In a 2022 Amplify article, Cutter Fellow Noah Barsky shared 10 unconventional “rules” that can help senior leaders identify, assess, and manage digital era risk. In a recent Advisor we shared a refresher of three of those rules; in this Advisor, we tackle three more: (1) question analytics, (2) don’t excuse technological glitches, and (3) promote business acumen, not digital transformation.
Question Analytics
In many organizations, analytics groups are becoming the administrative functions they purported to usurp. Companies can no longer afford to limit database use to transaction processing, history referencing, periodic reporting, and validating intuitive expectations. Organizations need data tools that are predictive and drive proactive actions and preventative defenses. That requires staffing, culture, and commitment to evidence-based decision making that can shatter project-protective norms in addition to massive, high-hurdle-rate program investments.
Too often, analytics groups founder not from longstanding data-modeling limitations (i.e., clean, comprehensive, validated data), but from scarcity of the right mix of strategists, technologists, and statisticians (in that order) who challenge the orthodoxy and increase competitiveness long before reporting quagmires feast on swelling data pools. Truly strategic leaders proactively mine data in novel ways to drive future results. Unfortunately, too many data analytics initiatives are funded on the allure of “what could go right,” without adequate plans for “what could go wrong.” Analytics claim to make companies smarter, swifter, and stronger, but is that real or digital era rhetoric? Encumbered progress, diluted results, and cash burn tell the story.
Don’t Excuse Technological Glitches
Recent cybersecurity scares, emerging regulations, and heightened audit scrutiny motivated boards to rethink digital risk. Executives fear system breaches, asset theft, and data hijacks that tarnish reputations and derail strategy. Although downside risk often grabs boardroom attention, strong IT controls serve a second valuable and underappreciated purpose: helping businesses run smoothly. CFOs and CIOs must go beyond loss prevention to ensure that system designs do not impede what must go right for key stakeholders. Such unforced errors can be damaging to a company’s strategy, reputation, and bottom line.
Recently, American Airlines reported that a scheduling platform glitch left thousands of flights without pilots. The underlying problem of this example and others is that many C-suites tolerate the term “glitch” as a comfortable excuse for lax management oversight. Too often, system designers and software engineers lack fundamental business process insights; in turn, their operations peers conveniently blame “systems” for mistakes.
As companies aim to digitize workflows, tech leaders must thoroughly understand routine business activities, critical resource paths, and risk points. Cross-functional leadership teams must regularly ask these three questions:
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Do system designers understand how digitized business processes speed throughput and improve revenue generation?
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Do decision tools connect operating decision quality to financial consequences?
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Do credible plans exist to deploy and use automated analytics to proactively identify, diagnose, and curb transaction variances?
The (non-) responses reveal much about digital era readiness.
Promote Business Acumen, Not Digital Transformation
Digital transformation is the hottest trend and spend in technology circles these days. But how can employees possibly transform a business they don’t fully understand?
Companies may have ample tech skills, but functional experts often fall short when asked to be strategic difference makers. That’s the major problem with most grand-scale initiatives — technology alone cannot transform a business. Digital transformation risks becoming the latest IT project remembered for inflated promises, cost overruns, and few results. Executives and tech leaders can rewrite that narrative by realizing that success depends far more on how they develop people than how they deploy technology.
Technology is an overpriced, underutilized tool in the hands of employees who either don’t know or don’t care enough about the business. Strategy has low success odds when employees can explain what they do but not why they do it. Employee acumen requires far more than mandatory training sessions. Are employees aware of key financial indicators like revenue growth, expense ratios, and balance sheet health? Which three IT metrics drive financial outcomes? Do IT teams understand how transformation decisions affect planning, budgeting, and results? Unless technology connects correctly to strategy, there could be nothing left to transform.
[For more from the author on this topic, see: “10 Rewired Risk Rules for the Digital Era.”]
