5 Steps To Become A Digital Business

The term "digital business" may still be loosely defined, but here's a measuring stick: If your products aren't fully alive in your customers' digital worlds -- a.k.a. their ecosystems -- then trouble awaits.

Any digital business is still a work in progress. Chances are your company wasn't born digital like Amazon, but chances are also good that, even in slow-moving industries like construction, you'll become the next Borders if you don't adjust to the way customers use digital products and services.

Many companies have no problem looking and feeling digital -- a mobile app here, a redesigned website there -- but the real challenge is being digital. That means using technologies like cloud, mobile, and agile development to create better customer experiences that become revenue.

[Immerse your products into the customer's ecosystem. Read Digital Business: The Bolt-On Strategy Doesn't Work.]

Our own InformationWeek research for this month's InformationWeek Elite 100 feature shows that the digital business wheels are in motion at many companies as they work to provide customers with better products and/or reduce the cost of delivering products.

Three-quarters of the survey's 100 respondents plan to "use data analytics to make better business decisions," and half plan to "introduce new IT-led products and services for our customers." Forty-six percent are using technology to make business processes more efficient.

But the biggest test on the road to being digital is convincing senior management that it's worth the effort. "Unleash Your Digital Business" (subscription required), a new Forrester report penned by analysts Nigel Fenwick and Martin Gill, surveyed 1,254 global business executives and concluded that the C suite does not have much confidence in their companies' ability to pursue digital innovation, even after acknowledging that digital disruption is a threat. Only one in six business execs say their firm has the competencies to execute a digital strategy.

That's not exactly a confidence booster. However, CIOs and other technology leaders can take steps to whip their company into digital shape, even with a skeptical CEO. It's an ongoing process and requires an overhaul of some of your culture, technology, and organizational structures, but your customers will thank you.

Establish clear digital leadership.
Forrester's survey results indicate some CEOs can't get their heads around digital innovation. When that's the case, CEOs should turn to a trusted lieutenant -- likely the CIO, CMO, or perhaps a newly hired chief digital officer -- to lead the company's digital strategy. "CEOs must fund innovation activities like labs and hold them directly accountable for developing actionable initiatives," the Forrester report states. "They should look to digital leaders on executive teams to help. If there aren't any, bring in someone with the requisite vision and skills."

Promote a digital-first culture.
Change the company's culture? That's easier said than done. But CIOs can help invigorate a digital-first philosophy across the business by pushing for digital seminars and education programs for employees and working with HR to help define how team goals and employee performance plans need to adjust to a digital mindset.

[For inspiration on how IT projects can transform your business, read 20 Great Ideas To Steal In 2014]

"Firms like GE, L'Oreal, Nestle, and P&G are investing in the digital education of their executives to create a network of digital champions across the organization," report author Fenwick wrote.

Build an organizational model around the customer.
The customer has always been right, but with mobile and social technologies, the customer is also ubiquitous and more powerful than ever. Businesses are adapting. "Companies such as CVS and Bupa are forming cross-functional digital innovation teams that use Net Promoter Score [a metric that measures the loyalty between a provider and a customer] to help guide their actions," Fenwick wrote.

Get your own ecosystem.
Forrester recommends that companies start by focusing on one business unit or product line, using its own ecosystem to reposition itself within the customer's digital world. Two winning examples: Audi turned to an ecosystem of partners to create Audi City, a virtual dealership that lets customers visualize their model of an Audi car using interactive displays. And Nike has been slowly building its NikeFuel platform for activity tracking, opening up its data for third-party developers.

Whatever you do, protect the customer's trust.
With reports of NSA surveillance and retail data breaches in the news, companies need to tread extra lightly with a customer's data to earn customer trust.

The responsible digital company, according to the Forrester report, gathers only the data it needs, uses it to create context that benefits the customer, asks permission to share data, and shares it only with partners that can add more value.

"The way the iPhone makes its apps ask permission before gathering location data is a perfect example," Fenwick wrote. "Apple proves it is part of a trusted ecosystem while also enabling apps from weather forecasters, retailers, and travel suppliers to function in a more efficient and personalized way."

Too many companies treat digital and mobile strategies as pet projects. Here are four ideas to shake up your company. Also in the Digital Disruption issue of InformationWeek: Six enduring truths about selecting enterprise software (free registration required).