Designing and Executing a Digital Strategy Is No Longer Optional
Introducing The Protium.Digital Strategy and Maturity Model
Sometimes it seems hard to imagine how much of our lives has already been impacted by the ongoing Digital Revolution. To remind myself I always look at this now very famous image of the last two Papal inaugurations in the Vatican, almost 8 years apart.
This image is so power-full because you can clearly see the change. In 2005 maybe 1 or 2 people are looking on their phone and in 2013 almost everybody is holding their phone taking pictures. In hindsight most people have to laugh when they see this picture but for most people this change happened gradually without them even realising it. There was no pivotal moment in time where the world changed, there was no disruption in the market and there was no “Singularity” moment, it just happened.
Throughout history we have seen the same pattern. Take for example the elevator. Have you ever just stood in an elevator and realised that the building you are standing in would probably not exist without the invention of the modern industrial elevator. The modern industrial elevator (the first elevator was probably in built 236 BC) is a great example of the Industrial revolution. It has impacted how we design our cities, buildings and infrastructures. And today we often don’t recognise its importance. And if during the industrial revolution a business did not adapt to the changing conditions it would probably not exist today.
The same can be said about the ongoing Digital Revolution. Digital is the new Kingmaker. Companies with a Digital strategy will outperform their competitors today, tomorrow and the day after tomorrow. Digital is catalysing new business models, reshaping entire industries and most importantly its reshaping every industry. Business leaders can no longer wander their way forward in the digital revolution; the challenges are too great to address without a multi-year strategic roadmap, and the business potential too vast to simply dismiss. Or to quote Jack Welch, retired CEO of General Electric:
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near”
— Jack Welch, Retired CEO of General Electric
But transforming an existing organisation is complex. I have worked with many organisations in transforming their business from a traditional business into a digital business. This allowed me to gain firsthand experience in what can go wrong in designing and executing a digital strategy. It also allowed me to design and develop toolbox of frameworks and models that aid in the successful creation and execution of a digital strategy.
Top 3 reasons why Digital Transformations fail
Wikipedia rules. When I was doing research for this blog I found this article on the challenges in implementing a digital (or industry 4.0) strategy and the list goes as follows:
- IT security issues, which are greatly aggravated by the inherent need to open up those previously closed production shops
- Reliability and stability needed for critical machine-to-machine communication (M2M), including very short and stable latency times
- Need to maintain the integrity of production processes
- Need to avoid any IT snags, as those would cause expensive production outages
- Need to protect industrial know how (contained also in the control files for the industrial automation gear)
- Lack of adequate skill-sets to expedite the march towards fourth industrial revolution
- Threat of redundancy of the corporate IT department
- General reluctance to change by stakeholders
- Loss of many jobs to automatic processes and IT-controlled processes, especially for lower educated parts of society
- Low top management commitment
- Unclear legal issues and data security
- Unclear economic benefits/ Excessive investment
- Lack of regulation, standard and forms of certifications
- Insufficient qualification of employees
Now don’t get me wrong this is all true and probably many people have acknowledged this in some survey. However, I always ask myself 5 times why. Why are there IT security issues, Why is there insufficient qualification of employees, Why is there low commitment of top management, Why, Why?
Understanding the underlying problem allows me to create a solution that will actually work. This brings me to the first reason why the implementation of a digital strategy often fails.
Reason 1: Failing to adopt a strategy that transforms the system rather then the individual functions
An Organisation is a complex system of many functions that should all be working as one. In a way an Organisation is like an Organism. The etymology of the word Organisation says as much. The word is derived from the latin word Organum which means organ or organic structure (It’s surprising how many business terms are derived from Biology). Now imagine replacing a human heart with that of a whale. The two are not compatible. Yet this is what we see happening a lot. The organisation has an amazing digital marketing strategy, but has not told sales. Sales get’s so many leads that they struggle to keep up, and when they do, manufacturing fails to deliver. The result, leads are lost, customers are unhappy and so on. I hope you get the point.
