A guest post by Nicholas D. Evans, a Vice President and General Manager at Unisys.
When developing strategies for digital transformation, it’s often hard to see the forest for the trees. In 2017, with so many emerging technologies on the horizon, we’re inundated with too many discrete technologies and no clear direction.
The challenge is how do you make sense of all these disruptive technologies such as IoT, wearables, intelligent automation, blockchain, 3D printing and next generation cybersecurity and utilize them strategically either to counter the threat of digital disruption in your industry, or to take a proactive approach in launching digital disruption yourself.
While it’s well recognized that successful digital transformation strategies require a well balanced approach across people, process and technology, in studying world class organizations in my recent book, Mastering Digital Business, I found that in addition to perennial themes such as leadership, people and cultural competencies, there are four key strategic themes for success.
Rather than focusing on discrete technologies, these four strategic themes can help organizations focus on the bigger picture so that you can advance your digital strategies, your overall digital transformation maturity, and your corresponding industry competitiveness and agility.
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Four key strategic themes for the next wave of digital transformation
The four themes that are key to the next wave of digital transformation and to leading digital disruption are as follows:
- Disruptive Technologies and the notion of moving from discrete technologies to the power of technology combinations to carve out innovative value propositions
- Platform Business Models and the notion of moving from linear value chains to multi-dimensional value networks to enable permissionless innovation
- Digital Services Mastery and the notion of moving from discrete techniques to digital assembly lines to accelerate digital service development and deployment
- Leading Practices in Corporate Innovation and the notion of moving from idea-centricity to exploring “where to play” and “how to scale” to maximize results
The power of technology combinations
The first theme relates to disruptive technologies and moving from discrete technologies to technology combinations. You can think of social, mobile, analytics and cloud technologies as “digital experience essentials” and essentially table-stakes for today’s business applications. These technologies provide essential application attributes that customers and employees have come to expect and demand.
The new competitive battleground relates to the next wave of “digital experience enhancers” such as IoT, intelligent automation, and even next generation cybersecurity, and how you apply these in powerful combinations within your applications at the business process, business model and even at the industry level. These new technologies are the experience enhancers that you can apply to carve out innovative spaces and value propositions in your industry.
For example, Amazon Go’s checkout-free shopping experience is an example of how they’re using deep learning, in combination with other technologies such as “computer vision and sensor fusion”, to delight their customers with remarkable new experiences that are unlike anything that’s come before.
The power of platform business models
The second theme relates to platform business models and moving from value chains to value networks. You’re likely very familiar with B2C platforms such as Airbnb and Uber, but we’re now seeing this theme becoming a predominant go-to-market business model across many industry verticals as well. In fact, according to IDC, “by 2018, it’s predicted more than 50% of large enterprises – and more than 80% of enterprises with advanced digital transformation strategies – will create and/or partner with industry platforms”.
Platform business models will likely generate some of the highest magnitude business disruptions in the years ahead, as they dissolve industry boundaries and extend the limits of the customer journey from one industry to another. These models have been shown to have a 4x multiplier effect in terms of their average valuation, when compared to traditional business models, primarily because they require no physical assets and convert linear value chains to multi-dimensional value networks.
As an example, GE’s “Predix” operating system and platform offers extensive data management and analytics capabilities as well as the economics of a centrally managed and shared infrastructure in a pay-as-you-go subscription model for GE’s industrial customers. The model enables “permissionless innovation” by allowing developers to write applications and innovate on top of the platform through access to their various digital services exposed via APIs.
The power of digital services mastery
The third theme relates to digital services mastery and the notion of moving from discrete techniques to a digital assembly line. The idea is to make digital services agile, flexible, efficient, personalized and manageable. Much like a magician, you need the props (i.e. the technologies), but you also need the sleight of hand (i.e. the agile assembly line) to be able to deliver effectively.
By taking a lifecycle approach towards techniques such as agile, DevOps, as-a-service infrastructure and intelligent automation, you can accelerate digital service development and deployment, make services available on-demand, automate extensively, personalize to specific roles, and manage holistically.
As an example, according to McKinsey, Netflix can deploy new code into their production environment in a matter of hours as opposed to weeks or months, since their website comprises hundreds of microservices hosted in the cloud, and each service is maintained by a dedicated DevOps team. Their cloud-based IT architecture together with high levels of automation, such as automated monitoring and rollback of code in the form of deployable web images, is another key factor in their efficiency.
The power of leading practices in corporate innovation
The final theme relates to leading practices in corporate innovation. The state of the art in innovation is moving from idea-centricity to “where to play” and “how to scale”. Organizations are now looking at the front and back-ends of their innovation lifecycle to ensure they’re connecting strategy and execution – and to ensure their innovation programs are focused squarely on their digital transformation agendas.
To date, too much attention has been focused on managing ideas and far too little attention has gone into exploring where to play strategically and then how to scale (i.e. commercialize) the corresponding “big bets”. As an example, leading organizations in industry segments such as athletic wear are working with innovation consultancies not on how to better manage their ideas, but how to explore their digital futures in world-building style workshops to explore the “what-if” scenarios associated with various strategic alternatives.
Industry examples of the strategic themes in action
When preparing to lead or respond to digital disruption in your industry, these four themes can be powerful weapons in your arsenal. You don’t necessarily need to be a master or a world-leader in each theme, but advanced maturity across many of these dimensions is a hallmark of leading organizations.
For example, if we look at the foundational technologies behind Uber’s business model, we find a rich set of technology combinations. Uber’s model is about more than just a mobile app on a smartphone and actually combines social, mobile, analytics and cloud (SMAC) technologies as well as the latest techniques around agile service development and DevOps. All of this is delivered via a platform business model that consummates matches – in this case between passengers and drivers – in a fashion similar to other well-known platform companies such as Airbnb, Alibaba, Alphabet, Amazon, Apple, Facebook, LinkedIn, Microsoft, Netflix, Salesforce, Tencent, Twitter and many others.
As another example, the Government Digital Service (GDS), part of the UK Cabinet Office, is leading the digital transformation of government, helping the UK government save more than £1.7 billion for taxpayers to date. The GDS is a centre of excellence collaborating with UK government departments to help them with their own transformation. In terms of our strategic themes, in addition to innovative technology, two key elements of the GDS delivery model include their platform approach as well as their approach to the digital services lifecycle. To achieve this, the GDS incorporates a focus on shared resources via a “government as a platform” approach to provide a common infrastructure and set of componentry to rapidly assemble new digital services, coupled with a focus on people and capability to enable more iterative and incremental delivery models.
These organizations have tapped into the power of technology combinations, the business model benefits of digital platforms, the agility of digital assembly lines, and the speed and scale of execution that can be achieved through leading practices in innovation. In seeing the forest for the trees, these are four key themes to keep in mind when seeking to lead digital disruption.
Nicholas D. Evans is a Vice President and General Manager at Unisys, a BCS Fellow and author of the new book Mastering Digital Business published by the British Computer Society (BCS). One of Consulting Magazine’s Top 25 Consultants, and one of ComputerWorld’s Premier 100 IT Leaders, he has 25 years of consulting under his belt and is also a widely recognised digital business speaker and author.