The technological performance of a business has become central to success. An increasing number of businesses have found that when the push for digital transformation and the call to strengthen technological prowess comes from the CEO, financial performance improves.
Your Morning Cup of Tech?
Starbucks founder Howard Schultz makes a classic example to back this hypothesis. Schultz recently told an audience at an annual insights conference that line extensions or the introduction of a new flavor or packaging were once seen as innovation at Starbucks. But true innovation came when Starbucks, which doesn’t have any proprietary technology, created an app that became the most pervasive mobile app on the American retail landscape and changed the Starbucks business[i].
Starbucks has become so obsessive about technology that its latest CEO, Kevin Johnson, began his career as a software engineer, joined IBM as a systems engineer, went on to become one of six executives who determined the strategy of Microsoft and was appointed by President George Bush to America’s National Security Telecommunications Advisory Committee. Since 2015, Johnson has leveraged technology to improve the global operations of Starbucks, including the supply chain and technology supporting 21,000 Starbucks stores in 66 countries[ii]. Now, he is leading the company with expansion in China (Alibaba is a partner), rolling out fancy Augmented Reality features that blend online and in-store experiences at their Shanghai Roastery[iii].
Growing Role of Tech for CEOs
There are a growing number of examples where a CEO has played a critical role in embracing technology and powering the digital transformation of the company. Walt Disney CEO Bob Iger has been regularly placing bets on technology, using RFID-enabled wrist bands (used by customers to activate rides, gain access to their hotel rooms, make payments) at Disney World to interactive mobile apps and using drones to shoot movies. Fortune magazine once said that “He has made a deliberate decision not to have a chief technology officer. In fact, he’s the closest thing the company has to a central head of tech.” Under Iger, says Fortune, Disney has delivered a total shareholder return of 341%, compared with 104% for the S&P 500[iv]. Inger’s message to the world: Embrace technology[v].
Walmart CEO Doug McMillon emphasized the role of technology to his shareholders in the company’s 2019 annual report, “The ways we can use technology today and in the future are exciting.” Walmart is helping busy moms locate things faster in their stores using a map feature on a mobile app, shoppers are skipping checkout lines using Walmart Pay, others are pulling up at a pick-up spot to have their personal shoppers put stuff into their cars, autonomous scanners check counters to help improve in-stock levels, autonomous floor cleaners carry a camera to gather data on products to share with a system in the back room that prioritizes items for restocking.[vi] The pro-active use of technology to improve supply chains, empower store executives, improve customer experience and lower costs is one of the key reasons Walmart has remained the #1 Fortune 500 company for several years now[vii].
Embracing Tech = Business Growth
The bottom line is that when leaders embrace technology, they stand to make a difference and their companies stand to gain. Some may even come back from the brink of extinction — as was the case with Best Buy. Under the guidance of CEO Hubert Joly, Best Buy, and her focus on technology, the company made a complete turnaround. Market watchers didn’t give Best Buy any chance against juggernauts like Amazon. Many were writing its obituaries. In seven years after making investments in digital technologies, stock prices of Best Buy went up 198%[viii].
Take a look at the widespread evidence available for the impact of digital: Toy manufacturer Hasbro saw shares improve by 203% in seven years, Nike improved stock prices 69% in two years, and Target stocks improved 66% in eight years[ix] after launching their digital transformation initiatives.
Making Digital Happen
Businesses have used digital in a number of ways, from leveraging data to acquire a better understanding of customers and launching intelligent marketing campaigns across multiple channels to improving supply chains to prevent stock-outs, enhance the performance of their information management processes, boost innovation practices and improve customer relationship management.
The role of technology in the fortunes of a business cannot be discounted. Organizations that hope to remain lean, profitable, sustainable and competitive must be prepared to invest in technology and prepare a realistic digital roadmap. Technology — this includes data, analytics, IoT, cloud, cybersecurity, serverless computing, artificial intelligence, augmented reality, biometrics, blockchain, robotics process automation, cognitive technologies, and 5G — is becoming the bedrock of scale, agility, and responsiveness. But the strongest signals to turn technology into business tools must come from the CEO’s office.
- Pradeep Kar
Founder and Chief Microlander, Microland Limited
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