDonald has a warning for leaders charting digital business strategy: Don't undervalue the role of people.
Speaking at the InformationWeek Conference on March 31, McDonald, managing director of Accenture's digital business practice, said, "Healthcare, automobile, financial services, venture capital -- they all talk about the same essential model: We're going to suck information out of this room, we're going to stick it into a big engine, we're going to turn the crank, we're going to throw it up into the cloud, and then we're going to be so damned smart that we're going to be able to create value out of it." (View an expanded excerpt of McDonald's comments in the video clip below.)
But there's something missing in that analysis, he said. People. Human ability. "The ability of your customers, the ability of your workforce, the ability of your trading partners." And when you leave out people, McDonald said, the only outcome of that digitized business model is commoditization. "It's a bad decision for all the right reasons," he said, "because we view digital as a collection of technologies rather than as the characteristics or the capabilities…in order to change the ability of people to do things new and different."
McDonald thinks we need a new definition of "digital," one that goes beyond looking at digital business as something companies "own and combine" (analytics, mobile, social, cloud) to one that looks at how companies apply technology to make products and processes more information-intensive and connected. Digital business is not about taking an existing model and sticking it on a mobile or other computing device -- "using new technology to do the same old thing," he says, while taking people out of the equation.
Also speaking at the InformationWeek Conference, Gaurav Dhillon, CEO of cloud integrator SnapLogic, emphasized the urgency for digital innovation. Dhillon sees digital innovations disrupting every industry, from retail to healthcare to defense. Google alone has inserted itself as a digital player into financial services (Credit Karma), smart devices (Nest), autos (self-driving prototype), telecom (Google Fiber), and same-day retail delivery (Shopping Express) through acquisitions, investments, and internal development. Do you think the likes of Equifax, Honeywell, Ford, Verizon, and Kroger gave Google much thought five years ago?
But it's not just the Googles and Amazons of the world that are making digital waves. A range of established companies are shaking things up digitally on their own: University of Pittsburgh Medical Center, Deere & Co., Capital One, and Union Pacific to name just a few. Will your company be the hunter or the hunted?
In the InformationWeek Conference video clip below, Dhillon relates the old story of the two guys in the woods being chased by a bear. In the short run, they don't need to outrun the bear, just each other. "You can celebrate the demise of Circuit City for one day if you're Best Buy. One day," Dhillon emphasized. "Then you tie your shoes and off you go." But digital innovation offers tremendous opportunities as well, he said, noting how GE and other companies are embracing the Internet of Things to create new service-oriented revenue streams.
But how do established players get into that digital mindset? One school of thought is that CIOs must lead the digital charge from within, working closely with their peers in marketing, product development, customer service, supply chain, and other departments. GE and General Motors have created development centers in key cities -- GE's 700-employee center in San Ramon, Calif., falls outside the IT organization, GM's centers near Atlanta, Austin, Detroit, and Phoenix, are inside -- not only to develop new software, but also to create a more agile, digitally native culture and tap into new sources of talent.
Healthcare and insurance provider UPMC is going above and beyond the digital norm, creating a wholly separate profit center, the UPMC Technology Development Center, to develop and market digital healthcare products, mostly with partners, to bolster its 2% margins. Speaking at the InformationWeek Conference, Rebecca Kaul, president of the Technology Development Center, said it was important to take it outside of UPMC's core IT group. The center is even physically located in a building, shared with Google, in the "innovative part of town," miles away from UPMCs downtown Pittsburgh headquarters. (View a video excerpt of Kaul's conference presentation at the link below.)
Kaul said the center was conceived and structured like a digital startup, down to the highly collaborative work environment and relaxed dress code. "You need to get them out of that corporate grind," she said at the InformationWeek Conference. "You can't do innovation inside of the corporate grind. You have to spin it out, if you will, even if on paper it's not spun out, but [make it] outside of the norm and really ask these people to focus."
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