Digital Leaders Blog

If you’re not turning your company into a “math house” you’re headed for serious trouble. Every industry will soon be driven by digitization and every winning company will be using algorithms, or mathematical rules for processing information, to shape the end-to-end customer experience. Any advantages you have now will pale in comparison with a great set of algorithms that differentiates the customer experience. It is the algorithms that will create value for the business.

This is not guesswork. Sensors, the cloud, mobile and broadband wireless, and other such technologies are increasing the flow of digitized information exponentially. Algorithms, run on ever faster computers, can do amazing things with that information, from detecting patterns and making predictions to solving complex problems. They can even modify themselves as new information comes to light. 

More such catalysts are entering the fray every day. Venture capitalists have their radar out for and provide ample resources for the catalysts to scale up very quickly. The result is the reconstitution or destruction of industries, creation of new market spaces, and reshaping of old industry ecosystems.

Some leaders will ignore the trend, as happened at Nokia, or remain on the defensive, as reflected in Walmart’s delayed response to Amazon. But others know it is not going away and that they have no choice but to transform the company. That realization creates more anxiety than insight into what to do. CEOs are on the hunt to understand who has done what, and who has succeeded. They want to know, does a legacy company really have a chance of transforming itself into a math house? Can it do so at the speed of a start-up? Yes. On both counts.

The above quotation is taken from a recent article in the Harvard Business Review by Ram Charan entitled How To Transform a Traditional Giant Into a Digital One. The article examines the leadership lessons to be learned from the digital transformation of GE, the only surviving member of the original Dow Jones Index of 1896, showing that it is indeed possible to transform a large, traditional business despite the many obstacles and barriers to be overcome. 

There are important lessons to be learned here.

Jim H

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