Agility is the capacity to detect, assess, and respond to environmental changes in ways that are purposeful, decisive, and grounded in the will to win
A recent Article describes how Target transformed from a Retailer with stores in disrepair and leaders that struggled to adapt to changing consumer behavior, to a company that is thriving. Their first quarter results for 2019 beat analysts’ expectations, the store’s private-label lines are exploding, and the stock price is trading at an all-time high.
Target CEO Brian Cornel made a huge announcement in March of 2017 that it planned to invest over $7 billion in a turnaround strategy – Wall Street was not impressed, as Target suffered its largest stock plunge in almost a decade on the day of the announcement. But Mr. Cornel took a page out of Jeff Bezos book and pushed forward on a plan that included:
I recently authored an article on ecosystems and digital transformation along with leading platform strategist Simon Torrance. Here is a brief abstract of the article. You can read it Here on the TCS website – along with other perspectives on digital transformation.
As Frank Diana and Simon Torrance explain in “Defining Your Digital Ecosystem: The First Step in a Machine First™ Transformation,” many leaders are no longer looking at strategy and industry structure in the ways of a non-digital world. Instead, they’re analyzing how emerging ecosystems—networks of stakeholders, including business partners, suppliers, customers, and competitors that interact digitally to create value are supplanting traditional industries as the organizing construct. For example, in a mobility ecosystem, automakers no longer just make cars; they must redefine the very notion of automobile ownership and how people get around.
Digital transformation means different things to different people. As I strive to change mindsets, I am sensitive to these distinct perspectives and the individual filters applied to terms like digital and transformation. In my view, Digital has been more narrow than holistic, while in some organizations ERP implementations are considered transformation. So, does digital transformation represent the narrow use of digital technology to improve some aspect of our organization? Or, is it the wholesale change of a set of structures, institutions and paradigms built for a different era? Although I have mostly abandoned the phrase, when I do use it, I mean the latter.
Let’s call it what it is, starting with the term transformation. To truly transform means to change from one nature, substance, form, or condition into another. I’d maintain that the pace of change has made the archaic nature of our industrial era structures, institutions, and management paradigms very apparent. Therefore, to transform in this sense means to change from the nature, form and substance of our industrial past, to a state that is viable for our digital future. Digital is foundational: the building block for which this future state is built upon. Therefore, for clarity sake, a better way to describe digital transformation is:
TRANSFORMATION FOR THE DIGITAL AGE: a change in the nature, substance, and form of our industrial past, to a future state that allows us to thrive in our emerging digital future.
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.
The year of shifts is upon us. 2016 will ultimately be viewed as the bridge to a different future; a year where our intuition and beliefs will be reset. Accelerating advancements across science and technology have set the foundation for these shifts. Driven by societal and economic challenges, we will leverage this foundation to change current institutions and build new ones. To succeed, organizations of all types must view transformation through a different lens; one that enables their role in this future. In my current series, I am focusing on the thirteen (13) key enablers of future viability. The first post explored Structural Change. In this post, I will look closer at the pillars of transformation, and delve into the second enabler: a holistic digital foundation.
This future series continues with a look at a new book by Geoffrey Moore titled Zone to Win: Organizing to Compete in an Age of Disruption. In my last post on Emerging Models, I looked at a model based on business type. The model explored by Mr. Moore is based on zones, and came to life in his work with Salesforce.com and Microsoft. With Salesforce, the model supported a focus on disruption (offense), and with Microsoft, it supported a posture against disruption (defense). The four zones as identified by the author are depicted in the visual below:
IDC today announced its worldwide information technology (IT) industry predictions for 2016 and beyond. The predictions were published in a new IDC FutureScape report. As we embrace the notion of Future Thinking
This forward looking guidance is critical. Here is a snippet from the report:
“The disruptive impact of digital transformation is about to be felt in every industry as enterprises ‘flip the switch’ and massively scale up their DX initiatives to secure a leadership role in the DX economy,” said Frank Gens, Senior Vice President and Chief Analyst at IDC. “In the next two years, two-thirds of Global 2000 CEOs will put DX at the center of their growth and profitability strategies. By the end of this decade, IDC predicts that the percentage of enterprises with advanced DX strategies and implementations will more than double.”
IDC predicts that the scale-up of digital business strategies will drive more than half of enterprise IT spending within the next 24 months, rising to 60% by 2020. Mastery of 3rd Platform technologies will be table stakes for successfully executing DX business initiatives and “Cloud First” will become the new mantra for enterprise IT. Virtually none of the other 3rd Platform technologies or major DX initiatives is possible in scaled-up implementations without the Cloud as the foundation. By 2020, IDC predicts that enterprise spending on cloud services, the hardware and software to support cloud services, and the services for implementing and managing cloud services will exceed $500 billion, more than three times what it is today.
