Your board Members need digital competence now! Peter Sondergaard on Post Pandemic Digitalization

by Anthony Torno

For many years Peter Sondergaard was Executive Vice President Research & Advisory of Gartner. After leaving Gartner in 2018, he supports global decision-makers as an analyst and consultant in successfully mastering the challenges of digital transformation. He is Chairman of the board of DecideAct. The company offers a cloud-based platform for strategy execution management.

We are very much looking forward to Peter being a keynote speaker at www.ciosummit.at. His performances inspire top-class auditoriums around the world. He inspires, excites and informs. We are thrilled to welcome him to the Confare stage as well.

In the run-up to the event, he spoke to Confare founder Michael Ghezzo about how Covid has changed the world and what is now needed for the next step in digital transformation.

Has this pandemic changed the economy, the way the economy works? And what do you think are the most important first and second order effects of this?

Let’s start with the audience of the www.ciosummit.at, which is, CIOs, CDOs, CEOs and then you can project out from there. So, I think the major task for them has been to accelerate digitalization in their organizations. Just before the pandemic, there was in fact a slowdown in digitalization. Mainly because many companies failed either to scale their digital projects and proof of concepts, or in fact, couldn’t take the next jump, which really had to make digitalization a pervasive leadership focus, not just with the IT function but broadly across the executive suite.

COVID then happened. And in fact, there were three things that happened out of COVID. First we had an acceleration around the implementation of digital workplace, and the associated technologies around this. So, we tested and tried different modes of how to work and in many instances proved that the old organizational structures had to be adapted. So, marketing couldn’t work with sales and sales couldn’t work with production, this changed. Organizations became flatter. And also, in some instances, productivity increased in organizations as a result of the implementation of digital workplace, even in the public sector. The second thing was that in responding to this, we had to accelerate process automation, because we were lacking some people.

I’ve worked with companies during COVID, where in fact call center staff wasn’t available. Because that call center staff was based in low-income countries where you couldn’t send people home. And so, what happened was sort of an acceleration in RPA (Robotic Process Automation), in intelligent RPA, as well as also acceleration in the investment of data optimization across the supply chain.

The third thing, which we all enjoyed was the investment that happened in web and commerce-based technologies in order to accelerate the way we buy, and the way we interact from a service perspective.

So, all these things got put in place. None of them were architected. I mean, fantastic work happened from CIO, let’s first also say that. But it wasn’t part of the overall architecture. And now we have sort of these disconnected islands of activity that have happened, where we now need to go back, and revisit how we actually tie this back into the architecture.

What happened was essentially, that we skewed from the path of what is digitalization overall in the sense that we focused on these things, but let other things rest because we didn’t have time to actually deal with those. So, let’s focus on the positive. Productivity benefits, new modes of working, flexibility in the supply chain. And in some ways an acceleration on certain product development initiatives even in the public sector, that would have been almost impossible to do because of inertia. So, that’s the good thing.

But we have to make sure, to not carry an architectural legacy with us. And now we have to face the question: how do we architect for agility? A pandemic, now unfortunately, a war in Europe on to higher energy prices, supply chain issues, new business models, new forms of competition, new kinds of work. It’s very clear that we don’t have flexible enough architectures. Going forward we need to focus on that.

What would be the main issues of this architecture? I assume that cybersecurity and automation are two of the topics CEOs really should focus on. But would you agree with that? And what are more issues of this? 

Yeah, I think you’re spot on. Cybersecurity is a business-critical issue that resides at the board level of any organization. And if it isn’t, then the organization is in trouble. It’s also clear that the definition of an agile, you know, composable, business architecture becomes incredibly critical. We need the ability to rearchitect for more flexible supply chains and more flexible ways of work. Out of that comes the need to sort of think about digital not as a project, but think of it as part of the product, the process, and the business strategy of the organization.

