Next up in this transformation series is edge-driven design, the second enabler. This key enabler is growing in importance as developed economies are moving away from command and control models and towards edge interaction that is value-based. The design principles of our past where the core (Systems of record) drove design and the edge adapted do not support this shift. This future state requires the edge to drive design from the outside-in and a core that is adaptive. This reversal in design principles supports two future dynamics: 1) Value is increasingly created by an ability to connect capabilities across organizations within an ecosystem of services, and 2) The shift from a transactional paradigm to an experiential one. An edge-driven design addresses both of these dynamics and begins to instill a fast, iterative and responsive culture.

In the case of the first dynamic (ecosystem services), operations and processes are increasingly viewed as a collection of services that come together with external services to create value. Designing this ecosystem must start from the edge – where business is conducted – and work backwards. Companies in the ecosystem must have the ability to seamlessly share information and outcomes, and the flexibility to change and customize offerings in response to external changes.

In the case of the second dynamic, engagement and consumer-like experiences are critical to future success. We simply cannot extend our back office environment to meet the needs of the engagement era. Some form of intermediation is required to resolve the tension between the stability and security requirements of the core, and the creativity, speed, agility and responsiveness requirements of the edge. The other key drivers that make this enabler a critical component of the transformation program are:

• The need for flexibility in operating and business models – as discussed in previous posts, business and operating model innovation is critical to future growth and differentiation. The environment must be adaptable enough to support changes to the models that drive competitive advantage and growth. Enabling the edge creates the flexibility to rapidly change models in response to external change.

• Rapid shifts in market and business conditions – if one thing is certain, it’s that the speed of business will only accelerate. With this acceleration comes the critical need for an adaptive environment that is driven by the needs of the edge. This edge-driven design creates an edge that enables adaptability

• The need for new capabilities that can adapt to changing players – value creation in the future is likely to involve a changing set of services and stakeholders. This drives companies to design from the edge back in an effort to continually create value by assembling the assets that address the needs of the marketplace

• The shift from a transactional to an experiential paradigm – this shift is well underway. In the short term, this is the biggest driver of edge-driven design. To meet the experience requirements of customers, companies must start at the edge and understand what it means to deliver the intended experience, and who is involved in delivering it

• The shift of power to the individual – this is the game changer. The shift in power has driven many customer-centric agendas. There are many stories that describe the consequence of ignoring the individual. One of my favorites is this now famous incident where United Broke a Guitar. The YouTube video included in the article is great

• The growing importance of value ecosystems – as described above, ecosystems will come together in the future to deliver value to the market. To succeed in this future, companies will view the world from the ecosystem in. This vantage point enables the enterprise to create the right stakeholder experiences and create competitive advantage through innovative new offerings

• The importance of engagement to future success – engaging with stakeholders across the ecosystem is a foundational component of the future enterprise. Edge-based organizations will flourish in the future – but only if they design from the edge back

These drivers put a premium on innovation, creativity, and design both in terms of organizational culture and employee traits. With this as a backdrop, here are some of the tactics that should be part of programs that move the enterprise towards an edge-driven design paradigm.

Tackle value creation from the edge back – whether it’s creating value by combining ecosystem services or enabling the right customer experience, it should be addressed from the edge back – an outside-in design paradigm. This shift from an enterprise-out philosophy allows us to anticipate experience, service and people dependencies across the ecosystem

Embrace design innovation – analysis shows a positive correlation between a company’s investment in design and their innovation capability. Design is what links creativity and innovation and represents a significant source of future competitive advantage. It is not enough to simply move to an edge-driven design, but companies must embrace design excellence. This article on the Design-Inspired Enterprise says it very well: “Companies should be guided by an organization-wide, shared understanding of who their customers are and how the design of their products or services can best shape the customer experience”

Shift to a “Design Thinking” culture and hire and groom design thinkers – “design is a way of thinking more than it is a theory, process, or product.” That is a quote from this article on The Art of Design.  Design thinking is a critical aspect of edge-driven design, as embracing emotional concepts will increasingly be a core element of business. As this article on Design Thinking states: “You can’t plan, analyze, or optimize your way to something completely new, you have to design your way there.” Assuming that much of what the future holds is new, design thinking is critical to that future

Move to a continuous delivery paradigm – broadening from agile development to agile operations. It’s about reducing cycle time using agile principles to get to market faster. The core concept of making small frequent changes and testing at every step introduces speed to market. This is true both in terms of market offerings as well as an edge-enabling platform. This paradigm enables the experimentation required to truly address the needs of the ecosystem

Enable edge interactions through holistic systems of engagement – edge-driven design is not limited to products, services, or customer experience, but applies to every edge interaction. Holistic systems of engagement that enable this interaction should be designed in an edge-driven manner and deployed to enable the value ecosystem    

Deploy event-driven service oriented architectures – as more companies become edge-based organizations, the need for extreme agility becomes more acute. Event-driven SOA, also called SOA 2.0, creates extreme agility by combining service orientation and event processing with technologies such as business process management, business activity monitoring and enterprise service buses

Enable an adaptive core – this is perhaps the most challenging aspect of the edge-driven design program. A framework to enable this adaptive core will evolve over time. An intermediating layer is likely to emerge as a mechanism to manage the tension between the needs of the core and those of the edge. Enabling the edge with context, integrating systems of engagement with systems of record (where necessary), and leveraging interaction histories are all part of moving towards an adaptive core

Orchestrate the value ecosystem – organizations will increasingly need to dynamically assemble people, processes and systems to create market value, deliver next generation experiences, and/or effectively manage the activities within the ecosystem. Bringing together stakeholders within an ecosystem to create value requires the ability to orchestrate many moving parts. The core capabilities of a business should be viewed as a collection of business services and orchestrated with the relevant business services from within the ecosystem

I’ll close this post with a description of the highest level of design maturity, as defined by a maturity model articulated in this Report from a design commission in Britain: You have reached the highest level of design maturity when design is used as a strategic core competency to influence the direction and ongoing evolution of the organization.

That’s a look at the second enabler. For a review of this transformation series to date, here are the links to each of the prior posts:

Forcing Functions:

• Growth
• Effectiveness and Efficiency
• Differentiation
• Societal Change
• Digital DNA

Enablers:

• Structural Change