The rewards for success are enormous, while the consequences of failure are drastic, even lethal. They could do worse than look to a quote from one of the most successful race-car drivers in history, Mario Andretti: No race—or transformation—is risk free, of course, but having the courage to make decisions that push the limits of the organization is a necessity. For this reason, we analyzed dozens of both successful and less successful digital transformations to get at the root causes of where they go wrong.
This analysis has yielded ten important traps that businesses frequently fall into during a digital transformation. Often overlooked or misunderstood, these traps boil down to culture, discipline, and mind-set issues. Here is what CEOs can do to overcome them and de-risk their programs so that businesses can capture the full benefits of digital. Paradoxical though it may sound, we believe companies need to take more risk, not less.
Many senior executives look back on their transformation programs 1 1. Data tell the same story. Recent McKinsey research reveals that the companies that do best follow bold and disruptive strategies. They make big bets on new technologies and business models, champion a test-and-learn culture where every failure is an opportunity to improve, and launch change programs that transform their whole business. Making reckless moves, ignoring common sense, and losing sight of where the value is can undo bold initiatives. When information is in short supply, people fall back on experience and gut feeling.
The best companies start by identifying where value is created and destroyed, 3 3. This external analysis should be matched with a deep and comprehensive internal assessment. The best companies then also develop an objective picture of their digital quotient, 4 4. Dispelling the unknown extends as well to painting a compelling picture for the entire business of what the future could look like.
Experimenting with hackathons and war gaming also helps not only to develop innovative new models but also to make them more tangible, so that leadership can align around them. Leaders can address this by thoroughly defining and explaining what the digital transformation really means—for example, improving customer experience to become the number-one service in the category or radically improving productivity across the supply chain.
Such an approach generates excitement and learning, but it can also be self-defeating if not carefully managed. Running too many competing initiatives dissipates management focus and starves promising ideas of the resources they need for a successful scale-up. To avoid spreading their efforts too thin, smart digital leaders prune their portfolios regularly and ruthlessly. Subscale investment is no way to compete against venture-fund-backed companies.
Focusing on the right kind of initiatives is equally important. To avoid this wasted energy, any digital transformation should start with understanding customer needs and build out solutions that not only address them but have the potential to generate the most impact. Some digital transformations run into difficulties because costs rocket while savings or revenue growth take longer than expected. Leading companies start by targeting quick wins to unlock value so that the effort funds itself, often within the first three months.
In fact, this approach can be so effective that the most successful companies generate more savings or revenues than are needed to fund a transformation. Banking these savings and revenues can often happen using the tools and data already to hand coupled with a willingness to do things differently. Take the three-person team that carried out a microsegmentation of the customer base at a US telecom company. Similarly, an online retailer upped conversion rates by 35 percent simply by having one person optimize page-loading times again and again until they shrank from 16 seconds to six.
Often these opportunities can be identified as early as a week into a project. Evaluating the customer decision journey is a good place to start. In consumer sectors like banking and telecoms, the joining and onboarding processes for new customers often offer plenty of opportunities for significant improvement.
Most companies embarking on digital transformations underestimate how long it takes to build capabilities. They know they need digital talent, but not what kind or how much. Although important, this iteration was lacking depth in each circle. It was the need to account for all of these complexities that finally landed me on the complete StoryVesting framework. The modern experience framework that I finally settled on is grounded in values. Here it is in all its glory:. StoryVesting is an intelligent framework that is used for essential growth-related business tasks, including recruitment, intelligent data looping, mining insights, improving operations, improving employee morale, and building customer experience CX initiatives.
Individually, each of these layers are impressive. I purposely designed each of these layers as concentric circles that sit on top of each other. The goal here is to showcase that each component bleeds into another. Organizations are complex entities. While there are core departments, including the marketing department, finance, HR, technology, and information, each of those departments contains its own set of teams. This graphic shows the department structure that a CEO typically oversees. Then, each C-Suite executive oversees dozens, if not hundreds, of people who each play a different role in growing the company.
Aligning these teams takes tremendous effort and without a framework in place to serve as the guardrails, teams can easily go off course, sending the company into a tailspin. Take the struggle of aligning sales and marketing teams as an example. For years these two teams have been at odds despite working toward a common goal of growing the customer base. That chasm often leads to a healthy amount of finger pointing. The sales team points the finger at the marketing team for not getting enough leads or low-quality leads. The marketing team then points the finger back at them saying that the sales team needs to work harder to close the leads they send their way.
Not only does it keep teams focused on the primary goal—growth—but it also benefits the business in other areas. Consider the data science team and the strategy team. Organizations are getting a wealth of big data coming in daily. In order for that influx of information to be used strategically, the data science teams must align with the marketing team to pull out the top insights. By eliminating siloed thinking and budgets, decision-making becomes more strategic, which ultimately leads to delivering better results.
