Digital Transformation:

Governance
Vincent Feltkamp and Joris Stadhouders

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 Channeling the efforts
• Tech fast – organizations slow.
• Large organizations are full of entropy
• Units may move into their own direction
• Units may ignore the vision
• Units may move too slowly
• Units may move too fast, ignoring regulatory, security & org.
risks
• Units may waste resources on duplicative, uncoordinated or
incompatible efforts
• Need: digital governance

“coherent engine that drives digital transformation”

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 Procter & Gamble (1)
• traditional industry, low margins: focus is on value – not at
cost reduction – a challenge!
• Aim of McDonald (ex-CEO) : become most
digitally-enabled company in world.
• Foundations: P&G evolved its IT unit into ‘global business
solutions’ (GBS), a shared services unit,
• Digital leadership, but:
• business processes are leading, not technology
• GBS P&G to become simpler, flatter, faster, more agile
• standardizing systems, processes and information
• automating, eliminating non value adding activities
• accelerating decision making, through real time information

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 Procter & Gamble (2)
• P&G GBS focuses on: consumer engagement, value chain
innovation, business intelligence and organization
development
• Launched like new brand, GBS people had clear tasks
• Governing technology innovation
• Multilayered approach
• Iterative review: look at world trends
• Next choose technology
• Example: accelerating innovation times with virtual reality
• Built a digital governance culture (not only structure)
• “cart before horse” in order to force change (review later)
• Digital cockpits with standard, easy charts, to share views.
• Piloted, it failed, was revised, re-launched in 18 months,
• Later 58000 operational cockpits, and with 80000 planned
• Energy, Passion, Funding, Discipline, Capabilities, Skills
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 Digital Governance: highly required
• Companies govern Finance and HR, but often do not
govern the Brand, the suppliers or the IT
• Digital governance has become essential
• social media lowers your control over brand image
• confidentiality and regulatory challenges increase, see:
• hacking after loss of phones or tablets, or passwords
• postings of secrets, of patient records, of credit cards details
• huge risks that can damage reputation of companies easily
• Digital masters govern better
• Make better choices and have better steering of those choices
• Good Governance is not just a risk reducer, but also an
opportunity provider
• Enables faster implementation, across multiple platforms,
continuously, still being compliant, secure and linked to legacy
• Fosters data integration, enables effective collaboration across
• Creates and enforces policy, and monitors its adherence5
 Making governance work
• Coordination of initiatives across the enterprise
• Prioritize, synchronize, align
• Sharing across the enterprise
• Using common capabilities and resources, including in
particular: people (expertise), technology and data
• Note: for many enterprises this is unnatural
• Co-operation across “silos” is not common, not easy: business
unit managers and regional managers will get affected WIIFM
(like functional managers when the ERPs got implemented)
• But: decisions are global in a changing world (dynamics)
• Three major governance mechanisms exist:
• committees,
• leadership roles,
• shared digital units
• Executives’ role: choose mechanism for coordination and
sharing, overcoming resistance 6
 Governance committees
• Governance committees
• are typically not enough but it helps having them
• two types, the first one is most common
• steering committees of senior executives
• ratify policies, prioritize competing interests, kill low value
projects
• make cases for investments (e.g. a global customer platform)
• Volvo: committee to integrate engineering with manufacturing
for the connected-cars concept, also addressing the dealers’
concerns about the direct Volvo-consumer dialogue
• innovation committees (policy and oversight role)
• identify challenges that can be resolved through technology
• fund experiments and pilots
• consider how to adopt useful innovations
• committees make decisions, but do not drive change
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 Digital Leadership Roles (1)
• new role: Chief Digital Officer (CDO)
• Role: from digital cacophony to digital symphony
• At least: unifies vision and coordinates digital activities,
makes suggestions (is no threat to anyone)
• But may also: create synergies, drive transformation
• resistance can be high here though, local units may oppose
• needs authority (must have credentials)
• p 144-145: Starbucks & Volvo have strong CDO
• Starbuck strong leadership
• Can be a temporary position, but there is a need for
digital technology synergy, brand integration, investment
coordination, capability development,
vendor/supplier/partner management & innovation
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 Digital Leadership Roles (2)
• Official liaison roles, e.g. the digital champions, can steer
the transformation at the business unit (or regional) level
– mini CDOs in each business unit
• E.g. PRISA press group,
• decentralized corporate culture (managing many brands, such as al Pais),
• each media property gets a CDO, coordinating with group CDO

• Leaders can drive change – however: implementing the

change (and sustaining it) also requires expertise and
resources (at central level)

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 Shared Digital Units
• Shared digital units (P&G, PRISA , NIKE, )
• govern and drive digital transformation
• drive initiatives and drive synergy
• they can vary in size and role
• Can help business units to conduct digital initiatives
• Can conduct digital initiatives for the business units
• create shared infrastructure
• unified customer databases
• enterprise wifi platform
• advanced analytics teams
• innovation labs
• global content management system (local level had no incentive)
• avoid reinventing the wheel in each unit
• centralize experiences and capabilities, so that all can benefit
• create cooperation of local units
• help to develop and introduce new standards

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• But require (depending on role) investment and attention
Governance
mechanisms

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 Do not leave it to chance
• Ineffective governance creates waste and missed
opportunities, hence increasing DT risks and costs
• A governance model is required for coordination and
sharing, in line with strategy and culture (structure as
well, but may change – like BPs and people’s roles)
• No single model is optimal
• Combinations of three mechanisms, examples
• Nike: digital unit (along with steering committee)
• AsianPaints: steering committee (IT unit became the DT unit)
• Nestlé: digital team and digital champions (no committees)
• Northwestern Mutual: committees but no digital unit or roles
• It’s not static: review, adjust the government model

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 Takeaways
• Look internally for effective government practices
• Typically with HR and Finance, but can also be with IT
• Consider which digital decisions
• must be governed at higher levels,
• can be delegated to lower levels
• Identify governance mechanisms to assist
• Committees
• CDOs or Digital Liasons
• Shared Digital Units
• Think : who is in charge (CDO or other)
• Notice that a Shared Digital Unit requires resources
• Adjust government models if need be

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 Committee work demo
Discuss issue
• IT person says: we can do this
• all others Question:
• what about confidentiality?
• how do we train?
• retain data?
• what does it take to make it usable before we deploy in the
field?

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