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:
how can CEOs maximise ROI in the digital age?
how much power should a CDO have?
how to improve executive performance using wearable technology?
how to settle turf wars between CMOs and CDOs?
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.
Arielle: The digital age will make or break today’s businesses. How?
CG: This Digital Age means that everything changes very quickly, and often unpredictably. This is the key message of PwC’s “Digital Age Website”, The World Is In Beta.
In this digital age you don’t need a digital strategy. You need a business strategy for the digital age.
Importantly, strategy and execution are no longer sequential, and no longer in a master-slave relationship. They are peers.
At the extreme, agile and ruthless adaptive execution based on modular capabilities can be a winning strategy in itself.
Why is this? Because in a World In Beta executing an imperfect strategy faster (and killing wrong strategies quickly) pays more dividends than slow cooking perfection.
Arielle: What advice do you give to young managers and executives to prepare them for the digital future?
CG: First, make a serious effort to understand the values and decision-making process of digital natives:
give them responsibilities above their age, above their budgetary power and above their hierarchical power
Second, seek to understand how powerful and how 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 develop (yes, develop!) a website and a responsive-design mobile app.
Finally, identify five digital thought leaders and entrepreneurs, and follow them religiously on social media.
share your ideas
understand how they look at this fast-changing world
try to get to the deeper dynamics of things, beyond the glitter of the latest gadgetry
update your list of five every – say – three months
swap some out, follow new ones
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.
Arielle: How do you see wearable devices transforming executive jobs?
CG: 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:
professional competence (in the broadest sense)
Wearable devices can definitely 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.
And link these aspects of your wellness to specific aspects of your business performance. Say you see some correlations with your effectiveness.
Let’s say that a group of executives feels comfortable creating a private online community in which these 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.
Say that the blood pressure of an exec is higher than usual on Wednesday mornings. Why is that?
Difficult weekly meeting with the boss? School-run anxiety?
Can we improve the agenda of that one meeting? Can we diarise the school run on Wednesdays rather than feeling guilty about it? Science fiction? Today, yes. Tomorrow, probably not.
In this sense wearable devices could contribute to giving a CEO the equivalent of a NPV Formula for the future performance of his/her executives.
Arielle: How do you see the role of the Chief Digital Officer (CDO) evolving in the next 5 years?
CG: I am very opinionated on this. I believe the Chief Digital Officer role will go through four phases:
Phase 1 – Digital Awareness
Phase 2 – Digital Coordination
Phase 3 – Digital Championing
Phase 4 – Disappearance and Re-Birth
In 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 persuasive and inspiring merchants of digital business relevance and art of the possible >in the organisation to start to change the culture and the beliefs system.
Beware of organisations that look at the CDO as a functional role. If you believe that appointing a CDO ticks the box of “we appointed the role – we are now a digital player”, think again.
Also, beware of digital aficionados who look down on IT – they will need IT to make things work “below the glass”.
Beware of IT veterans who believe “Digital” is just a sexier name for “Technology” – they are not getting it.
In Phase 2 – Digital Coordination the role is mainly an Architect and an Interpreter.
An architect of what?
Mainly of “horizontal and modular things” such as data and re-usable digital capabilities.
In this phase the CDO provides business model challenge, and also coordination of functional, cross-functional and ecosystem-wide “digital projects”.
He or she also acts as an interpreter between (I’m oversimplifying here) five types of stakeholders:
business stakeholders (e.g. marketing, finance, etc.)
“traditional” IT stakeholders (e.g. CIO / CTO)
“emerging” digital age stakeholders (e.g. User eXperience designers, app developers, etc.)
digital natives (e.g. employees and customers)
partners in the broader ecosystem (e.g. suppliers, distributors, providers of products and services that relate to the same customer goals your company is trying to deliver/enable)
In Phase 3 – Digital Championing the role is mainly 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 more these innovative and transformational initiatives happen (failing fast or succeeding and scaling up) – the more the organisation will leave behind digital age amateurism and embrace digital age agility and dexterity.
At which point the mission of the CDO is truly and fully accomplished.
In Phase 4 – Disappearance and Re-Birth 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.
After decades during which applications were the fulcrum of IT architectures, we are now entering the age of “in-memory computing” in which data becomes the centre of everything.
So the need to constantly integrate data is replaced by the need to surround a single pool of data by 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.
In this world the Chief Data Officer shapes and nurtures the “fabric of business space” on which everything else happens.
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.
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 and though a continuous blitzkrieg of moves and countermoves to respond to/outfox competitors.
Marketing believes that the job of IT is to jump as high as marketing asks them to – fast. And marketing is invariably disappointed at the complexities, intricacies and delays of IT delivery.
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.
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 amount of IT power from costly and constrained IT kit.
And they did!
The catch – though – is that they ended up creating inflexible and highly-coupled IT machines that were truly fit-for-purpose only for a relative short time, and very hard to modify.
The curse of this situation is that IT typically has to spend 70-80% of their time and resources just to “keep the lights on”, and only 20-30% to innovate.
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 be thinking “that’s us! “
Arielle: The situation seems quite complex.
CG: 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.
They believe (quite rightly) that they can truly engage with customers and measure things much better than marketing ever could.
They also believe (quite rightly again) that their outlook on technology is much more effective for the times we are living in because they believe in a technology that is “more liquid”.
They look at technology as a “tap”, or as a continuous “production line” that delivers small atoms of change continuously – rather than in big releases that systematically end up delivering less than originally scoped, with delayed milestones and with inflated budgets.
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).
Arielle: What do you suggest boardrooms do to avoid turf wars and focus on the bigger picture?
CG: 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:
Accept that the “World is in Beta” – everything changes at an exponential pace all the time. In a situation like this, there is more ROI in agility than in future telling.
Accept and embrace that business strategy in a World in Beta can be shaped by different stakeholders acting as a truly cross-functional team. The times of linear “strategy first and execution later” are over. Possibly forever.
Respect all three “groups” described above. IT, marketing and digital professionals should respect one another much more and abandon historical pecking orders that do not apply anymore in this digital age. In this digital age the boundaries between these three areas will become more porous, and the synergies will increase substantially.
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”.
Arielle: What would you say to executives who are struggling to design an effective digital strategy?
CG: There is no shortage of possible solutions. Here are just a few:
Create a cross-functional “Digital Age Council” that 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. It will feel somewhat strange to expose the uber-senior decision making alchemy to young talent. Here is a way to think about it: it is 1980, you are a CEO of a company, and a 25-year-old Steve Jobs is on your books. Would you want to ask him for his views? Well, the odds are that today many companies have this kind of talent inside their ranks, but they overlook it.
Abandon the “Myth of And”. Call out the key trade-offs instead of fudging them. Get the different CXOs to interact like a real-time that jointly defines and attacks problems, rather than as a set of old-times players that exchange contracts, SLAs and deliverables with one another. Get everyone to really understand, appreciate and defend the notions on “Corporate Fitness, Agility and Coherence”. It is as if every CXO “owns” the customer, corporate data and corporate complexity.
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.
Arielle: How did you end up doing what you do? Did you have an idea of what you wanted to do for a career when you were at college?
CG: I have always been passionate about business strategy, and how – over the years – technology has become not only 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.
My ambition is to understand these new dynamics in a way that is valuable to my clients. Now. Not in 5 years’ time.