Business Strategy For The Digital Age: An Interview With PwC’s Carlo Gagliardi

I recently spoke with Carlo Gagliardi, partner at PwC who leads the firm’s “Strategy For The Digital Age” offering. In this interview, he covers:

A strategist with 23 years of experience, Gagliardi specialises in advising companies on their growth strategy and business strategy for the digital age.

Before PwC, he was a partner at Accenture. All views expressed here are his own.

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How Will The Digital Age Make Or Break Today’s Businesses?

This Digital Age means that everything changes very quickly, and often unpredictably.

In this digital age, you don’t need a digital strategy. You need a business strategy for the digital age.

At the extreme, agile and ruthless adaptive execution based on modular capabilities can be a winning strategy in itself.

What Advice Do You Give To Young Managers And Executives?

First, make a serious effort to understand the values and decision-making process of digital natives:

Second, seek to understand how powerful and flexible today’s “digital Lego blocks” can be.

This can be achieved, for example, by participating in a 1-day “Digital Hands-On Training Immersive Experience” (with no PowerPoint and no smart people talking at you for hours) to build (yes, build!) a website and a responsive-design mobile app.

Finally, identify five digital thought leaders and entrepreneurs, and follow them religiously on social media. Then:

In this digital age investing time in digital networking is – in a way – a form of fitness exercise. In the right quantity. Not obsessive. But not cursory, either.

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How Do You See Wearable Devices Transforming Executive Jobs?

Wearable devices capture personal behavioural and performance data. You could write an entire blog or article, or book on this topic alone.

Let’s try to simplify things. Let’s say that personal business performance is driven by two things:

Wearable devices can transform the way executives understand the linkage between their personal fitness/wellness and personal business performance.

Think, for example, if you can track your sleep, fitness, exposure to sunlight, weight and nutrition.

Link these aspects of your wellness to specific aspects of your business performance.

Let’s say you see some correlations with your effectiveness.

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Next, let’s say that a group of executives feels comfortable creating a private online community in which this data is shared between the members (on an anonymous or named basis) so that the group can learn faster what correlates to what, and enhance the performance of the entire group.

Let’s say that the blood pressure of an executive is higher than usual on Wednesday mornings. Why is that?

Can we improve the agenda of that one meeting? Can we diarise the school run on Wednesdays rather than feeling guilty about it?

In this sense, wearable devices could contribute to giving a CEO the equivalent of an NPV Formula for the future performance of his/her executives.

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How Do You See The CDO’s Role Evolving In The Next 5 Years?

I am very opinionated on this. I believe the Chief Digital Officer role will go through four phases:

Let’s break each down.

Phase 1 – Digital Awareness.

The role is mainly an Ambassador of all things Digital. This is an important role because digital ignorance and misapprehension can be widespread.

You need a persuasive and inspiring merchant of digital business relevance who will start changing the organisational culture.

Also, beware of:

Phase 2 – Digital Coordination.

The CDO’s role is mainly an Architect and an Interpreter.

An architect of what?

Mainly of “horizontal and modular things”, such as data and reusable digital capabilities.

He or she also acts as an interpreter between (I’m oversimplifying here) five types of stakeholders:

Phase 3 – Digital Championing.

CDO’s role is mainly that of a Catalyst.

A Catalyst of what?

As many of the “horizontal and modular things” (such as data and re-usable digital capabilities) are now in place, the CDO can play the role of catalysing and encouraging digital age enterprise-wide innovation and transformation.

The faster these innovative and transformational initiatives happen (failing fast or succeeding and scaling up) – the sooner the organisation will leave behind digital age amateurism and embrace digital age agility and dexterity.

Phase 4 – Disappearance And Rebirth.

The role of Chief Digital Officer morphs into the role of Chief Data Officer.

The role is mainly a Custodian of data richness, integrity and quality, as well (again) an Architect of data coherence.

The need to constantly integrate data is replaced by the need to surround a single pool of data with constellations of Applications and Microservices, all reading from and writing onto the same data.

The Big Data dream of decoupling the questions from the data is achieved at last, and data becomes the fuel of systematic actionable insight and foresight and a source of true competitive advantage.