Companies can focus more holistically on driving the ship forward in tandem and thereby fueling growth. Having the StoryVesting framework to serve as a guide helps attract the right talent and guide hiring decisions. As you might recall from my research, the best employees had to have more than just smarts—they had to have passion and an emotional vestment into the organization. They had to believe in why the company existed.
They had to know why it was beneficial to the market. The why must also be validated by the business model. No matter how cool the vision, the brand has to showcase that they to have a sustainable business model and can make money. In other words, it has to make sense. They have to like the processes that are in place, or at least feel empowered to shift the processes when necessary to become more productive. The technology used organization-wide must spur productivity and reduce friction, so the only focus is getting the job done well.
The employee has to believe in the product or service wholeheartedly. But this is only half of the equation. The way we process information as consumers with purchases is complex, especially for purchases that bend our budget a little more. Despite the complexity, we, as buyers, move methodically through a predictable pathway to purchase to make decisions, each step getting amplified by the one before it.
It starts with an external stimulus. A memory from our past buried deep in the limbic system gets triggered. This emotional and physical response is called the Cannon-Bard theory , which causes a physical and psychological response, like trembling in fear or getting butterflies on a first date. We weigh the time vs. Upon deciding to move forward, we start to progress more from the present into future consideration as we weigh our expectations.
Will the purchase meet our needs? How will our life be different if we buy? Will it be better? Could it be worse? This reconciliation of past, present, and future experiences is the answer to each of these layers getting stacked one on top of each other throughout the path-to-purchase. In fact, the why can oftentimes lead to excellence and euphoria in other parts of the framework as well. Here are a few examples of brands that have succeeded at each stage of the framework. I had the lucky opportunity to spend time on the Apple campus in for a consulting gig. That left an indelible mark on me.
It left such an impact on me over the years. I took that lesson and used it to drive the very essence of StoryVesting and how to make a company successful. Costco changed the way people shop for groceries through their subscription-style business model. Members pay for a service and in doing so, get lower prices on bulk groceries. An Example of the 3Ps in Action: Lululemon has differentiated themselves from the competition by turning their employees into brand advocates and advertisers through the benefits they offer.
In addition to the discounts on this otherwise high priced attire, team members get paid to work out. After experiencing quick growth, Airbnb decided to expand their service offering to go beyond giving travelers a bed to sleep in, and instead, give them a way to create memorable experiences wherever they went.
They even went as far as naming their new product, Experiences. Now, travelers can book a place to rest while also booking concert tickets, day spa passes, classes, and more. Disney has made its guests experiences the focal point of all they do. Offering fun vacation plans is just the beginning. Disney representatives also meet travelers in the airport to help with their luggage before they get to the hotel.
The special effects, awe, and wonder at every turn within their park, are evidence that Disney continually strives to amaze the people who engage with their brand. There are many ways in which you can achieve growth at every layer of the StoryVesting framework, but this only accounts for one side of the equation. In StoryVesting, alignment goes deeper than bringing teams together internally. In a recent study, IAB found that growth has slowed or stopped in much of the U. As a result of these declining figures, 6, brick-and-mortar stores have closed as more consumers opt to buy products online.
The companies that are succeeding are the ones that are aligning themselves with the type of experience consumers demand—a direct-to-consumer experience. The reason why is that cutting out the middleman allows brands to tell a stronger story and connect on a deeper level with their consumer. Top players in the retail industry suffered in In doing so, consumers are more emotionally vested in the brands they use and buy from. In doing so, these brands are able to form a new cognitive association of their brand and build brand awareness.
Take the unimposing razor industry as an example. Gillette, the previous market leader, has seen a steep decline in market share, dropping in the U. Pakman, a partner in Venrock, the VC firm that invested in Dollar Shave Club, had his theory on why the company continues to grow. This pilot commercial brought in 12, customers for the subscription razor company in two days. Alignment, instead, is about understanding what the consumer needs at every stage of their journey. At RocketSource, we drill into the entire customer journey to find any negative touchpoints and moments that cause friction and result in dissonance between your brand association and the consumer.
We run root-cause analyses to find where in the funnel the problems really lie, uncovering weak areas and analyzing their impact on the conversions at the end of the funnel. Before we move on, let me walk you through an example of how this all comes to life, together, rooted in the StoryVesting framework, specifically by analyzing the behavioral economics of the car buying experience.
Facebook found that during a path-to-purchase, people intending to buy a car visited Facebook and Instagram times, spending Social media is just one of the 24 total research touchpoints the average car buyer encounters, according to Google. You can see the complexity involved with this purchase. If you want to download and share this image, we encourage you to do so. Like any major purchase, a car buying experience is kickstarted by an external stimulus that triggers a deep-seeded emotion.
