In a recent book titled Dual Transformation, the authors (Scott D. Anthony, Clark G. Gilbert, and Mark W. Johnson) focus on the challenging task of transforming the core while simultaneously creating a growth engine. They refer to it as dual transformation: Transformation A – repositioning the core, and Transformation B – creating the new. This complex tension is represented in this visual from our upcoming leadership course: Reimagining the Future: A Journey through the Looking Glass.
Next up in this transformation series is the fifth enabler: 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.
Next up in this transformations series is the fourth enabler: next generation experiences. As we are now deep into this transformation series, some of the drivers and tactics are similar across the various enablers, so you will start to see some redundancy across posts. 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. But as Forrester concludes in their book Outside-in, customer experience remains the most misunderstood element of corporate strategy today.
The next focus of this transformation series shifts to the emergence of value ecosystems and their role in driving the Enterprise of 2020. 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.
This closer look at transformation now shifts to the enablers. By way of summary, we have covered the forcing function piece of the diagram below; those forces that drive leaders to invest in a future state. In the absence of a burning platform, one must turn to vision as a catalyst for change in what promises to be the most transformative period in history. Once the impetus for change is established, what are the enablers of change? Where do companies invest to move towards that future state? The enabler side of the visual identifies those facilitators of change that allow us to address the forcing functions and build a path towards the future. The next nine posts will address each of these individually, starting with structural change.
This closer look at transformation continues with part five focused on Digital DNA; the sixth forcing function. 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. Today, Internet companies like Facebook, Twitter, Amazon, Apple, Google and others have fairly high Digital DNA quotients. Start-ups are born with much more Digital DNA than traditional companies, and the rate and ease at which start-ups are entering the market will continue to create a competitive environment where traditional companies are disadvantaged. Since most companies are traditional companies, the majority will enter business transformation from a challenging legacy position.
Webster’s dictionary defines the term “blurring” as something vaguely or indistinctly perceived. This term – a term I have heard often in the last couple of months, seems like a good way to describe the dynamics of our world today. The lines are blurring, the boundaries are blurring – pick your phrase – I find it really fits. For example, one of the key drivers of change is the blurring boundaries between industries:
- Insurance: Gartner predicted that at least one social network will become an insurance sales channel by the end of 2014. The rationale is linked to Facebook’s timeline feature, which documents all the crucial events in a person’s life from getting married to having a child to retiring. The personal information controlled by players like Facebook and Google could fuel their desire to take on today’s insurance giants
- CPG: manufacturers will increasingly encroach upon the Retail Industry as they pursue Direct-to-Consumer models. The number of companies selling products directly to consumers is expected to increase from 24 percent to 41 percent over the next 12 months.
- Publishing: By facilitating publishing, Amazon, Barnes & Noble and others are eroding the position of the publisher in the ecosystem in much the same way Apple eroded the gate-keeping role of the carriers when it introduced the app store.
- Entertainment: The borders between Entertainment, Communication, and Information are blurring, and service innovators like hulu and Sling are establishing their role in the ecosystem
- Telecommunications: Competition from content and “over-the-top” companies (Facebook, Google, Apple, Skype, Amazon, etc.) are taking market share and dismantling long-standing Industry value chains
- Financial Services: Companies like PayPal, Amazon, Zynga, Google, and Facebook are encroaching on their territory, and payment is the battlefield. Banks will need to experiment with new business models and digital disruptions of their own to fight back. The balance of power could shift from banks and credit card companies to innovative companies that provide the best digital wallets