In general the prevailing way of thinking is that if you improve the performance of a single part of the system it will improve the performance of the whole system. This way of thinking in silo’s is false. In fact, it can destroy an organization (read more about silo’s in our series “breaking silo’s”). A Digital strategy should offer a holistic roadmap to transform every aspect of the organisation. This requires a level of systems thinking that many are not capable of without some help. It also requires an organisation to break through its internal (and often external) silo’s.
Before we go to reason 2 here is a little fun fact. Have you noticed how many “Maturity models” are out there? There is one for every function of the business. most focus on a single silo or function (Digital HR maturity model, IT maturity model, Digital finance maturity model, etc, etc). The reason for this is that consultants are always looking for problems to fix. After all, we only get paid when we uncover problems and fix them. Maturity models are designed to show you what’s wrong and give you a possible future that you desire (Like a horoscope). Maturity models are great and can really help. Just be smart and use the ones that show you the maturity of the entire organisation and not just one function in it.
Reason 2: Digital transformation is not about technology and not about transformation (confusing right)
Lets start with Technology. Technology changes the conditions under which business is done, in ways that change the expectations of customers, partners, and employees. Technology enables digital strategy but it is not the goal. Think about the example of the elevator I gave earlier. The elevator enabled the construction of skyscrapers. We did not design skyscrapers to house the elevator. In a lot of ways we have not idea yet what the skyscrapers of the digital revolution will be. Blockchain for example enabled Cryptocurrency but what else will it enable? What’s important about a digital strategy is that it allows you to better understand and create value for your customers, partners and employees. Technology allows you to learn and adapt faster. The goal should always be to deliver value.
The second part is about the word transformation. Again wikipedia rules. If you look up the article for business transformation they give you the following definition:
“Business Transformation is the process of fundamentally changing the systems, processes, people and technology across a whole business or business unit, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction. As such, a business transformation project is likely to include any number of change management projects, each focused on an individual process, system, technology, team or department.” — Source: Wikipedia
There are many things that are wrong with this sentence but the main thing is the implication that a transformation project has a beginning and an end. In a digital world organisations need to adapt to a constantly changing environment. Basically there is no beginning or an end. Organisations need to constantly improve in order to keep adding value to your customers, partners and employees. That is why we always give our clients this principle: “Every day 1% better”.
In this paradigm of “every day 1% better” you will see another change. Often organisations “benchmark” themselves with their competitors. The prevailing belief is that getting to the highest level of for example digital maturity is usually expensive, or impossible and it is probably smarter to choose the areas you want to really excel, and pick your battles by just staying ahead of the competition. And while it is true that focus is very important it is also important to realise that your most important competitors in the future will probably be new market entries (start-ups & scale-ups). They have no legacy and can be much more effective in delivering value to your customer if you are lagging behind. When you let go of the benchmark culture and just keep improving your value proposition you are probably in a much better position when the new cool start-up arrives to disrupt your business.
Reason 3: Amazon, Apple, Google, Microsoft, (Or any other digital powerhouse) has already won
No….. just no. You have no idea how often I hear this. From the students that I teach to the CEO’s of some amazing organisations. There is a sense of fear that they get from their digital competitors that is unhealthy.
Take for example Amazon. Yes Amazon is an Ecommerce powerhouse and an amazing company. They are definitely a force to be reckoned with, but are they unbeatable? Definitely not! What we have seen in the last few years is the end of the beginning. We have seen companies like Amazon lay the groundwork and foundations for something much greater. This video explains it:
Or as Alibaba founder Jack Ma puts it you should have a 30–30–30 focus:
To quote BTO “You aint seen nothing yet!”. To sit back and think that you cannot win is wrong. Organisations need to have an entrepreneurial mindset. That means that when you identify a problem or opportunity you take on the challenge of solving it without complaint, you learn and recruit new skills as needed and deliver results despite politics. Because all problems have solutions. If there is no solution, then it’s not a problem. It’s a regrettable situation.
Introducing The Protium.Digital Strategy and Maturity model
When we started developing our Digital Strategy and Maturity model we took these 3 problems and used our entrepreneurial mindset to solve them.
