m a n a g e m e n t H a r va r d B u s i n e s s r e v i e w P r e s s us $ 3 0 . 0 0 / c a N $ 3 4 . 5 0 g e orge Westerman is “Successful transformation of your organization to digital doesn’t just happen—you need to lead a Research Scientist in the it. Leading Digital shows the key elements and processes that have made Digital Masters out of MIT Initiative on the Digital companies around the globe, in many different industries, not just high-tech. A must-read.” Economy. His research —Pete BlackshaW, Global Head of Digital and Social Media, Nestlé Become a Digital m aster—No and teaching help senior m atter What BusiN ess Y ou’re iN executives drive competitive advantage with digital “The days when senior executives could delegate technology issues to their technology people f you think the phrase “going digital” is only technology. He is coauthor of two award- are over. Digital leadership capability is essential to thriving in a world of fast-changing relevant for industries like tech, media, winning books: The Real Business of IT (2009) technologies. Westerman, Bonnet, and McAfee provide a clear and readable guidebook iand entertainment—think again. In fact, and IT Risk (2007). to help any leader or manager play an effective role in turning technology challenges into mobile, analytics, social media, sensors, and transformation opportunities, both now and in the future.” cloud computing have already fundamentally d id ier bonnet is a Senior —michael tushmaN, professor, Harvard Business School; coauthor, Winning Through Innovation le Ding changed the entire business landscape as Vice President at Capgemini we know it—including your industry. The Consulting, where he serves “To stay relevant in this new, always-connected digital universe, businesses in virtually problem is that most accounts of digital in as Global Practice Leader every industry are reinventing their business models for unprecedented customer access, business focus on Silicon Valley stars and and heads Capgemini interaction, speed, and scale. Leading Digital shows how transformative companies are tech start-ups. But what about the other 90-plus TCroannssuflotrimnga’tsi oDni gpirtoagl ram. He navigating this disruptive era successfully—and why others are falling behind.” perIcnen Lt eoaf dthineg e cDoingoitmaly,? a uthors George has more than twenty-fve years’ experience in —Joe tucci, Chairman and CEO, EMC Corp. Westerman, Didier Bonnet, and Andrew strategy, internet economics, globalization, and McAfee highlight how large companies busines transformation for large corporations. “Leading Digital provides comprehensive, fact-based insights into how multinational Digital in traditional industries—from fnance to companies can leverage digital technology to transform their businesses’ performance. manufacturing to pharmaceuticals—are a ndreW mc afee is Co- In this book, the authors provide not only the inspiration, but also the practical guidance using digital to gain strategic advantage. They Director of the MIT Initiative required for CEOs to successfully navigate this complex transformation.” illuminate the principles and practices that on the Digital Economy. He has also held appointments —Pierre PriNguet, Vice Chairman of the Board and CEO, Pernod Ricard lead to successful digital transformation. at Harvard Business School Based on a study of more than four hundred and Harvard’s Berkman “Technologies—whether based on stone, steel, or software—are tools. They deliver results only global frms, including Asian Paints, Burberry, Center for Internet and when wielded effectively. Westerman, Bonnet, and McAfee’s careful and insightful research Caesars Entertainment, Codelco, Lloyds Society. In 2008, McAfee was named number 38 reveals the patterns common to the most effective leaders of the digital revolution and shows Banking Group, Nike, and Pernod Ricard, the on the Ziff Davis list of the “100 Most Infuential how they are using digital technologies to deliver impressive results.” turNiNg techNologY book shows what it takes to become a Digital People in IT.” He was also named one of the Master. It explains successful transformation —erik BrYNJolfssoN, professor, MIT Sloan School; Director, MIT Initiative on the ffty most infuential people in business IT, by in a clear, two-part framework: where to Digital Economy; and coauthor, The Second Machine Age Baseline Magazine. He is coauthor of The Second invest in digital capabilities, and how to lead iNto BusiNess traNsformatioN Machine Age (2014) and Race Against the Machine the transformation. Within these parts, you’ll (2011), and the author of Enterprise 2.0 (2009). “Digital is no longer the responsibility of a few tech-savvy executives—in the age of digital learn: customers, it needs to be the responsibility of every leader in the organization. Leading Digital Westerman How to engage better with your customers provides a blueprint for digital transformation.” bonnet —charleNe li, founder and CEO, Altimeter Group; author, Open Leadership; How to