This physical and emotional response happens when he sees, hears, or smells something. His actions are driven more by this emotional response, which according to UCLA researchers , is normal. External triggers seduce the brain, inspiring an emotional response over an urge to begin fact-finding.
Now, imagine that dad is me. These emotional triggers are typically strong enough to stick around for an extended period of time—long enough to move from the past and slowly into the present to start exploring cars that trigger those deep-seeded emotions. During this phase, a buyer typically explores 14 brands but considers only six and decides between only two. Still, the most important factors are brand and make, followed closely by model, the model version, and driving performance.
Deals, dealers, and finance options rank last when it comes to influencing a car buying decision. This goes to show that emotions tied to the brand are still injected into the start of the shopping experience. As those feelings slowly fade out, logos commences and the buyer starts to focus on fact-finding than emotional response. As he kicks the tires, he likely turns to the Internet to whet his appetite for a new BMW.
While conducting logical research, the buyer shifts into exploring specific details and comparing preferred models against each other. What are the features? Will the expectations fit his personal needs? What else is out there now? The brain is being driven by the neocortex as he explores reviews and ratings for the preferred car models. During logical research, a car-buying journey can include over digital touchpoints alone over a 3-month period. This younger cohort spends an average of During this comparison stage, the buyer maintains confidence in the brand.
One is deeply emotional and positive, while the other is filled with anxiety and mistrust. Going to a dealership continues to be one of the least enjoyable parts of the car buying experience. Research shows that one of the factors impacting customer satisfaction with the car buying process is locating a dealer. Getting dealer information is the least favorite activity during the car buying experience, preceded by researching the car, finding cars listed for sale, comparing models, and finding out what their current car is worth.
He knows he trusts the brand, but how does he know he can trust the dealership? Part of making that decision involves looking at and talking about price. His limbic system is firing off at all cylinders as hormones are shot off in his brain. The past, present, and future he tapped into when making his purchase decision get reconciled as he drives away from this purchase experience. They can be seen throughout any path-to-purchase. Now although I have grossly oversimplified a complex brain process, can you start to see why knowing this basic level of emotive and logical processing detail about your buyer is critical?
In order to operate out of a place of empathy, you need a degree view of your customers and your employees. In a recent effort to find the best marketing growth strategies , Google learned that:.
The Many Uses of the StoryVesting Framework
This demand for personalization is where the StoryVesting framework is critical. Fortunately, information from internal data sources and Data as a Service DaaS providers have empowered brands to achieve this personalization by getting a degree view of target buyers and their path-to-purchase. Through that clarity, brands can further align their offerings with what the market demands, continually evolving and innovating to deliver exceptional experiences.
Take a look at what this perspective is doing for leading retailers. Most brick-and-mortar clothing stores people shop in today have stacks of clothes on the shelves where buyers can pick a color and size, try it on, and hopefully buy. One retailer living the experience-centric model is MM. LaFleur, a high-end clothing store.
A CEO guide for avoiding the ten traps that derail digital transformations | McKinsey
The retailer originally set up shop online but has since opened up five brick-and-mortar locations in New York. Instead of putting inventory on shelves, they hide it. When a customer leaves the elevator and enters their Suite they are met with a glass of champagne and a personal shopper who knows their name. The shopper then taps into the customer data available, such as digital reviews, shopping cart activity, and in-store activity, and through a proprietary algorithm, decides which clothes to pull for that specific shopper. Consider what a perfectly StoryVested company would look like when everything worked together in harmony.
The purpose of the company would tug a deep-rooted emotional heartstring in the customer. As they moved throughout their experience with the brand, the business model would serve their needs, the people would answer the logical concerns of the user with platforms and processes that left them satisfied.
The product would be delivered and met with overwhelming confidence and excitement, stirring up hopeful feelings for the future. All in all, this alignment would lead to one thing— euphoria. To do this visually, I decided to augment the Venn-diagram with concentric layers within the circle and then showcase what I learned through all of my research and active testing in behavioral modelling.
On the other end of the spectrum, when you bring the two circles i. Despite knowing the importance of personalized experiences, many American companies fail to deliver on what the consumer demands. In this report, brands across 19 industries are ranked. Remember the rhetorical triangle component, pathos, or emotional appeal? In order for brands to break away and align better with the buyer, they have to tap into that emotion. Elite brands provide an average of 22 emotionally positive experiences for each negative experience.
Emotional connections are more powerful than many give credence to but this type of experience deserves recognition. By layering these critical aspects on top of each other, businesses are able to achieve powerful growth rooted in exceptional experiences both internally and externally. A proper framework should be simple to take in on the surface so everyone can understand it with clarity. Let me show you just a few of the ways you can insert the intelligent StoryVesting framework into your business. I talk to too many smart professionals that point the finger square in the face of the marketing team when it comes to growth, and many are surprised when I shake my head no.
