Digital Enterprise Transformation – Wrap Up


Over the last three months, I have presented a framework for thinking about transforming the enterprise to the type of enterprise that can succeed in the year 2020 – What I call a digital enterprise.

Throughout this multi-part transformation series, I have focused on those forcing functions that push us to transform – the drivers that stir us to action. Old models that were created for another time cannot lead us into this future – we must think differently. We must invent the models that define business in the decades ahead.

So, I wrap up this closer look at transformation with the hope that I’ve convinced you in some small way that we are indeed heading towards what is likely to be the most transformative period in history. My hope is that leaders everywhere think differently to usher in a period of prosperity and societal advancement. Instead of talk of disruption, let us talk of enablement and advancement. May we each have the wisdom, vision and courage to lead in this emerging transformative period.

For a review of this entire transformation series, here is an intro and link to each of the prior posts. As a reminder, forcing functions are those things that force the enterprise to invest in a future state. The enablers are those facilitators of change that allow us to address the forcing functions and build a path towards the future. Click on the underlined title to access each post.

Forcing Functions:

Growth

We’ve been talking about globalization for a long time, as outsourcing and the rapid advancement of technology amplify its impact. These same technology advancements create new growth opportunities in emerging markets, driving a focus on the innovation needed to capture a share of the three Billion new consumers entering the digital economy by 2025.

Effectiveness and Efficiency

In the case of efficiency, the next phase in the search for gains is upon us, as companies have hit the efficiency wall. But something bigger is happening, as the pace of business will increasingly demand that we are not just efficient – but effective. Whereas the past was about re-engineering, the future is about re-imagining.

Differentiation

Differentiation is a process that showcases the differences between products and services. It looks to make an offering more attractive by contrasting its unique qualities with other competing offerings. Successful differentiation should create competitive advantage, as customers view these offerings as unique or superior

Societal Change

Wikipedia refers to societal change as an alteration in the social order of a society, including changes in nature, social institutions, social behaviors, or social relations. The base of such change is change in the thought process of humans. Digital is the primary driver of a societal change not seen since the first industrial revolution, impacting every aspect of society from business to war. It was digital (Internet) that accelerated globalization, and now the broader digital platform allows even a start-up to be global upon inception

Digital DNA

My perspective on Digital DNA is based on a view of the business environment that is likely to exist in 2020. Enterprise DNA must reflect those characteristics that enable success in the digital world likely to exist in seven years. Business speed in the next decade and the rapid rate of change makes Digital DNA critical to future success.

Enablers: 

Structural Change

Major structural change lies ahead. I simply can’t see traditional companies in their current form operating in the future the way the world needs them to operate. Increasingly, traditional companies understand that viability in the next decade drives the need to evolve. This realization could be the impetus behind a push towards a future state. The shift from product-oriented industrial age structures to a service orientation has a dramatic impact on the structure and operating models of modern day companies. Our companies are simply not structured to deal with a shifting economy that is increasingly powered by ideas, knowledge, creativity and design.

Edge-Driven Design

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.

Value Ecosystems

As we look at the Apple ecosystem and offerings like the connected car, mobile commerce, energy efficiency, electric cars, eHealthcare, and energy performance contracts, we can see the lines between industries blurring. Some even question the relevance of Industry constructs in the future. As this phenomenon accelerates, more and more companies must identify the relevant ecosystem(s) that enable their growth strategies. These value ecosystems are complex and relationship-oriented, representing future growth opportunities that are increasingly outside a company’s traditional business.

Next Generation Experiences

The issues of customer experience, customer-centricity, and customer intimacy are top-of-mind and dominate many executive discussions and conference agendas. According to Forrester, only 3% of companies manage to succeed at delivering an excellent customer experience, but 60% intend to use customer experience as a strategic differentiator. Driven by the rapid commoditization of products and services, the speed at which new market entrants emerge, and the rise of consumerization, experience is now the new battle ground – and sustainable competitive advantage is the prize.

Systems of Engagement

Geoffrey Moore introduced the Systems of Engagement concept about two years ago. This vision for the future of Information Technology is gaining broader acceptance – but a surprising number of executives are blind to the coming sea change. Where current enterprise systems are designed around records (systems of record); these new systems are designed around interactions. Where technology investment in the last two decades enabled transaction workers and executives – these systems enable the middle of organizations with a focus on growth.

Sense and respond systems

These systems are critical to the transformation agenda, as most of the disruptive technologies likely to impact the enterprise in the next decade have data at its core. The resulting data explosion promises to complicate information management for most companies. As the speed of business accelerates and the amount of data flowing through company ecosystems expands, the need to sense stimuli and enable a real time response intensifies.

Collective Intelligence

One of the key themes throughout this transformation series is the clear movement from an enterprise entity to an extended enterprise of stakeholders. This extended enterprise – or what I alternatively call value ecosystem – increases complexity and requires a new management approach to be effective. I use the term collective intelligence as an umbrella phrase that combines the critical need for both collaboration and analytic excellence.

Descriptive to Prescriptive

most companies still use current methods such as traditional business intelligence (BI) to focus on reporting and analysis that seeks to answer questions related to past events – what happened (level one). In levels two and three, advanced analytics is used to answer questions such as: why is this happening, what if these trends continue, what will happen next (predict), and what is the best that can happen (prescribe). To accomplish this, analytic initiatives need to leverage an insight-action-outcome framework that starts by defining outcome-enabling insight and ends with a focus on data provisioning.

Thinking Differently

How can we enable the characteristics so important to future success, if we don’t start thinking differently? Status quo thinking is the cause of many transformation failures – a trend that will continue without the re-imagining necessary to support the coming transformative period. The keyword to reflect on is “re-imagine”. To do this in the context of where the world is heading forces us to think differently and involves creativity – a trait that consistently heads the list of key traits that CEOs look for in leaders.

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