INTERVIEW WITH JEANNE ROSS
Jeanne Ross serves as research director and principal research scientist for MIT’s Center for Information Systems Research (CISR). She has researched and written extensively on digital strategy and digital business and co-authored three books, most recently, “IT Savvy: What Top Executives Must Know to Go from Pain to Gain” (2009).
According to her research, companies pursuing successful digital strategies need to build both an efficient, integrated operational backbone, and a more fluid digital services backbone—a technology environment where small experiments can come and go. She also stresses the value of ongoing organizational redesign.
TCS spoke to Ross about those concepts and what she believes established companies that were not ‘born digital’ can do to increase speed in the digital business era.
TCS: What organizational factors feed into a speed disadvantage for companies that were not born digital?
How can they move more at the speed of digital natives?
Jeanne Ross I do not think they can move as fast as newer, smaller companies. But I do not think that is a big handicap because they bring different strengths to the table. That said, they do need to move faster than they have historically. But they have a base of capital—and an ability to scale—that the fledgling digital companies do not have yet.
For a big, established company the question is how do we derive enough value from our heft? How do we draw advantage from our size, our experience, and our relationships? Simultaneously, how do we get a lot faster than we are?
TCS: What are the biggest roadblocks for these companies once they decide to get faster?
Ross: The number one limiting factor is they have not fully become IT-enabled. They have not automated to the extent they can. They still have legacy processes that hold them back.
For a well-managed company that has automated, the new challenge is to make digital innovation happen all over the company. These companies’ tradition is focused innovation, often in an innovation unit. In a digital world, you want as many people innovating as you can. You start distributing innovation to more people, in more places, at more levels of the organization. In the course of doing their jobs, they introduce innovations that lead to better outcomes. A lot of the big old companies do not have a culture or governance process that would allow this, without chaos.
TCS: Do digital businesses take a fundamentally faster approach to building–and improving as necessary–their operational backbone, their mission critical systems?
Ross: Frankly, most digital start-ups are not thinking about their operational backbone. They are focused on building digital products and services, and they build a digital services backbone for that purpose. But as they grow, they will struggle with scale, completing transactions, and back office processes. The exceptions to that rule are companies like Amazon, Facebook, and Google. As they have grown, they have built an operational backbone, and it has facilitated their growth. But even those companies have turned out a little different than they imagined when they started.
Digitally born companies had an advantage because they did not have some of the older systems, but they definitely have faced the challenge of speed–creating inefficiencies and challenges to building an operational platform.
First, you are moving so fast you cannot fix things that did not fit. You can create chaos in your systems and processes. Second, you are incredibly profitable, which makes it less important to introduce the efficiencies that your operational backbone offers. When you are older and your growth slows, you have a financial incentive to focus on efficiency and processes.
TCS: You note the value of ongoing organizational redesign to a digital business. What strategies can leaders of companies not born digital use to build team support for this idea?
Ross: The more you introduce an environment in which jobs are continually changing, the better. I think of USAA [the Fortune 500 financial services company]: every time you talk to them, people’s jobs have changed. What that starts to do, is give people a much broader sense of what the company is trying to accomplish. People are constantly learning and they are constantly challenged.
The idea is ‘We are going to change tomorrow. Come in expecting to change.’ That is the culture you want to foster–and it is not typical.
Move people around a lot, and then give them clear assignments and a clear idea of what the business needs to accomplish. In an environment like that, people do not worry about job security because this is the norm. It is important to get accountability and empowerment right if you want to succeed in establishing a culture of change.