In other words, everyone in the business is essentially in marketing. Sublime external brand experiences, however, are driven by the interwoven connectedness of the teams and modern growth marketers or experience advocates are usually the ones armed with data to bridge the Customer Experience gaps. This approach requires having the right people on your team.
Only then can you refine your processes because those people are going to naturally fine-tune the processes to their own needs. Regardless of how much executives and directors push, employees have to buy in for the changes to work. As they gathered data and learned from customer feedback, they began their process of scaling through steady, strategic iterations. From day one, the Dropbox founders and their team were in constant communication with their end user, their customer, to engage them in the product development process.
But the developers were met with two kinds of feedback—bug fixes and new feature ideas. They had to quickly sift through both types of changes and decide where they were going to spend their valuable time. With a framework rooted in business modeling and outward progression, like StoryVesting, companies have a strategic plan for when to pivot once those strategic inflection points hit, says BuckleyBarlow. The founders clearly knew what they were doing.
The company continually powered through strategic inflection points by using an approach called data looping to uncover the most critical needs in the market and sequential steps to outclass and outperform any competitors. Data looping consists of eight stages, the first of which is collecting data. Then, that data gets back to the data science teams to aggregate and mine for insights. Once they have those insights down, they send their findings over to the business intelligence team to model the IRR on the investment and give executives confidence levels and probability success factors to help with decision making.
Having the right people, a hybrid team of people is the key. The StoryVesting framework is strong enough to take any kind of initiative, including development operations, growth marketing, customer experience initiatives—everything. That starts with having the right team. Too often, people credit the company itself for success. Do you have these people in your business? They are masterful and eager to learn, especially when it comes to collaborating across departments and skill sets.
Here, you have a developer, a graphic designer, a strategist, a content writer, a content marketer, a data researcher, and more. These people are all V-Shaped, which means they specialize in one area but also have a healthy amount of knowledge in another. This approach makes a V-shaped team agile.
They can shift from one strategy to another as the market deems necessary, enabling the business to pivot more quickly too. Take a look at another department often found in Software as a Service SaaS businesses—development operations. The list goes on. These types of teams are the way companies have to interact today to maintain business speed and momentum. It used to be so different in the fact that everyone was compartmentalized and siloed, but today, you cannot possibly operate in an empathetic and customer-centric viewpoint without speaking a common language.
That common language is the StoryVesting framework. Start to look at how to change up processes and align departments across the organization through the lens of StoryVesting and the entire end-to-end customer journey. That strategic, swift ability to pivot is the key, not just to business transformation, but to run an agile operation using StoryVesting. The very nature and survival of most businesses out there today depend on the ability to deliver a positive experience.
That means, you have to run an agile operation, which is hard to do, especially for legacy businesses. For legacy businesses, inflection points pose a tremendous challenge. The dual perspective of the horizontal and vertical view I talked about above is powerful because it enables you to hone in very quickly on specific departments that are contributing to the negative experience.
Is it a platform issue? Is it a process issue? Is it a people issue? To do this, my team and I run a digital maturity model to grade whether a business is leading or lagging in the market. The scale looks like this. Each of these areas corresponds with a specific segment of the StoryVesting framework, and then drills down into the various components that correspond with that area.
Each component is then graded based on numerous qualifiers. In this sample dimension scoring graphic, you can see that each segment has a corresponding color. As the circles move outward, they have a number alongside it that signals how many qualifiers go into that specific area. We use this type of data visualization because it allows us to dissect smaller areas of the business to get comprehensive insights. The further we drill into the qualifiers used to create the score, the better we can hone in on what needs tweaking and adjusting, and where we need to pivot. Data visualization like this is the easiest and quickest way to present large amounts of data so decision-makers can make informed and insightful strategic decisions.
At RocketSource, specifically for our growth team, we live in our project management system, Monday. If something needs to pivot to keep in line with an overarching strategy, the entire team can very quickly see why the pivot is happening and move to stay on course for our end goal. Keeping our DevOps projects on schedule has become leaps and bounds easier and more effective with the StoryVesting framework in place. We take this a step further with daily updates to the team and conversations around the clock by using an app we love called Voxer.
Daily check-ins save time and they feel good, allowing each team member to give each other a pat on the back for hard work. We also use Slack for quick updates throughout the day. Slack is basically a chat app that lets us share screens, interface across the office or across state lines, and share files or links. We use it to quickly check in with each other and continue moving quickly, with momentum. Kudos to you for wanting to transform, not only your business but also yourself. The answer, without me knowing your role or responsibilities, is yes. StoryVesting is designed to bring operational alignment.
Here are just nine areas where StoryVesting can make a massive difference. Each of these are core areas that see a direct benefit when the StoryVesting framework is put to use. Take a close look. These departments and roles each have a different mission in mind. StoryVesting is all about creating a well-oiled machine by operationalizing a team of hybrid employees in an agile organization through a customer-centric mindset.
