Why digital transformation matters: ‘Anyone is a competitor’

Published on the 12/04/2017 | Written by Donovan Jackson

Digital transformation competitiors_Alibaba

Whether in private business or the public sector, the potential threat and reward of digital transformation is a reality for every organisation…

That much is clear in a discussion with Jonathan Reichental, CIO of the City of Palo Alto, who is presenting a keynote at the CIO Summit taking place in Auckland on 14 and 15 June.

Asked about the challenges which face today’s CIO, Reichental said the reality is that competition has fundamentally changed. “The major characteristic of digital transformation is that anyone with an internet connection, a smartphone and a credit card could be your next major competitor. They can build a business within hours or days, including arranging the manufacture and distribution of goods through Alibaba. Right now, the barriers to entry and participation in business are uniquely low.”

Few businesses outside of the government sector don’t feel a level of threat from that, said Reichental. “If you are not fast enough, agile enough, if you don’t anticipate the future and meet customer needs, the market moves quickly. We’ve seen hundred-year old companies disappear or be damaged; just now, we’ve seen how Tesla has become the most valued car company in America – and this is the country of Ford and GM. For an upstart, barely fifteen years old, to rethink the market should send shivers down the spines of all company leadership.”

What that means in plain terms is that the role of technology, which is widely recognised as transversal, is becoming increasingly baked into business – any business. And in turn, that means the CIO’s star continues to rise (something Winston Fong recently pointed out).

“The CIO is moving on from taking orders and making the back-office work to becoming an important part of the executive team. Tech is moving from the periphery to the centre of the organisation, so the CIO has a lot of responsibility – and on the hook to continue to anticipate market challenges.”

That’s on the one hand. On the other, Reichental said there is a shift in how things are done: “The CIO once had to learn marketing, finance, HR to address the needs of those various departments. Now, those departments have to learn IT.”

The changing role of the CIO in an environment where innovation and the ability to respond rapidly with the power of technology begs the question, then, of where responsibility for innovation lies. While it is akin to asking ‘how long is a piece of string’, Reichental said is a good question and the right question for every organisation to ask. “It is difficult to answer, too, as there is nothing prescriptive and there are certain dynamics to consider from one organisation to another. It is also risky to assume that tech leaders should lead innovation, as some leaders will be good at making things happen, but not an expert on the multiple moving parts like maybe blockchain or machine learning which could drive dramatic change.”

Merely asking the question, however, gets people thinking about it; line of business people, who Reichental has already said must themselves become technologists, often have the insight to see where and how innovation is possible. “So, ultimately, it becomes a collaborative effort.”

But what about the public sector, where competition isn’t quite the same as it is for business? Is innovation, digital transformation and change the same in this environment? “It is a bit different, but what I have learned since moving [from the private sector] is that even cities compete with one another. We compete to attract industry, services and communities and we compete for talent. My mayor wants us to be better than the next city, so if they have a mobile app for crime reporting, we want an app for crime reporting,” Reichental chuckled.

Positioned as it is in Silicon Valley, he said there is an expectation that Palo Alto should be a smart and digital city – and indeed it has just such a vision. “We constantly seek to encourage innovation and focus on a series of technology improvements which align with City goals. We don’t try do everything, but certainly anything which can deliver improved customer or community experience, we’re keen on. We also look to eliminate as best as we can manual processes internally and externally with digital services. And we have a laser focus on strategy, embracing and acknowledging the important role technology plays. After all, we are in a unique place as the epicentre of innovation.”

To hear more from Jonathan Reichental, how the City of Palo Alto is digitally transforming, and his ‘Superpowers for Transformation’, book your place at the CIO Summit.

Conferenz CIO summit June 2017

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