Organisations that master this game will not only win. They will exterminate the ones that do not. If we think that some players today still deal with baskets and nameless/faceless consumers, the chasm is formidable.

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What Do You Suggest Boardrooms Do To Avoid Turf Wars Between CMOs And CDOs?

This is a non-trivial issue.

From my perspective, marketing and IT can have an antagonistic relationship in many organisations.

Marketing believes that they deliver true value through propositions and brand magic through a continuous blitzkrieg of moves and countermoves to respond to/outfox competitors.

In their intoxication with blitzkrieg, marketing asks for IT shortcuts and workarounds that work in the short term, but that invariably create a tenacious layer of complexity that no one owns and that will make the entire business less agile.

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On the other hand – IT veterans have cut their teeth in an age in which technology was scarce and expensive. They learnt to extract huge amounts of IT power from costly and constrained IT kit.

The catch – though – is that they ended up creating inflexible and highly-coupled IT machines that were truly fit for purpose only for a relatively short time, and very hard to modify.

Marketing wants “Blitzkrieg”. IT can (traditionally) offer “Maginot Lines”.

Clearly, this juxtaposition is theatrically exaggerated – but I am sure many CEOs, CMOs and CIOs reading this must think “that’s us!”

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The Situation Seems Quite Complex.

It gets more complex before it gets simple. Come forward “Digital Professionals”!

Originally an Online / Social Media / Apps group of ninjas, they pride themselves for two noteworthy differences with their Marketing and IT counterparts.

That’s why they are happy to “go around IT” in the pursuit of speed and agility (even if often this means decreasing the overall coherence of the IT architecture).

What Can Boardrooms Focus On The Bigger Picture?

This is a beautiful and difficult question.

I am not sure silver bullets are at hand, but given the dynamics described above, I would advise boards to consider the following:

IT professionals will have to progressively abandon monolithic IT stacks and embrace much more modular and loosely-coupled architectures.

Marketing professionals will have to progressively appreciate structural agility over and above short-term moves and counter-moves against competitors.

Digital professionals will have to progressively embrace operating model and behavioural change “above the glass” and robust technical and data integration “below the glass” – over and above the app visual and interactive excitement “on the glass”.

What Would You Say To Executives Struggling To Design An Effective Digital Strategy?

There is no shortage of possible solutions. Here are just a few.

1. Create A Digital Age Council.

Make sure it involves and implicates not only IT, Marketing and Digital, but also the COO, Strategy, Finance, HR and the CEO / Chairman/Chairwoman. Sprinkle a few high-potential digital natives as well.

Here is a way to think about it: it is 1980, you are a company CEO, and a 25-year-old Steve Jobs is on your books. Would you want to ask him for his views?

The odds are that today many companies have this kind of talent inside their ranks, but they overlook it.

2. Abandon The “Myth Of And”.

Call out the key trade-offs instead of fudging them.

Get the different CXOs to interact in real-time that jointly defines and attack problems, rather than as a set of old-times players that exchange contracts, SLAs and deliverables with one another.

3. Eat Humble Pie.

Have the CEO and senior management team accept the need to be humble when it comes to “digital”. Take the time to admit the things that you don’t know and that there are things you don’t know you don’t know.

Ask questions. Create “horizontal communities”. Don’t delegate innovation to the functions – but lead it and catalyse it.

How Did You End Up In Business Transformation?

I have always been passionate about business strategy, and how – over the years – technology has become an enabler, but in many ways, one of the essential ingredients of competitive advantage.

I have studied quite advanced mathematics at college and at university, and I love to look for more fundamental, fewer and simpler dynamics that can explain the stupendous richness of everything that happens around us.

I am also a plane spotter. If you understand supersonic flight and subsonic flight, you will see that the equations are quite different.

That’s why a Concorde and a Boeing 747 look so different.

The beauty of this digital age is that it is showing us a new set of dynamics that are not an incremental variant of the previous ones, but something genuinely new and disruptive.

I aim to understand these new dynamics in a way that is valuable to my clients. Now. Not in 5 years.