It requires that you continually iterate by taking an empathetic stance for both for the customer and for your employees. To do that requires data. An Accenture study found that:.
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These metrics offer a black-and-white picture of how your business is faring in the market. Analytics is where having data transforms the business. Analytics enables companies to uncover opportunities and instances where things can absolutely be changed for the better. What happens more often than not is that there is a firehose full of information spraying into the organization and no one knows how to handle it all.
Armed with data, you can chisel away brick-by-brick at silo walls that tend to pop up when people argue based on guesswork alone. Instead, by using data looping and feedback mechanisms to analyze the information available, you can gain buy-in by democratizing the data. What does democratizing mean exactly? It means visualizing the data in a way that tells a story across all departments, so everyone can speak the same language and move forward together as a cohesive unit driven toward the same goal. Here, we start by breaking out what the customer is likely thinking, feeling, saying and doing at this stage.
Then, we analyze which departments are playing a role in each touchpoint, and the platforms being used at that specific stage of the journey. This means that the CEO and their leadership team really have their work cut out in communicating their vision effectively. Leaders need to consider how their company is going to be different and transform into a digital business. They need to understand the threats and opportunities the digital economy presents and how they will respond, and how they will ensure their organisation is capable of transforming. Delegating accountability for this to lower level management will almost certainly result in politics and other mid-level management conflicts that will only serve to hamper a transformation.
Cultural, mindset and behavioural shifts must be seen to come from the most senior leaders, with them clearly communicating their messages - repeatedly. These shifts must be replicated down through the organisation at every level - addressing any pushback that is encountered along the way in a constructive manner. With the right leadership, digital business transformation opportunities can build on one other to foster new ways of working, which will support the achievement of the transformation vision. Leaders also need to recognise that often they are unlikely to find the capabilities they need, already inside their organisation and sufficiently available to undertake a new role in a transformation.
The best leaders have a solid grasp of the key capabilities they need to make transformation successful. They are more successful than those that underestimate the importance of specific transformation expertise, making the false assumption that operational staff have all the skills and capabilities needed. As many lessons learned have shown, underestimating transformation capability is one of the main reasons for transformation double. THRIVE highlights the principles that leaders need to be mindful of when embarking on digital business transformation.
Neglect any of the principles and the consequences are predictable. Transformation readiness is about being prepared for what lies ahead and not simply moving forward without a proper assessment of the health of the organisation from a transformation perspective. You need to identify what your organisation looks like now in terms of leadership mindset, organisational culture, transformation capabilities, etcetera. Then establish what you need your organisation to look like as a prerequisite to successful transformation.
If you opt to embark on transformation without having sufficiently raised that maturity, the writing will be on the wall from the outset and the transformation is likely to run into trouble. This same principle can be applied to all of the other transformation success factors covered in this course. Transformation readiness can be compared to preparing for other major undertakings.
The details might be different but the fundamental principles of preparation and readiness remain the same. For example, an Arctic expedition would be seen as foolish if its leaders set off without an immense amount of preparation. Many other comparisons exist, which show us how preparation and readiness for major undertakings are so vital. A lot of organisations embark on their transformation journeys with a vision, budget and enthusiasm, and an assumption that this alone will get them to where they need to be.
By carefully considering all THRIVE principles, then taking appropriate action to fill gaps, you can ensure that all bases are covered and that your company is ready for the journey ahead. Transformation begins with pro active executives who have recognised the need to undertake digital business transformation and are prepared to adopt the THRIVE principles. The alternative might be likened to the disaster that struck the mighty Titanic on its maiden voyage in The Digital Business Transformation Iceberg helps to show how the conscious mind of digital leaders should be focused on far more than the tip of the iceberg.
It illustrates the principle of what is often sitting beneath the surface requiring transformation focused leadership and management, and is designed to encourage leaders approach digital business transformation holistically. It helps leaders approach transformation with an open mind and primed to answer the question So while the customer is key, you need to cast off any blinkers that prevent you from taking a holistic approach to transformation using all six THRIVE principles.
Components that sit immediately below the surface of the iceberg all need to be sufficiently mature, if transformation initiatives are to be successful. They include transformation management capability, innovation management capability, transformation governance and digital capabilities. It's important to keep your primary focus on the business, as opposed to specific technologies.
Getting hung up on using a particular technology for the sake of a technology is something that all CEOs need to be on their guard for.
A CEO guide for avoiding the ten traps that derail digital transformations
The important thing is that you always see below the surface and avoid the fate of ships that only look at the tip of the iceberg. Social, Mobility, Analytics and Cloud. This convergence is what sets apart firms that simply deploy single digital technologies, from those that use innovation and business needs to determine how multiple technologies can be integrated to work together to transform their business and how they work.