I think we’re going to see an acceleration in tools for digital product development or service development. The way you develop products or services now is that you kind of start with the product or the service and then you wrap around a little technology, like a website, or a sensor integration, or data analysis, or even machine learning activity. But you don’t manage the complete digital aspect of the product, as a product itself. We’re starting to see some really interesting startups that really think about architecting products in a completely new way.

This has then also brought to the forefront the strategic importance of data. I mean, we’ve talked about this for a billion years now. But I think COVID illustrated the importance. Organizations that had strong data architectures and a strong leadership’s competency around data, not just in IT, but across the business have done very, very well.

And then the last and this is certainly something that I do want to spend time on at the event (Confare #CIOSUMMIT) is, we’ve now shown that you cannot just have one person, the CIO, CDO or the CTO as being responsible for digitalization. And so, we have to work on elevating the competencies of all leadership, members, team members, you know, we have to elevate the competency around digital for-, head of HR, the head of legal, the head of finances.

We spent some years now and a lot of venture capital money talking about industry. How FinTech, Health Tech, Edu Tech change the way those industries work. But we have to elevate the discussion around functional technology, outside of what has happened in marketing the last 10 years. And that’s a competency question of those leaders in those organizations.

How does this change the role of the CIO in the organization? What will be his part of this transformation?

The CIO will continue to remain the advocate for technology and for how technology impacts the business. They will have the critical responsibility for overall corporate architecture. They will likely have the responsibility for the security aspect of this, although in some businesses that responsibility may be elsewhere but at least for the execution of it. And they will have the data architecture, data strategy responsibility. But the CIO cannot be successful the next 5, 10 years if he or she doesn’t have a very, very strong working relationship with the entire C-suite, and see them as needing to become technically competent, data competent.

What can CIOs do to pursue the goal of integrating business and IT?

This mainly is the responsibility of the CEO. You know, for some years, we’ve talked about digital strategy. And I think companies have now realized that there is no such thing as a digital strategy. There’s only a strategy.

Now, the board creates the strategy with the executive team. So, if this starts with the board than the board has to be digitally competent and aware. And have to articulate a strategy in which digital is pervasive. And that is then rolled out to the executive team that includes the CIO. That doesn’t mean that the CIO can influence his or her peers of the executive leaders and work closely with them.

As we go into what I would call post pandemic digitalization, we have to go back to the fundamentals of how businesses operate. This is one of the reasons why we kind of stalled out on digital because it was a series of big projects. Then we got the pandemic. We got a little bit of a lift. But now where do we go? And it isn’t the CIO’s responsibility to tell us where we go. He or she should be an advocate and can be a flag bearer.

Talking about the competency of the executive team. You are involved in a company, which helps people for-, talking the same language there. Could you say a few words about that company?

Yeah, so, this is a little company called DI2X that focuses on this aspect of making sure that the leadership team first has a common language and an understanding of where they are today. Right? Because one of the problems is, if you ask a leadership team write down what you think digitalization is, you’ll get as many answers as there are leaders in the room. Which means how are you going to execute something where people don’t agree on what the baseline is, or what the long-term objective is. And so, this company works with both public sector organizations and private organizations. And part of what is offered is a maturity test.

And so, part of it is to understand where you are today and have a common language about what that is. And then where you are, where you want to be in two years and where you want to be in five years. Another thing that the company does is a competency C test for the organization. Because one thing is you say here’s where I am, and here’s where I want to go with digitalization. But you then also need to know: do I have the competencies across the organization to go there? And so, there are 10 different organizational competencies that are defined in order to be able to be good at digitalization and then three leadership competencies. And those are rated on a scale from one to seven. So, you know, it’s not always a question, I have the competency, or I don’t have it. It’s a learning process, right? And so, it gets some fantastic conversation. So, a couple of days ago, we had the Foreign Ministry of Norway, which has used this to develop competencies. They’ve even had all the ambassadors all over the world involved in understanding where they are from a digitalization perspective and what their competencies are because they know that in order to be an agile diplomatic core, you really need to elevate the technology knowledge.

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