The CIO's 2 New BFFs

Is your business digital? A better question to ask is: Which part of your business isn't digital? Most organizations -- whether they are corporations, government agencies, healthcare organizations, or educational institutions -- are now digital at the core, including their interactions with customers.

Still not convinced? Here's what George Westerman, a researcher at the MIT Center for Digital Excellence, had to say about the companies that his research has found to be "digital masters." For them, "technology is not technology. It's an opportunity to rethink the processes of how they do business."

[Lets not forget the question of corporate culture. Read Geeks Versus Jocks: CIOs, Beware Your Culture.]

He discussed his team's research during a panel session on business transformation at last month's MIT Sloan CIO Symposium in Boston. "Digital masters all have a common approach to managing digital and are 26% more profitable than their peers," he said. "They lead differently. For all the talk we've seen [advising us to] 'let innovation happen around your organization,' these leaders drive transformation from the top down."

Westerman and his research partners identify companies as digital masters if they meet the following two criteria:

• They invest in technology with the viewpoint that it represents an opportunity to transform their business, and they have leaders who are proactive about finding ways to use digital technology to benefit all aspects of the business.
• They drive technology innovation across all business departments, marrying a clear digital vision with a strong governance foundation, preparing the company to change, and seeing that change through.

He gave some examples in a prepared statement, citing Nike, Caesar's Entertainment, and Chilean mining company Codelco as digital masters:

[Nike] is end-to-end digital, from supply chain to design and marketing. It combines custom-designed social media with a digital supply chain. By creating its Nike Digital Sport group, Nike linked all of these functions together, and the company is able to launch more products, customize products, test new designs, and customize advertising to a highly personal level. Within a Caesar's venue, customers are supplied with a concierge on their personal phones that immediately responds to any need, perceived or actual. And the largest copper company in the world, Codelco, is using digital technology both to track production in its copper mines and to update customers about orders. Digital technology also allows Codelco to use driverless mining trucks, and it may even help increase production while minimizing the volume of human activity underground and corresponding safety concerns.

According to a report released earlier this year by Forrester Research, the "biggest test on the road to becoming a digital business is convincing senior management that it's worth the effort. Only one in six of the 1,254 global business execs surveyed by Forrester said his or her company has the competencies to execute a digital strategy.

Indeed, as he noted during the MIT CIO Symposium, "If you think of your organization as a caterpillar, then digital should turn you into a butterfly." The problem, he said, is that many of the businesses his group has studied "are using digital to turn themselves into really fast caterpillars."

What does all this mean for CIOs? For one thing, it's time to

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