Additional predictions were provided:
- By the End of 2017, Two-Thirds of the CEOs of the G2000 Will Have Digital Transformation at the Center of Their Corporate Strategy
- By 2017, 60% Companies with a DX Strategy Will Deem It Too Critical for Any One Functional Area and Create an Independent Corporate Executive Position to Oversee the Implementation
- By 2018, 80% of B2C Companies Will Have Created Immersive, Authentic Omni-Experiences for Customers, Partners, and Employees; 60% of B2B-Centric Companies Will Have Done the Same
- The Top New Investment Areas Through 2017 Will Be Contextual Understanding and Automated Next Best Action Capabilities
- In 2016, 65% of Large Enterprises Will Have Committed to Become Information-Based Companies, Shifting the Organizational Focus to Relationships, People, and Intangible Capital
- By 2018, 75% of the G2000 Will Have Deployed Full, Information-Based, and Economic Models or “Digital Twins” of Their Products/Services, Supply Network, Sales Channels, and Operations
- By 2020, 60% of the G2000 Will Have Doubled Their Productivity by Digitally Transforming Many Processes from Human-Based to Software-Based Delivery
- In 2016, the Level of Connectivity Related to Products, Assets, and Processes Will Increase 50% for All Industry Value Chains
- The Sharing Economy Will Give Rise to the Networked Free Agent and Skill-Based Marketplaces, Resulting in More than 10% of Work Being Sourced in this Fashion in Mature Economies by 2019
- By 2018, at Least 20% of All Workers Will Use Automated Assistance Technologies to Make Decisions and Get Work Done
I’m struggling with the term disruption and its effectiveness in driving urgency. Most definitions describe a radical change in an industry or business strategy, and most involve the introduction of a new product or service that creates a new market. My struggle is not with this decades old view of disruption, but its application in the context of our exponential world. The word disruption is viewed through a traditional lens. I end up in debates about the validity of a disruptive scenario as viewed through this lens, versus the massive implications of these future scenarios viewed through an exponential lens. The ensuing dialog focuses on:
- Coming up with disruptive innovation before our competitors do
- Embracing protectionist behavior to block a disruptor
- I’m not worried, regulatory hurdles in my industry block the impact of disruptors
- I’m safe, my industry is very stable
I thought it would be interesting to get a slightly different perspective on the questions that I posed to Futurist Gerd Leonhard in our recent interview. So I reached out to IT Futurist Thornton May. Thornton and I have interacted on a number of occasions at various events. His bio describes him as a futurist, educator and author. His extensive experience researching and consulting on the role and behaviors of C-level executives in creating value with information technology has won him an unquestioned place on the short list of serious thinkers on this topic. Thornton moderates the nationally recognized CIO Solutions Gallery program, intended for executives and senior leaders in the technology and operations communities.
With that background, I was excited to explore these broad topics with Thornton. His perspective follows.
This Presentation tells the full business evolution story articulated below.
Several key drivers have positioned the next two decades to deliver a staggering – perhaps unprecedented – amount of change. The accelerating pace of business, the growing impact of digital, and several other major indicators suggest that a next generation enterprise is on the horizon. The first of these indicators is the level of societal change impacting everything from business to war. In the business world, the implications of this change can be seen in our employees, where for the first time in history, four generations of workers are in our work force. The associated challenges are coming into focus, as some of these workers are digital natives, but the vast majorities are digital immigrants. With customers, the shift of power to the individual has changed their role forever and placed them at the center of the company ecosystem. Other indicators include an intense focus on growth, which increasingly requires collaboration within and outside the four walls of the Enterprise. This growth agenda drives a new type of value ecosystem, enabling growth that in many cases is outside a company’s traditional business.
The next post in this continued look at disruptive scenarios focuses on the Logistics Internet. In his recent book titled The Zero Marginal Cost Society, Jeremy Rifkin describes an Economic Paradigm Shift driven by a Third Industrial Revolution (TIR) platform. The Logistics Internet is one of three components that make up this TIR platform (communications and energy are the other two). As the three components converge, they create a general purpose technology platform that drives a third revolution. Mr. Rifkin believes we are in the early stages of an automated transport and logistics Internet, and he describes his thinking in this short Video.
