Welcome back to our ‘5 Questions CEOs Should Ask Themselves in 2020’ series. Last time we discussed what the decade ahead will likely mean for the marketplace and went over the first two questions that leaders need to address in order to ensure they are competitive in the years ahead. Today we’ll talk about the remaining three questions (you can find Part 1 here).
3. How do we maximize the benefits that the IT function creates?
Maximizing the benefits created by IT is essentially the other side of the issue highlighted in the first question, which we discussed in Part 1. This time around, however, the question eyes the management and optimization aspect of the business’ technology practice and landscape. In order to build a future in which technology plays the role of a core business resource, on whose possibilities entire business models are built, it is necessary to set up the control mechanisms that will govern its activity. Therefore, you need to know how technology decisions are being made around the company. Is there a framework, or solid processes for this? Good oversight will keep waste at a minimum and get the most bang for your buck in terms of technology investments. Also, who are the people that are responsible for operationalizing this IT management? These are questions that need to be clearly answered for progress to be made.
The other side of this coin is that you also need to make sure that your governance is agile, meaning able to decide ‘on the spot’, and doesn’t inhibit innovation. Speed is increasingly more important than getting it exactly right or minimizing cost, certainly in markets where the ‘winner-takes-all’ effect mentioned previously benefits first movers. Moreover, especially in software-driven enterprises, it is comparatively easy to pivot and change the course if it turns out your decision wasn’t the greatest.
The CEO must find out how (if at all) the organization keeps track of the value being produced by IT investment and ensure oversight and accountability. So appoint/hire technology leaders wherever needed, get acquainted with their plan for the future and make everyone else in the management team buy into this technology-first approach. Set digital KPIs, follow up on the results achieved and shut down projects that aren’t providing value for the customer – even IT functions that are assigned significant resources can fail if the right management isn’t there to maintain the right course.
The digital agenda should be discussed at every high-level meeting and evolved according to the newest trends in the marketplace, developments within the organization and feedback from customers. This will ensure that IT works with and for the organization – at the forefront of things, not in the back as an afterthought. This is how you turn IT from a cost center into a profit center.
4. What part do customers play in writing our story?
Customer-centricity and the relationship between an organization and its customers is already a vital aspect of commercial success. Expect things to only get more competitive as we move forward. Two main factors will drive this. One, the lowering barrier to entry means an increasing number of people armed only with ‘the idea’ will be able to carve out a slice of the market for themselves. In the UK, less than ten years ago, Metro Bank became the first new high street bank to launch in over 150 years! Their recent problems notwithstanding, this was a significant achievement. Of a more recent wave of innovators, Monzo has their eyes set on becoming the first mainstream bank without a single physical location. What’s more, the PSD2 regulation will require banks to open up customer data (with the customer’s permission) to external financial service providers. Similar regulation in other sectors could break down monopolies on customer data and open up the world for new customer-centric service providers. Such disrupting events will continue happening at an increasing rate. And two, technology and legislation will elevate experiences, heighten expectations and eliminate barriers from migrating to a competitor. This trend is already visible. Here are a couple examples. The first is the wording of the GDPR’s Article 20 concerning data portability, which states “the data subject shall have the right to receive the personal data concerning him or her in a structured, commonly used and machine-readable format and have the right to transmit those data to another controller without hindrance”. Yes, this sets the vision for a future in which your customer can move to your competitor on a whim.
So ask yourself if your organization is geared towards delivering value to the customer or not. Improve your processes, redirect resources towards more customer-centric projects and products, elevate your customer journey, have developers get in touch with end-users and make sure that you listen to them. As we move forward, it’s likely that mass customer exodus/arrival phenomena will become more frequent and acute.
5. What is our approach to cybersecurity?
The last of the questions that CEOs need to ask themselves is to do with cybersecurity and the importance of fostering a secure IT function. The first key point to consider here is tightening regulation around data privacy and personally identifiable information. In fact, there’s a good chance that the next decade will mark the beginning of genuine self-sovereign identity (with the help of blockchain technology), with data being treated as the commodity that it is. As such, expect further legislative developments on the regulatory front and possibly the slow dismantling of the data-surveillance capitalism that has proliferated in the past twenty years.
Additionally, as increasingly more and more value will be transferred onto the digital self, cybercrime and attempts to illegally break into systems will also rise in lockstep, enticed by the bigger payoff. The really hard job in this case will be not to secure digital operations but rather to do so while maintaining the delicate balance between security and innovation. And finally, one last thing to consider is security by design and by default. Is this happening presently in your business? Why/why not, and what steps can you take to address this problem – both internally and in your relationship with vendors?
The 2020’s will see several currently experimental/niche technologies go mainstream. This will likely have profound but as of yet unknown effects on the marketplace, and a significant number of companies will fall behind for good. In order to ensure their organizations become or remain competitive in the decade ahead, CEOs must get to grips with a few key concepts – technology and its role in their company; customer-centricity; and organizational agility.
We believe the difference between successful and unsuccessful companies in the years ahead will be made by leaders’ willingness to come to terms with the important topics mentioned above, as well as their ability to strategize around and execute on them.