Today, businesses, irrespective of size and sector, cannot ignore a digital plan. And there is no denying that digital technologies are doing most of the work humans used to manually process even as recently as a decade ago. And India Inc. is slowly but surely taking note. not just India Inc., even the Indian government is taking note of the importance of going digital and digital related threats. From Finance Minister Arun Jaitley – who announced the establishment of CERT to counter cyber threats – to the former Defence Minister Manohar Parrikar, who, on several occasions, has said that future wars will be fought on cyber space, it is evident that the focus on digital technology is here to stay.
In an e-mail interview with BW Businessworld’s Sanjitha Rao Chaini, N. Venkat Venkatraman, the David J. McGrath Jr Professor of Management at the Boston University and author of 'The Digital Matrix: New Rules for Business Transformation Through Technology', talks about the importance of allocating funds and manpower to manage digital technology in organisations, and why Ransomware and similar cyber threats are here to stay.
Edited Excerpts:
What is digital matrix? And how did the idea of writing this book come to you?
The simple premise of ‘The Digital Matrix’ is that traditional leaders in every industry — GM or Toyota in cars or Vodafone or Airtel in telecommunications or NBC or CNN in media — will face competitive threats from two sources: the small start-ups that take advantage of developments in digital technologies to come up with new functionality and the digital giants — Alphabet (parent company of Google), Apple, Amazon, Microsoft, Facebook, Samsung, IBM, Baidu and others. The second set of companies — who have been historically seen as IT companies — now expand their scale and scope to influence the digital transformation of nearly every industry. The other axis of the matrix represents three phases of transformation — experimentation, collision and reinvention but with a twist that all three phases occur simultaneously, which simply challenges existing companies to recognise how to take advantage of digital technologies to manage today’s operations (Horizon 1), adapt current operations to reinvent their business models (Horizon 2) while tracking and carrying out experimentations that might fundamentally influence the future reinvention (Horizon 3). I expand on the logic of this Matrix in the book.
Aren't everyone taking note of the digital technology in their organisations already? Why this book now? Did you plan to focus on a particular aspect of going digital through this book?
Digitisation is not new. It has been around for at least two decades. What’s different today is that digital technologies are evolving from tangentially impacting some functions such as marketing (social media and mobile apps) or operations (supply chains) to now impacting the design and development of products (with Internet of Things or IoT, smart sensors and connectivity), how we design organisations (given pervasive impact of artificial intelligence and machine learning) and how we deliver personalised services that take advantage of computing, connectivity and cloud. Digitisation today cannot be delegated to some task force or to traditional IT organisations. It is to be recognised by senior managers as the single most important issue that could define the future of their business — irrespective of industry or geographical location of their business.
What lessons does your research hold for Indian entrepreneurs, especially in the realm of social entrepreneurship, where access to power supply let alone digital technology is bare minimum?
Digitisation doesn’t always require expensive machines or big scale computing infrastructure. With minimal power supply, we have seen pervasive use of smart phones and applications. So, I encourage Indian entrepreneurs to look at how they can solve problems for the Indian market that couldn’t be solved before. How could we take advantage of simple low-cost designs with IoT (for example, Raspberry pi) and low-cost smartphones to help solve problems. India has scale and smart entrepreneurs that could (and should) innovate with digital technology and show the world what’s possible at the low-cost, high efficiency end of the spectrum.
How does an enterprise put in place a system to gauge competition from digital technology or anticipate and plan actions derived from future technological research?
The book highlights that for every company, the future competitive landscape will be far different from the current one. I tell executives that they should spend more time thinking about the competitors that they don’t know than the ones that they now know and track. Nokia and Blackberry didn’t lose to other telecom companies but to Apple and Google. Sheraton and Hilton are facing competition from Airbnb that uses digital technologies to connect available rooms to prospective travellers that go beyond traditional reservation systems that filled existing rooms in those properties.
How long did it take to research and write the book?
My work over the last two decades has been about how digital technologies impact companies and industries. The specific writing of this book—intensely happened over a year. I hope it triggers more executives and management students to think about digital technologies—not as a technical subject but as a management theme.
What is the budget an organisation should earmark towards digital technology and research? And what systems should companies put in place to avoid 'Ransomware'-like situation?
Budget should be not just financial resources, although that is important. The key budget in my view is the allocation of management time. I suggest to managers to first think about the allocation of time in management meetings to understand systematically how their business could be transformed, disrupted or altered because of digital technologies. ‘The Digital Matrix’ is first and foremost about recognition of the future and the pathways to transform. Then, we can discuss how best to respond by allocating and reallocating resources — here financial resources come into the equation. Equally important then is the human resources required to guide the transformation.
Security is an important, thorny issue that requires management attention and time and should be treated as a risk to be managed (not minimized) with adequate investments and safeguards. Some of the ideas are: testing the system for security vulnerability and reporting the results to the highest levels of management (enhanced accountability); designing hackathons to proactively identify areas of vulnerability; actively participating in security working groups rather than relying on third-part security service providers. Data is the new resource — it may sound cliche but there’s an element of truth. Ransomware is unlikely to go away and knowing the vulnerability and profiling the risk is necessary but also prudent for management teams today.
So, do you think, constant scrutiny of digital technology could lead to overdependence on one particular sector, especially for large, established organisations?
I think digital technology is pervasive and will be more widespread. It will evolve from being visible to becoming invisible. I do not worry about overdependence on one sector as much as how we as individuals might become overdependence on some devices or services. The biggest fear for me is that large established organizations may underestimate the threat from digital technologies by believing that their pat success (and size) might help them evolve into the future. But might have fallen…
How do you foresee the change in the jobs market with the advent of AI and VR in most tech companies such as IBM and Microsoft?
This is a big issue. I discuss in the book the importance of designing organisations at the intersection of smart humans and powerful machines (AI, robotics, etc.). India with a younger demographic profile may be able to better adapt than other parts of the world that may see structural unemployment because of mismatched skills. There is no doubt in my mind that the skill base of companies will be altered by digital technologies as I discuss in my book.
Should organsiations then rethink the role of a CTO?
Digital shifts are more transformative than any single function. The demarcation of roles such as CTO, CIO, COO, CMO, etc., emerged from the industrial age organisation logic that emphasised functional expertise and excellence. Now, Human Resources should worry about digital technologies and think about how powerful machines could do jobs that were previously done by humans; Marketing should think about use of data and analytics for personalisation, etc. So, every function should think about digitisation and innovate to create new organisational logic for the digital futures.
Books you have read recently...
I have enjoyed reading Warren Berger’s book 'A More Beautiful Question'. I think we should spend more time to frame questions that need to be answered than rush to apply what we know. Our education system has focused on teaching humans to know the answers. Now computers are powerful in knowing the answers — provided we know what the question is. Humans should spend more time thinking about why…and frame questions and then let digital technologies solve. There are many thorny problems that require human attention and I find that book to be powerful and compelling.