How CEOs should approach digital transformation
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One of the conundrums of corporate digital transformation is this: Because it has such profound strategic implications, it has to be led by the CEO. But the CEO often lacks the knowledge to make critical technology decisions.
So how to proceed? That was the discussion at a fascinating Fortune CEO Roundtable yesterday, held in partnership with Tom Siebel and C3.ai. Francesco Starace of Enel—the Italy-based power company, second only to State Grid of China in size—laid it out clearly. “Ninety percent of the problem is that the people who are supposed to drive digital transformation are the most ignorant,” Starace said. He surveyed his employees on digital knowledge and found there was no correlation to age, gender or nationality, but there was an “inverse correlation between digital conversance and rank in the corporation.”
Some of Starace’s advice for solving the conundrum:
1. “Get the priests out of the room.” Don’t be held back by digital experts who are quick to tell you what you can’t do.
2. “Move everything into the cloud,” which gives you the flexibility to “compress time, make mistakes, fix, make mistakes, fix.”
3. Create a risk-taking culture. Noting that utilities are inherently risk-averse, Starace sponsored an employee contest around “My Greatest Failure.”
Mindy Grossman, CEO of WW, offered an additional piece of advice: Be clear about your purpose. “It’s not technology for technology sake,” she said. “What are you in pursuit of with that technology? What is the impact that is purposeful?”
And Brian Niccol, CEO of Chipotle, added that it’s also important to focus. “We asked, ‘What is the one thing we are going to do?’ And the answer was ‘digital kitchens,’” which separated digital orders from in-store orders and allowed Chipotle to maintain a high-quality experience for both.
In a separate CEO Roundtable on The Longevity Economy, Joe Coughlin, author of a book by the same name, dropped this nugget:
“The technology industry is the only industry in the history of the world that has the chutzpah to blame the customer for not knowing how to use their product.”
Coughlin is the author of this recent piece about technology policies to help prepare for the coming wave of baby boomers hitting old age.
More news below. And don’t miss Emma Hinchliffe’s profile of the person who may well be the next Treasury Secretary.
Coronavirus hospitalizations in the U.S. hit a record 61,964 yesterday, passing the previous record set April 15: 59,940. Thomas Tsai of the Harvard T.H. Chan School of Public Health: "The current hospitalization surge is likely a prelude to an even greater surge in the coming weeks given the record-breaking number of cases each of the last few days." Wall Street Journal
Apple has introduced new Macs that run on its own processors, rather than those from Intel, as has been the case for the last 14 years. The new chip is called the M1 and it's not very different from the chips used in iPhones and iPads; they're significantly faster than the Intel chips used in previous Macs. Many programs, such as Adobe Photoshop, will need to be rewritten to take advantage of that speed boost, though. Fortune
Chinese tech shares have fallen for a second day due to Beijing's clampdown on monopolistic practices. Shares in Alibaba, Tencent, JD.com and Xiaomi all fell at least 8% over the period, while the Hang Seng Tech Index is down almost 10%. Fortune
However, Alibaba has done just fine out of its annual Singles Day extravaganza—the world's biggest shopping event—with a whopping $56 billion in orders by Wednesday morning. Alibaba VP Liu Bo reckons online consumption is being stimulated in China because the pandemic is stopping people from going overseas. Reuters
Note: Yesterday’s edition neglected to note that, as part of Operation Warp Speed, the U.S. government has secured at least 100 million doses of the Pfizer/BioNTech vaccine.
AROUND THE WATER COOLER
European banks should prepare for a wave of pandemic-induced non-performing loans biting them early next year, says Elke König, head of the Single Resolution Board (which was set up following the eurozone sovereign debt crisis, to help stricken banks wind down.) She said banks need to work hard to sort out which loans are viable and which not, but rejected the European Central Bank's idea of setting up a network of "bad banks." Financial Times
Russia looks at Pfizer and BioNTech's 90% COVID-vaccine efficacy rate and laughs, because its Sputnik V vaccine is 92% effective. So claims (minus the bit about laughter) the Russian Direct Investment Fund, which is backing and marketing the vaccine, on the basis of preliminary data from Phase III trials of the two-dose vaccine. Reuters
Remember the enormo-cull of minks that Denmark was planning, in order to stop the spread of a mutated version of the coronavirus among people (a dozen of whom had caught it)? That's on hold, because the government doesn't actually have the authority to order it. Prime Minister Mette Frederiksen has apologized for issuing the order, and says a future cull may still be needed. As a result, the U.K. has reimposed quarantine requirements for people arriving from Denmark. Washington Post
TikTok would like to remind the Trump administration that tomorrow is the deadline the company was given to sell off its U.S. assets, and it's "offered detailed solutions to finalize that agreement," but it hasn't heard back from the administration's Committee on Foreign Investment in the United States (CFIUS) in weeks. So…what's happening? Unsure of whether it will get the 30-day extension it requested, TikTok has now filed a petition in the Court of Appeals asking for a review of CFIUS's actions. The Verge
This edition of CEO Daily was edited by David Meyer.