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Sunday, October 12, 2014

The Digital Wave & Business Leverage

It is now common knowledge that digital is changing the fortunes of many business – impacting both positively and negatively, depending on their level of preparedness to embrace digitalization. In every industry, competing business leveraging digital technologies, platforms and relationship to win over rivals, get more customers and their business and loyalty, and thereby rewriting the rules of competing in business, is perhaps the order of the day.

Reimagining the possibilities for business by becoming a digital enterprise is a key expectation for survival in the future for many businesses around the world. That calls for going beyond creating revenue by mere digital substitution. A digital strategy that focuses on specific business outcomes leveraging various forms of digital technologies can create an edge for the enterprise and in many cases, a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. The reality is that any company large or small, old or new can leverage digital technology and principles to create a winning edge for its business and perhaps, its industry. Your customers, your competitors, and your suppliers are all digital now. You can’t address this change with a bolt-on strategy that adds an app here or a site there. You need a comprehensive strategy that embraces both digital markets and digital operations.

Firms like Amazon and Netflix, were born digital — they find embracing these digital principles far easier. Most others strive to have significant digital business and imbibe /embrace digital DNA as their core mantra. For some of them, who were not tuned in, a near extinction threat could be shaking them up. The good news is that, with the body of expertise and collected wisdom available, survival and being competitive is possible like Kodak and Burberry with varying motivations and expectations were able to reorient and restructure their commercial business and have created formidable digital business. The old and well established business of last century or the ones started in the century before are totally capable of successful digital transformation.

Being self-aware is the key to reinventing oneself – this universal principle holds good for enterprises as well. At whatever level of maturity an organization is, digital journey for enterprises would call for substantial degree of change with respect to organizational DNA – this would permeate the culture, organizational structure, operations and governance. As I wrote here, “digital transformation, for a company board or a transformation council could look like a large scale revamp, but in reality, it is a series of coordinated number of changes – on multiple dimensions - across various attributes covering some planned, known unknowns, unknown unknowns - the coming together of this creates a deep impact and effects change, leading into a converged advantage. One can say that the commonality across different true transformation initiatives would rest on ability to think differently about set ways of functioning and willingness and ability to revisit all known models and think and act on them to change to deliver different results”.

There are multiple ways to measure an enterprise maturity and determine the strong and weak points (the most common way to measure is to plot a two- by-two with internal capability vs delivered excellence or capability vs maturity etc). Digital Babies” Digital Natives”, “Digital Phoenixes”, “Digital Masters” etc. are some of the terms used to denote categories, depending on whom you choose to listen to. From Slow moving to Wannabe leaders to Visionaries to Path breaking leaders, the different players can be classified through an assessment. My preferred assessment, as a next step is to chart radar diagrams covering the entire customer lifecycle journey measuring the efficiencies of various attributes along the way and using the outcome to rate against overall expectations. With such classification at hand, depending on the industry trends, a rapid path - either as a protective measure or as a winning measure need to be laid out. The important thing to notice here is no enterprise needs to be left behind in this digital journey lest they suffer extinction over time.

The successful undertakers of the digital journey need to look beyond bolt-on initiatives and look at transformation possibilities holistically, covering digital experience, digital operations and process outcomes. The nature of digital business is such that there are a lot of players/processes that need to be aligned – and some of them could be internal and some could be external involving partners, customers etc. So, the overall ecosystem would matter to get the best experience and outcome to customers. Think travel business or something like how ozon, the leading ecommerce player in Russia achieved success.

The need for holistic view cannot be under emphasized. With the proliferation of digital touch points and increased range of services that customers are beginning to expect, it is unwise to look at each of these as discrete or sequential projects – as such an approach would lead to increased cost and take a long time to deliver overall best results for the enterprise. In an age where time-to-market is a key determinant of success, such approaches are not in tune delivering for the needs of the day for enterprises.

When we digitalize enterprises, we set the seed for destruction of the old practices and policies and instead embed new age practices and leading edge policies. The customer expectations, service levels, support mechanisms etc. substantially change in the digital age and as such, those types of changes cannot be avoided. How do we conceptualize and validate such changes? The answer lays in being able to think for digital solutions wearing the shoes of the customer. Should services be delivered separately or in combinations – should we restrict the combined services to what can be natively delivered by the enterprise or combine them with external services. These types of questions need to be objectively assessed and answers though through – the answers will in turn shape the contours of digital transformation covering both strategy and operations.

One of the defining characteristics of cutting edge digital solutions is the ability to seamlessly weave associated services available with a bevy of partners made into a seemingly single stranded service for the customers – imagine airline ticketing service or financial services like Intuit(Mint) or Amazon marketplace. This is both an opportunity and a challenge – opportunity is to provide service under one virtual roof, challenge lies in integrating a variety of services real time. The customer expectations would not care for challenges though – so long as some other enterprise is able to provide similar integrated services, the baseline of expectations get already set in. The key to note here is that by offering such services leveraging relevant partners/services, an enterprise protects itself from the competitive effects of digital disruptors.

Such an ecosystem of partners sharing data and services protects the players within, overall from competitive onslaught. In every industry, digital thinking for business forces non-linear thinking and the can provide disproportionate returns to the enterprise. As the Ozon case illustrates, the partners can be sometimes competitors but such arrangements done through smart working relationship frameworks can provide great agility and scalability to business and can provide endearing value to customers.For some, such outcome may not be magical – remember, it’s a journey and the game keeps improving. It’s truly transformative for some, but in ways that will feel right and sometimes may not even look so special, given that these may become second nature. Many times, we don’t realize that the future that we envisaged in the past, when it arrives look so reachable and understandable – every enterprise embarking on a digital journey, can feel that along the way, if digitalization is pursued in a vigorous way with discipline inside their respective enterprise.

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