In his new book, Rifkin describes the process by which suppliers and buyers connect and conduct business (Logistics) as the driver of the whole economic system. Yet, he maintains that the means by which goods and services are stored and delivered is grossly inefficient and unproductive. Rifkin suggests that a rethinking of the way we store and ship materials and goods is in order. Several supporting facts are provided in the book:
In my continued look at disruptive scenarios, the focus shifts to Connected Health. In a recent White Paper, the term is used as an umbrella description that covers digital health, eHealth, mHealth, telecare, telehealth, and telemedicine. Analyst firm IDC defines it as “a broad spectrum of technologies that use telecommunications to facilitate the exchange of health information and delivery of care across a geographic distance as well as manage chronic conditions and promote health and wellness.”
There are several drivers that make this both a viable and desperately needed scenario. According to the IBM Institute for Business Value, inefficiency in the Healthcare ecosystem wastes over 2 trillion USD per year. According to the popular Internet Trends Study produced by Mary Meeker each year, healthcare costs have reached 17% of the U.S. GDP and 27% of health spending is wasted. The same study found that over 25% of family income is likely to go to health spending in 2015, and 50% of bankruptcies are driven by health costs.
In my continued look at disruptive scenarios, the focus shifts to 3D printing. Growth in this key innovation is expected to accelerate to $10.8 billion by 2021 according to Goldman Sachs. The economic implications are significant: Research by McKinsey Global Institute suggests a possible impact of $550 billion per year by 2025. Some believe that 3D printing will play a crucial role in launching a third industrial revolution at a personalized level.
This next post in the analysis of disruptive scenarios focuses on next generation automation enabled by combinatorial innovation. By way of reminder, the visual below depicts a convergence of innovations that have historically been viewed in isolation. As the building blocks of innovation multiply, their combination drives disruptive scenarios. By analyzing these scenarios, future implications and potential responses are determined.
This post continues a disruptive scenario analysis focused on assessing the transformative environment that faces companies, Industries, Governments, and society as a whole. Much attention is paid to several digital forces (e.g. Mobile, Social, Cloud, Big Data, The Internet of Things, AI, Robotics), but for the most part, the focus is isolated in nature. As described in The Second Machine Age, the combinatorial effect of these forces enables disruptive scenarios at an unprecedented pace. While some of these forces and their combinations are growing more visible, many are far off on the horizon, and countless scenarios are not yet visible. The visual below depicts this phenomenon, underscoring the difficulty of responding to the forces in our line of sight – and the near insurmountable task of responding to those further on the horizon. At its furthest point, lack of visibility to future combinatorial innovation drives a high degree of uncertainty.
This post continues the disruption scenario discussion initiated by my earlier Insurance Industry Case Study. I’ve been using the autonomous vehicle (AV) as an example of a disruptive scenario with potential societal, economical, and environmental impact. In this post, the focus shifts to the scenario’s possible effect on the automotive ecosystem.
Autonomous vehicle technology can be viewed using a five-part continuum suggested by the National Highway Traffic Safety Administration (NHTSA), with different benefits realized at different levels of automation:
Last month, an IHS Automotive study predicted the world will have nearly 54 million self-driving cars by 2035. The study also predicts that nearly all vehicles in use are likely to be self-driving cars or self-driving commercial vehicles sometime after 2050. Meanwhile, automakers and others are unveiling both their plans for – and introduction of – automated features:
At a recent news conference, U.S. federal transportation officials described Talking Cars and their ability to avoid deadly crashes by seeing it coming before you do. The U.S. government will likely require automakers to equip new vehicles with technology that lets cars warn each other if trouble lies ahead. A radio signal would continually transmit a vehicle’s position, heading, speed, and other information. Your vehicle would receive the same information back from other cars, and the on board computer would alert its driver to an impending collision. Alerts would come in varying forms: a flashing message, an audible warning, or a driver’s seat that rumbles. Some systems might even automatically brake to avoid an accident if that option is included. Examples of what the technology enables:
“The pace of innovation is about to surge – and more powerfully than ever before”
That sentiment comes straight from a new book titled: The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups. As obvious as that statement seems, many leaders still act as if nothing is really changing – or any impact to their business is too far into the future to worry. This well written book focuses on the problem with this kind of thinking. Anyone that has worked in a corporate setting will resonate with the challenges identified in this book. Behavior at every level of an organization is the biggest obstacle to innovation and the identification of what the authors call “Doomsday Scenarios”. Most of us are familiar with traditional company politics and turf-driven behaviors. The authors conclude as I have, that most bias in an organization goes toward keeping the status quo.
This current executive presentation captures the breadth of the digital enterprise transformation series. It can be found on SlideShare – appropriately titled Blurring the Boundaries.
The presentation is a call to action for leaders everywhere. A slide in the deck asks the question: as status quo thinking prevails, what drives action? The first half of the presentation builds the case for action. The second half describes a framework to enable that action.