So basically we had to do 3 things:
- Create a model that breaks through organisational silo’s and that gives a holistic view of the entire organisation and how it can add value through going digital
- Be a tool to communicate and share results of continues improvement (not a beginning and end)
- Encourage a belief in the ability of the organisation to create change in the world around the it and the conviction that it can achieve what it set out to do
Overall there are 4 core elements to our model. It starts with the Digital Principles. The Digital principles describe the organic framework that enables a successful digital business. Without these principles it’s unlikely that you will succeed in a digital world.
The Digital principles are followed by Operational Excellence and Customer Experience. These describe the functions of how the organisation currently creates, delivers and captures value for customers, partners and employees.
And finally it ends with the Digital Business Model. This describes the new ways an organisation can create, deliver and capture value for customers, partners and employees. The goal is to find new ways to create scalable and repeatable value propositions that can help the business grow.
Digital Principles
Before any digital strategy can be successful there needs to be a mindset shift throughout the foundations of the organisation. By making these shifts any organisation can implement and execute an effective digital strategy. We have captured these mindset shifts in what we call the Digital Principles. These principles touch subjects like Strategy, Organisational structure, People, Process and technology.
An example is that when you set out to transform your organisation it is important to have a strong Purpose and Vision. Your Purpose and Vision serve as a reference when customers choose where to buy, employees decide where to work, and partners decide where to engage. This is such an integral part of your company culture and therefore the success of the organisation that we believe that you should be able to measure this at all times. Have you ever asked yourself how many people within the organisation can recite your Purpose and Vision?
This is just one of our principles. As we learn more every day we keep adding new principles to our list. Right now there are over 20 principles that each play an equally important role in the implementation and execution of a successful digital strategy. They can be used as a guideline for the development of your own principles.
Operational excellence (OX)
Operational Excellence is an ongoing effort for organisations. With each new technological horizon come new ways to make your operations run more efficiently and effectively. Every organisation needs to continuously look for ways to augment the capabilities of it’s employees and improve it’s and automate its processes. Core to this continues improvement is data. That is why operational insights are the starting point for the effort to achieve operational excellence.
The data created from the operational systems can become a competitive asset that anyone involved in the enterprise can access. Over time, many of these processes and decisions can be automated.
The data and insights will help find new ways to improve the efficiency and effectiveness of your processes and your employees.
Customer Experience (CX)
Digitally improving your customer experience allows you to gain better insights into what your customers like and want via analytics-based segmentation and interactions. And subsequently design and build digitally-enhanced products, sales processes, self-service tools, and digital touchpoints to serve your customers more effectively and increase your top line growth.
There are two reasons why every company needs to improve their customer experience. 80% of organisations say they deliver a superior customer experience (source). But only 8% of customers think these same companies deliver a superior customer experience. The needs of customers are changing and it is impossible to predict what they want next, because they don’t know. People are unable to predict their own future behaviour. Or to quote Henry Ford:
“If I had asked people what they wanted, they would have said faster horses.”
And even though this famous quote is proven to be wrong (source) there is a source of truth in it. Your customers can not predict their future behaviour but you can get insights on their current behaviour which might have some insights in the future. Understanding what your customers like and want will help you increase customer satisfaction much easier.
The second reason to design and execute a Digital Customer Satisfaction strategy is the increase of customer expectations. It takes 12 positive experiences to make up for 1 negative experience. Designing better customer touch-points will give your customer more positive experiences so that they will forgive the inevitable negative experience.
Digital Business Model
And finally digital organisations are able to find creative ways to modify their existing offerings and develop digital products and services to keep the interest of even the most demanding customer. It also allows you to scale and repeat your new value propositions with ease and grow your business.
This final step is probably the hardest to achieve. But it does offer the highest competitive advantage.
With this model we have also designed a scorecard and questionnaire to determine your organisations digital maturity. If you are interested please let us know. You can contact us here:
https://protium.digital/#/contact
We hope to hear from you soon!!
