March 28, 2014
Macro trends in technology and shifting customer behavior are giving rise to the connected business — which is not defined by technology but is rather a new style of doing business. CIOs will be responsible for introducing technology solutions that help break down silos, boost cross-team collaboration, drive the end-to-end customer experience, and engage more deeply with customers. In order to succeed, CIOs must go beyond technology enablement and support organizational and cultural transformation.
With Jeroen Tas, one of the most renowned technology visionaries in Europe, as its CIO, Philips made a number of strategic decisions to transform itself into a connected business. Forrester believes that CIOs should familiarize themselves with Philips’ strategic, operational, and cultural transformation and learn from it, as Philips offers CIOs valuable lessons in planning the transition to a connected business:
- Philips embraces digital propositions at the expense of standalone products. Philips maps out customer journeys and ensures that its products turn into plug-ins for broader digital propositions. The firm connects all of its propositions through data, communities, and collaboration, allowing it to understand who the customers are and how they use products. Philips decides how it needs to develop its portfolio based on these customer journey maps, opening up new business models.
- Interdisciplinary teams help open up new revenue streams. The old model — all marketing people sitting together, all IT people sitting together, all supply-chain people sitting together — is outdated. Interdisciplinary teams force people to speak each other’s language. At Philips, interdisciplinary teams have also resulted in much higher job satisfaction.
- The CIO plays an important role in driving business transformation. Philips’ CIO and chief strategy officer took the board and the leaders of the firm’s main business divisions through their connected business concept. This led the CEO and line-of-business managers to rethink the Philips’ entire strategy and business propositions. The CIO can and should act as a strategic force.
Philips’ transformation should serve as an example to other businesses going through a similar process. Of course, the transformation process will need to be adjusted for each business, but we believe that Philips’ experience offers valuable insights into the necessary steps that CIOs will have to take to transform their organization into a connected business. Read the case study for details on how Philips tackled its digital transformation.