Integrating the SMAC family into a stack amplifies their power and potential for creating business value. For example, the data from a user's social media activity can be combined with location data from their smartphone. That data can then be analysed to determine customer behaviour and future buying criteria. This in turn can influence marketing strategy. Because of its low cost, high availability and global reach, the SMAC stack can help companies move into high-margin areas by exploiting the seemingly endless supply of innovative possibilities that can generate business value.
On Social - it would be naive of me to think that I need to describe what billions of everyday people now take for granted. While many leaders recognise this, other than launching a series of social media channels, not so many have incorporated social media into a new business model, to leverage its full potential. As buyers and other industry audiences increasingly look to social media for information about companies like yours, it becomes increasingly more important for company to integrate social media into their overall digital business transformation strategy.
Social media can also be used to increase the effectiveness of company wide change management initiatives and there are tools specifically designed for this purpose. The whole business of transformation is difficult from a people perspective. With internal social media tools, transformation leaders can leverage social media solutions to overcome the typical challenges of transformation more efficiently and effectively. What has become like a digital Swiss Army knife to the modern day consumer, should also be considered when companies seek out innovative ways to accompany the consumer as they make they daily journeys to potential new discoveries, relationships and purchases.
Mobile will only strengthen the store experience, especially if you create the right mobile experiences to supplement the in-store experience.
And the likes of iBeacon technology makes it easy to detect where a customer is in a store, or nearby, at any given moment, providing unprecedented opportunity to encourage a purchase. While collecting data is not so difficult, interpreting it is where many companies are struggling, and unless you can interpret it well, it has little if any value. Transforming raw data into useful insights is vital, and more powerful tools are enabling us to do that more effectively.
Armed with these tools, data scientists are increasingly able to mine the value of data. New tools such as Machine-learning technologies are enabling companies to make more informed decisions using more up to date, accurate and extensive data that they have gathered. Better data analysis enables companies to optimise everything in the value chain, and those that are in a position to take advantage of big data often get to market faster with products and services that are better aligned with customer needs and desires.
There are endless possibilities and big data use cases that can inspire any company. Simply focusing on cutting costs and improving IT department efficiency, is likely to result in CIOs still being labeled as good traditional CIOs, but not transformation leaders. Of course it is. But there needs to be more focus on how cloud can help transform the business, and not just modernise its technology systems. While this lesson has been about technology, you should never lose sight of the fact that digital business transformation conversations in the boardroom need to begin and end around business value and how it is best achieved through innovative digital means.
Rather than talking about investing in analytics, cloud or digital, technology leaders will do better talking about what new value or competitive advantage the business needs, then consider the digital means that can help achieve that. A platform, by definition, is a business model that creates value by facilitating an exchange between two or more inter-dependent groups. So, rather that making things, they simply connect buyers and sellers. Uber connects drivers with passengers. They have put journeys on a platform. Airbnb connects property owners with guests.
They have put accommodation on a platform. The fastest growing companies are no longer those that have the largest workforce or physical assets. The fastest growing companies are now those that build and manage platforms that facilitate the interaction of customers and companies to create and exchange value together.
The notion that bigger is better is fast diminishing as the laws of competitive advantage are changing dramatically. Digital businesses leaders are now creating the scalable and interconnected platform economy that underpins success in an ecosystem-based digital economy.
They all thrive and scale at a phenomenal rate as a result of their platforms. They are all bringing together customers and producers, which in turn creates value for the platform provider, the producer and the customer. They simply deliver their products and services to customers. Nothing physical disrupted the taxi, hotel or media industry. No physical assets were needed.
Only a platform was needed to bring about interactions between producers and customers. They simply need to create a platform based ecosystem where interactions can take place, then encourage the growth of those interaction using the power of networks. Of course the business model value proposition need to be very attractive to suppliers and customers.
But once achieved, the potential for growth is beyond what any traditional business model can achieve. In fact the potential for growth is exponential. Platform-driven ecosystems are taking shape across many industries, and the trend will continue. By the end of this decade, there are unlikely to be any industries that have been disrupted by platforms. The big question for all companies is, are you ready to embrace everything a platform represents in the digital economy? Or leave it for your competition to take advantage of? The Internet of Everything. To understand the Internet of Everything we must first understand that the Internet of Things.
Building on this foundation, Cisco defines the Internet of Everything as the intelligent connection of people, process, data and things. It builds on the foundation of the "Internet of Things" by adding network intelligence that allows convergence, orchestration and visibility across dissimilar systems. The Internet of Everything will enable us to see data and respond in different ways, access things in different ways, and intervene at the right times.
But while plenty of people talk about connected companies, incorporating this lofty futuristic notion into practical business models, which can then be successfully executed upon to achieve the required business outcomes, is another ball-game. While the Internet of Everything has huge a potential to transform our daily lives, it is still very much in its infancy.
Then comes the challenge of deriving value from that data. While the technical challenge of connecting things using different protocols, and security and privacy concerns need to be addressed, a key business challenge is in knowing how to derive value from the Internet of Everything within a particular industry.
