Digital is determining the winners and losers in the current environment. "We're seeing entire industries digitally remastered," says Ed Gabrys, Gartner research director."

"This requires all CIOs to become digital leaders," he says.

"There is a fundamental shift in the way IT organisations have to start viewing their role."

Traditionally, the CIO/IT leadership has taken an inside out perspective, says Gabrys. "What do we do today and how we do we that incrementally better? It is really rare that we say, how do we do something entirely different?"

The latter question, he says, can lead to "blue sky innovation".

"What has changed is the new technologies that lead to the blurring of the physical and digital world," says Gabrys.

"It is a powerful combination," says Michael Warrilow, Gartner research director. "The combination provides impetus or recipe for significant disruption for existing business and opens up new business models."

So how can CIOs and the IT leadership respond to these changes?

"You have to take an outside-in perspective," says Gabrys. "It is no longer, what do we do today and how do we do that better? It is, how do we take something entirely new and allow the business to survive and thrive?"

One of the best ways to do that is through an exercise of redesigning the business on a blank sheet of paper.

"It is starting from, literally, a blank page, ignoring your existing process and existing workflows because sometimes that is the only way you get to that true innovation," says Gabrys.

Gabrys says this exercise applies across sectors.

"The blank page goes everything from what technology do we use, and sometimes technology is not the answer."

"Who are the right individuals? Who is the right talent [to get] involved rather than, let us go to our standard top managers or top performers?"

Taking care of digital business

Warrilow says a "small example" of how this thinking is applied in government is the new website of the Australian Tax department.

The tax office had created a very secure, unusable way to lodge your tax online, he states.

The ATO totally revamped it and now when users log in, it populates with most of the information they need. They have got most of the information anyway, says Warrilow. "It had much greater success in the last year than any time in the last decade."

He says the site was an example of application of user experience concepts and "prudent use of open data".

Warrilow says another organisation that applied this thinking was Netflix. "It took them 10 years to become an overnight success," he says as the company started providing DVD rental.

Their technology could not keep up and they were forced to go to the cloud. Now, he says, the company is aiming to go to 200 countries, and is now creating its own content.

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"This business model change happens when you look at what is possible with digital," adds Gabrys. "You don't get it by looking at existing processes."

Gabrys says the process can be part of a 24-hour hackathon, the strategic planning process, or scenario planning.

Gartner analysts Mark Raskino and John Mahoney also discussed this process in their CIO New Year's Resolutions 2015 report.

They advised organisations doing this to be "as ambitious" as Facebook founder Mark Zuckerberg, and don't ponder too much on the costs or technical risks.

Some questions organisations can ask themselves, say Raskino and Mahoney, are:

  • What learning algorithms would Google substitute for humans if it operated your business?
  • If your product had a remote-control mobile app, what would it look like?
  • If your products were continuously cloud-connected, what services could be added?
  • If your product was autonomous and intelligent, what would it want? What would its goals be?

CIO New Zealand interviewed Ed Gabrys and Michael Warrilow at the 2015 Gartner Predicts Viewpoint in Auckland.