The CDO defines the digital vision for the enterprise. We have seen that digital transformation leads to an innovative leap of the enterprise’s business model. The cornerstones of this new business model need to be determined first. Innovation management techniques will be deployed to systematically generate and analyse ideas, casting them into the context of an all-encompassing business model. Business modelling methods such as the Business Model Canvas[1] should be deployed to ensure that the modelling to be undertaken is comprehensive. These tools will help describe the innovation of the enterprise’s business model, the realignment of the business portfolio to meet the digital reality, and how this vision can be broken down to the business unit level. Emerging proposals for business model adaptation must be discussed, challenged and verified with the various business lines, lobbying for a broad buy-in into the journey ahead.

The CDO, and in fact the whole digital transformation team that comprises the CDO Office, must expect organisational resistance here. 

But the transformation team must stay on course. It also requires gathering feedback to drive the target business model forward in an agile way, while defending the transformation against particular interests. Tough conflicts with existing business owners should be expected and contested for the sake of better solutions.

Besides business model innovation, business portfolio management will be another core element of shaping the new strategic direction. A long-term strategy is being developed, which realigns the existing business portfolio to match the digital world, leads to the strengthening of some existing business lines, terminates other business lines that would only distract from the focus of the enterprise in the digital world and creates a new inherently digital business. Care must be taken to ensure that the company survives the transformation process, which means that some ‘old’ business lines might still be necessary for a transitory period to finance the very transformation that will ultimately end those lines. Business portfolio management must be made an operative instrument that continuously validates the enterprise’s business mix in the wake of the macroeconomic digital evolutions. Such portfolio management must be done in tight cooperation with the CFO and the business lines themselves. 

This approach will ensure, at the highest level, that the transformation plan is derived from business portfolio considerations. 

To shape the digital transformation programme, the new vision of the company must be broken down into concrete targets for business units, projects, IT, business development, etc.

As a next step, the target architecture of the digital enterprise needs to be defined. The consistency of the enterprise architecture, and subsequently the target business model, are at the core of the digital transformation’s success or failure. This is not an academic exercise – the comprehensive transformation ahead must be executed in a way that maintains the balance of the company’s enterprise architecture to allow it to deliver reliable results during and after the transformation. The enterprise architecture approach to the company’s business model forces the transformation to consider all dimensions of the business model and ensures they are kept in balance.

In addition, the enterprise architecture view is the basis for effectively communicating the upcoming changes for and to the organisation. All functions of the enterprise will find themselves represented, understanding their individual contribution to the new business model and the changes ahead.

Besides enterprise architecture, the CDO manages the digital matrix, delivering an overview of the digital skills of the company and assuring appropriate skill levels in the organisation as a basis for success. 

The digital matrix indicates at which step of the value chain those skills are needed. The CDO uses it to ensure the availability of the skills required for upcoming projects. Decisions for strategic suppliers and human resources development are also guided through this tool.

The project team utilises the digital service backbone approach in the enterprise’s IT landscapes. Successful digital services need to distinguish the enterprise in the market, generating the maximum competitive advantage in the eye of the consumer, and they must be developed in an agile manner. Exciting new digital services need to complement legacy enterprise services, and both must be joined effectively. For example, a cutting-edge mobile app with sophisticated graphics is only useful with robust identity management and payment services. The ideal scenario is a set of Lego-type building blocks supplementing digital projects with commodity functionality. Significant input into IT architecture and transformation will be necessary to arrive at such system flexibility.

Last, but not least, the CDO must produce a concrete and realistic plan for the digital transformation programme, matching the investment capacity of the enterprise as well as its change ambition.

Such a plan maps out the transition of the company’s product and service portfolio into the digital future. The necessary project and programme vehicles must be determined, and the digital transformation journey must also be broken down into digestible individual steps that ultimately lead to the desired target, while still manageable in the enterprise’s specific circumstances. The digital transformation’s ambition must be matched by the enterprise’s capacity for change. Successful implementation of organisational change takes precedence over ambition for business model change. ‘Think big, start small’ is the appropriate approach to follow, optimising the risk-return ratio.