For example, a retailer is going to explore very different Internet of Everything digital use cases than manufacturers will. This is because they have very different business models, which can benefit from the Internet of Everything in different ways, and because they have very different threats to content with. You need to select digital use cases to drive digital value by focusing on opportunities, value propositions and digital business models that are relevant within your industry. But conjuring up business cases for opportunities that have never before existed, is a challenge.
While many companies recognise that they need to embrace the Internet of Everything, most have trouble articulating and quantifying value for a business case. Despite external opinions, the internal reality might be that you will be unlikely to get buy-in and funding for large-scale Internet of Everything deployments without a solid business case. On the Internet of Everything journey, Getting things connected together is a start, as is capturing data. Because only when relevant data begins to work for us, can it begin to demonstrate its value, along with the value of the sensors and devices that are helping to capture that data.
The value is found in the outcomes the connections make possible. Cisco has suggested that Internet of Everything value is distributed across five key business functions, which are:. Whether you adopt this or any other model to work with, while the Internet of Everything is still in its infancy, the task of getting things connected should begin now.
Before Engaging Tech Firms. It might seem logical to first turn to a technology solution provider for digital business transformation guidance, particularly as they are all offering advice on digital transformation. But doing so comes with a risk. Since tech companies and their partners began aggressively selling licences, the interests of the clients are often put in second place behind the interests of selling licences and consultants to the client. Even when advisors and account managers from tech companies want to put the clients interests first, they are quickly reminded by those to whom they report, to focus on their key performance indicators, and perhaps with a hint of what missing those KPIs could mean for them.
While tech companies are very knowledgeable about technology, their structure is so that clients are strategically steered towards their solutions, or to those of their partners. This is no secret, and yet naive leaders are consistently led up the garden path to a particular type of software, which might not be the best solution for their company. There have been too many organisations sold inappropriate technical solutions by sales hungry account managers, for smart leaders to still make the mistake of not being independently equipped to be able to make certain decisions themselves.
But the uninformed will continue to cost their companies money in this way, because they succumb to the grooming techniques of the sophisticated sales folk that have been trained well to persuade the client that their solution is the best thing since sliced bread. Technology solution providers and their partners are very useful, but you should engage them at the appropriate time. And Transformation leaders have a responsibility to their companies to be capable of leading transformation without having to turn to tech providers to guide them on strategy, only to get led up the garden path to use their solutions.
Good transformation leaders will establish strategy and goals, long before technology suppliers are involved. Because they are able to stand on their own two feet and to think independently and impartially, with the support of their team around them. We cannot innovate, digitise and transform without digital technologies and the companies that create them; but always keep in mind that the technology solution is only a small component of digital business transformation.
Structuring your transformation initiative in the right way, can protect the company against the influence of account managers that aim to sell technical solutions. One approach is for the company to appoint a two to three year position of a Transformation Executive. Another approach is to form a functional transformation group which is not driven by technology thinking.
Some companies might even elect to keep the CIO out of this group as they are often the target of account managers, and therefore could influence the group based on the influence account managers have had on them. The functional transformation group should be business transformation focused. It is a transformation think-tank, with perhaps the support of impartial external transformation advisors, who do not represent any technology firms.
The very reason for this group is to enable transformation strategic counsel, and to protect against the influence of the many technology firms that are trying to influence the likes of the CIO. The fact that you have enrolled in this training is testament to the fact that you want to be able to work independently and be capable of making key decisions yourself. One is around the challenge of undertaking transformation, and the other is around being competitive in the digital economy. Digital is blurring the line between large and small companies and small companies are now able to compete on a more level playing field with large companies than ever before.
The extreme example to make this point is the fact that a sole entrepreneur in their jeans and T-shirt in their spare room at home, can sell their digital offerings in vast quantities across the planet in the same way that global conglomerates can. Now every digital company can sell to anyone and we have have seen incredible examples of how very small companies can disrupt entire industries that have traditionally been dominated by wealthy global enterprises.
Small companies can now run the same business software that was once reserved for large enterprises, and technologies such mobility, analytics, and social media provide entrepreneurial companies of any size, with unprecedented connectivity, insight, and market reach. But bringing new value to the market requires a considerable amount of activity in the company, which is where the playing field is far from level, as both large and small companies face their own set of challenges.
Good simple advice given to the company employing ten people could be ineffective and even be damaging, if applied to a company with a hundred thousand people to consider. And the bigger the company, the harder it is to undertake digital business transformation. A leader who needs to transform a company with ten employees will experience something very different to the leader of a company with , employees. While the principles and basic challenges of transformation remain the same, larger organisations face greater complexity in areas such as change management, communication, culture, process and governance.