digitally enhance operations and coauthor, Groundswell mcafee How to create a digital vision How to govern your digital activities jac k e t d e s i g n : fa c e o u t s t u d i o s a u t h o r p h oto s : d av i d s e l l a ( W e s t e r m a n ) ; e v g e n i a e l i s e e va ( mc a fee) The book also includes an extensive step-by- ISBN-13: 978-1-62527-247-8 g e orge Westerman | d id ier b onnet | a ndreW mca fee step transformation playbook for leaders to staY iNformeD. JoiN the DiscussioN. This book results from a joint 9 0 0 0 0 follow. Visit hBr.org/Books research program between Leading Digital is the must-have guide to folloW @harVarDBiz oN tWitter Capgemini Consulting and the help your organization survive and thrive in fiND us oN faceBook, liNkeDiN, YoutuBe, aND google+ MIT Center for Digital Business. hBr.org/Books 9 7 8 1 6 2 5 2 7 2 4 7 8 the new, digitally powered, global economy. le Ding Digital “Imagination, capability, and opportunity take on a new dimension in the digital age. Leading Digital provides a framework for creating sus- tainable business differentiators across the value chain. A must-read for all those who aspire to become Digital Masters.” —Manish Choksi, President of Home Improvement, Supply Chain and IT, Asian Paints “Westerman, Bonnet, and McAfee have done a masterful job of describing the essential characteristics of Digital Masters and present- ing a thoughtful and pragmatic leader’s playbook for digital trans- formation. This book is an exceptional contribution to strategy and management practice.” —John Glaser, CEO, Health Services, Siemens “The authors have lived on the cutting edge of how global organiza- tions use digital technology to change and improve the way they do business. With this book, they bring us along on the transformation journey. If you want to prepare yourself to lead your organization through this profound change, Leading Digital is a must-read.” —Jean-Christophe LaLanne, Executive Vice President and Chief Information Offcer, Air France–KLM Group “Using powerful examples, this impactful, evidence-based book dem- onstrates that mastery of digital technologies drives signifcantly high levels of proft and productivity across almost all industries—and shows you how to become a Digital Master yourself.” —F. Warren McFarlan, professor, Harvard Business School “We are living in a time where technology is impacting everything we do and touch like never before, where being connected is becoming a basic human right, and where the unshared certainties of all businesses are turning into shared uncertainties. Leading Digital offers a powerful and refreshing approach to what needs to be done during each stage of this journey.” —Osman Sultan, CEO, Du, United Arab Emirates FM.indd 1 24/07/14 8:46 PM FM.indd 2 24/07/14 8:46 PM LE DING DIGITAL FM.indd 1 24/07/14 8:46 PM ➤ FM.indd 2 24/07/14 8:46 PM LE DING DIGITAL TURNING TECHNOLOGY INTO BUSINESS TRANSFORMATION GEORGE WESTERMAN | DIDIER BONNET | ANDREW McAFEE HA R V A R D B U S I N E S S R E V I E W P R E S S Boston, Massachusetts FM.indd 3 24/07/14 8:46 PM ➤ HBR Press Quantity Sales Discounts Harvard Business Review Press titles are available at signifcant quantity discounts when purchased in bulk for client gifts, sales promotions, and premiums. Special edi- tions, including books with corporate logos, customized covers, and letters from the company or CEO printed in the front matter, as well as excerpts of existing books, can also be created in large quantities for special needs. For details and discount information for both print and ebook formats, contact C O N T E N T S Introduction: Are You Ready? 1 1. What Is Digital Mastery? 9 PART I: BUILDING DIGITAL CAPABILITIES 2. Creating a Compelling Customer Experience 29 3. Exploiting the Power of Core Operations 47 4. Reinventing Business Models 73 PART II: BUILDING LEADERSHIP CAPABILITIES 5. Crafting Your Digital Vision 97 6. Engaging the Organization at Scale 115 7. Governing the Transformation 133 8. Building Technology Leadership Capabilities 153 PART III: BACK AT THE OFFICE: A Leader’s Playbook for Digital Transformation 9. Framing the Digital Challenge 175 10. Focusing Investment 189 FM.indd 5 24/07/14 8:46 PM vi  Contents 11. Mobilizing the Organization 209 12. Sustaining the Digital Transformation 225 Epilogue: You Ain’t Seen Nothin’ Yet 245 Appendix: Digital Mastery Self-Assessment 251 Notes 25 Index 275 Acknowledgments 287 About the Authors 291 FM.indd 6 24/07/14 8:46 PM Let us be grateful to the people who make us happy; they are the charming gardeners who make our souls blossom. —Marcel Proust From George To Clare, Henry, and Marilyn, who transformed my life in ways I never could have envisioned. From Didier To my wife Kathryn, for her immeasurable love and support, and to my two own digital masters, Alexandra and William, for keeping me on the right side of the digital divide. From Andy To my coauthors, who have taught me much about scholarship, writing, professionalism, and good cheer. FM.indd 7 24/07/14 8:46 PM