While smaller companies face the challenges of smaller budgets, limited talent pools, and more difficulty demonstrating value and benefits to stakeholders. While business of all sizes need to innovate, digitise and transform, if they are to remain competitive in the digital era, their size will determine the types of challenges that will require most attention.
Digital business transformation tools are the digital-age equivalent of the traditional tools that have served technology leaders well over the last two decades. As executives strive to remain competitive in a world increasingly dominated by technology and transformation, they will spend more on innovation, technology and transformation capabilities, and embrace new digital business transformation tools.
The companies that are prepared to approach innovation, digitisation and business transformation in a proper manner will do so by engaging transformation leaders that are adept in every area of the Transformation and Innovation Framework illustration shown at the top of this page. These leaders need to be prepared with a well equipped toolbox of strategic digital business transformation tools that can guide their organisations along every step of the journey.
Tools that bring consistency, a common language and effective ways of working into the organisation. While these tools can come in many shapes and sizes, one thing for certain is that if the tools are out of date and blunt, the journey and outcomes will disappoint. The Digital Capability Framework DCF is a strategic management toolset designed to help companies innovate and orchestrate digitally enabled business transformation.
It helps companies analyse their current situation and identify new business cases, which are enabled by technology trends. Addressing both the technical and people side of transformation, the DCF enables transformation leaders to obtain clarity about what maturity level their organisation has in terms of six digital capabilities, what maturity level they wish to achieve, and how they plan to do that.
Digital use cases help them develop a clear picture of the processes to be optimised and the technologies that should be used; and a tailored plan to transform the organisation into a digital enterprise can then be established and implemented. Core Capabilities and Digital Use Cases.
The Digital Capability Framework describes the core capabilities and digital use cases that companies need to consider if they are to approach their digital transformation holistically. Digital marketing and sales channels are the tip of the transformation iceberg, but beneath the surface are other considerations involving the workforce and operational excellence. Digital Capabilities are the key skills and capabilities a company requires to transform itself into a sustainable and successful business by considering digital technology as the enabling component.
Digital Capability Maturity Models are the structured assessments used to evaluate the Digital Maturity of an organisation. They typically show how organisations in specific industries can gain competitive advantages through digital transformation. Implementing digital solutions without innovation is not highly transformational.
At best, such endeavours often serve to cut costs and introduce efficiencies for existing ways of working. While many innovation methods exist, the illustration above suggests considering four fundamental innovation approaches. Customer Co-Creation enables new products and services to be enhanced through an active, creative and social collaboration process between companies and customers — superseding the Schumpeterian model where the lone entrepreneur would bring innovations to markets.
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Innovation Scouting sees specialists tasked with identifying new opportunities for partnership, co-development, licensing, or acquisition. Commercially relevant technologies are more likely to be found if the scouting team comprises a combination of marketing and technical functions.. Read how scouting can be part of open innovation.
Many companies have grown on the trusty old business models that are rooted in history and bound by process and culture. But to avoid becoming irrelevant in an increasingly changing world, they need to dust off antiquated models and make them fit for purpose in todays digitised environment. While innovation helps us leverage new digital solutions, the planned outcomes cannot be achieved without effective business transformation management.
This post serves as an introduction to an intensely documented approach to holistic business transformation management, which addresses the transformation journey from strategy through to business benefit realisation and everything in between. It is often said that strategy is three times more difficult to deploy than develop, which explains why so many strategies result in a painful execution journey for everyone involved.
Budgets and timelines are frequently exceeded and stakeholders get tired of the noise excreted from the project, programme or portfolio due to inadequate transformation orchestration. The colourful benefits on display in the business case begin to fade as it becomes clear that the planned return on investment is diminishing as more time and resources are sucked into the initiative.
This is not to mention the fact that the people and business areas that will inherit the new world, are ill prepared. This is a reality in many companies, because they lack the right transformation tools and transformation management capabilities. The failed BBC Digital Transformation is one example, and thousands of others are swept under the carpets of companies who thrive on operational excellence, but discover to their cost that, transformation excellence requires a very different set of capabilities. It is a generic framework, which can be applied to different business transformation use cases, and is not specific to one business function, technology or industry.
It is described in this page reference book which refers to countless external resources. So this article can serve only as a short introduction to the mission critical subject that many organisations still struggle to get right. The next level down is shown in the chart below and a detailed body of knowledge resides within each of the 65 components shown below. In the context of business transformation, Meta Management provides the overarching frame for a business transformation and provides the linkages amongst the disciplines and also the management structure, which will allow the transformation process to be effective.
It addresses individual disciplines which include guidelines, leadership, culture, values, and communication. In the context of business transformation, Strategy Management primarily addresses the Envision phase of the transformation life-cycle, during which a strategy is developed. Strategy Development involves the selection of appropriate team members, collection of data, analysis of transformation needs and readiness, design of a business vision, and a business model and the definition of an integrated transformation plan.