Prediction is very difficult, especially about the future – traditional Danish saying often attributed to Nils Bohr
The interest in A Simple Visual History of Digital Transformation prompted some to ask about where do we go next. Make any predictions on digital transformation and you can be sure that someone is currently working to undermine your credibility. The following suggestions for the future of digital transformation are offered on the basis that these are ideas that exist “but are not yet widely distributed” to borrow an idea of William Gibson.
As the costs of digital connectivity and computing power fall, these capabilities are being added to more and more devices. The internet of things has reached our homes and our workplaces. The increased ability to gather and use information in real time will drive new innovations in our businesses and our lives.
Add enough digital connectivity and computing power and you have created the potential for a mesh of sensors, connectivity and processing power to fill our environments. Now our digital things and our communication devices can be in constant contact and new applications will be developed to take advantage of the rich digital environment.
The digital mesh will help accelerate digital automation as many traditional roles of knowledge workers, such as the gathering, digesting and processing of information now flow from an ambient mesh and are managed through algorithms and their managers.
A digital mess also enables the greater leverage of bots, digital agents that can navigate the mesh and achieve outcomes for their owners, clients and masters. These algorithms take on the role of making local decisions or acting as advisers or facilitators across the breadth of the networks. Digital Agents help manage the scale of information and the real time demands of the mesh.
Distributed and connected computing power also enables us to revisit concepts of how we record, store and share information on concepts like ownership, identity and history of transactions. Instead of a single ledger located in one location, the transaction history can be distributed and validated across the network, as in blockchain. Innovations will build on these capabilities into new domains.
The digital mesh increasing can enable individuals by supplying capabilities need for individuals to have greater awareness, connection or to do work that was previously beyond the capability of a single individual. If an organisation is a solution to transaction costs as Coase suggest, there are new implications for the role and future of our organisations and the growing capabilities of the digital systems will shape the work individuals will do (or don’t do).
We have not yet begun to explore the potential of extending this digital mesh and its capabilities to the entire world. We can already see new approaches, such using e-commerce villages in China, video in education in India, market pricing data for farmers in the third world or mobile payments in Africa. As the costs of digital technologies fall and reach expands new entrepreneurs will solve new problems for those beyond the reach of this technology today. Perhaps then we will truly experience the power of the Internet of Humanity.
Since the Mosaic Browser helped introduce the internet to the world, we have experienced a digital transformation of business. We had digital activities in our organisations before. We had already spend almost 50 years computerising processes. However, the digital connectivity of the internet began more radical change. Here’s an overly simple graphical reminder of elements of that journey.
We began by creating digital channels to connect our organisations to their customers. The website began with simple digital brochures and basic contact information. Very quickly our websites became richer and more valuable. Innovation began outside the organisation that showed the way for all subsequent phases of digital transformation.
We added processes to support the customer interactions. In many cases these processes were new, partial and designed solely to support the new digital channels.
We saw potential in these digital processes and started to apply them more widely. These processes worked in the midst of our legacy process and often in unconnected ways.
As the breadth of our digital channels expanded and we needed to manage new social and mobile channel needs, we needed a dedicated digital team to manage the expanding offering and to help integrate the core digital processes and infrastructure required to support growing digital ambitions.
With a digital team to advocate and lead the way on growing digital opportunities, we saw digital interaction takeover much of the electronic communication in the organisation and new integrated digital processes develop in supply chains, shareholder & community management and other forms of stakeholder engagement. APIs began to standardise digital communication formats in an increasing way for organisations. Organisations could leverage vast amounts of data on interactions and increasingly on activity across the organisation.
With digital interactions dominating & pressure to focus on core business activities, organisations began to become more aware that they operated in digital networks, connected to customers, suppliers and other stakeholders. Importantly, it became increasingly obvious that these networks connected all stakeholders reducing transaction costs and increasing transparency. Most dangerously these networks & data flows gave competitive advantage to those most able to leverage digital technologies in disruptive ways.
Seeing potential in connectivity, new and existing organisations saw the ability to focus on platforms that connected system players, creating new value and disrupting the traditional business of intermediaries. These platforms were increasingly agnostic of whether they ran on a computer, a phone or another device, giving them greater geographic and temporal reach. We began to connect all processes & devices into networks to leverage the power of information. Concepts like employee, contractor, supplier and customer had less secure meaning in a networked world as chains of connectivity ran in all directions & right through the organisation.
With platforms and networks running through and beyond the organisation, people began to explore the opportunities in new ways of working using digital. The boundaries of organisations no longer constrained the boundaries of work. Seeking to retain talent, leverage information more effectively and create greater agility, organisations experimented with new digital ways of working and organising work.
This digital transformation has only just begun. There are many more phases ahead. The innovations and experiments of organisations will take us even further into exploring the potential of globally connected digital networks.
You lost customers over your service migration.
The fax machine is always busy.
The CEO prints emails.
Internet access requires a paper form.
All of the product information on your site is available in easily downloadable pdf.
Your digital consultant has 39 followers.
Your digital strategy is 150 pages of PowerPoint in a binder on a shelf in the archive.
Everyone is too busy preparing for performance reviews to collaborate.
Everyone wants to know the ROI.
Your office isn’t visible on Google Maps.
You routinely save documents to USB drives because of the capacity limits on your desktop and server drives.
It takes 90 days to get through the approval process to deploy in a release window.
The Transformation project has produced more video than code.
Design thinking happens in the creative department.
Investment committee meetings go for 3 days.
The head of product always tells a story about the launch of the iPod.
Only the complaints department sees customer feedback and they are too busy to share it.
You had an API but shut it down because people were using it.
Your mobile strategy is to migrate to SMS because WAP adoption has been disappointing.
The coffee table book in your foyer celebrates your centenary, 25 years ago.
The only scrum occurs when the fruit basket is delivered each week.
Your app has a manual.
Your big data strategy begins with some offshoring of data entry.
You have multiple single sign-ons.
Everybody in the leadership team has visited Silicon Valley (at least once).
End-to-end processes is a vision.
Calls to your call centre are directly correlated to communications you send your customers.
The whiteboard in your head of transformation’s team area says ‘do not erase’
It has only a drawing of a cloud on it
Change is what you get from the vending machine
And you just sent an analyst out to buy sticky notes.
Our traditional management models die hard.
Many organisations are starting to consider how they build new digital capabilities like agile, hypothesis-based experimentation, design thinking, analytics and collaboration. Yet when they start to plan these changes to more digital ways of working, they use management models from pre-digital management:
These approaches seek to make organisations ready for more digital management using the methods of traditional management.
Digital Dog Food
We can do better than this. We can start by asking projects to build digital capabilities to eat their own dog food. If nothing else, they will learn on behalf of the organisation the challenges and opportunities of new digital ways of working.
New Digital Capability Building
Projects to build digital and responsive capabilities in organisations can be role model projects for those capabilities. Taking a leaf from the digital tool suite challenges those building capability to consider capability building that offers:
New Digital Delivery
The projects to build new digital capabilities themselves can adopt digital approaches by shifting to:
Working on transformation projects in these new ways won’t always be efficient. It definitely won’t be easy. However, using the tools and approaches of digital management enables organisations to learn and evolve their goals through the process of transformation. This learning will be the path to step changes in effectiveness and a better match to employee and organisational needs. At a minimum, it helps ensure that the project creates a team of highly capable change agents to help drive the next phase of the journey.
“You can’t bank a percentage” – entrepreneurial wisdom
Disruptive businesses change the metrics that measure success by focusing on more effective outcomes. How are you rethinking the measures in your business?
Your Metrics Weren’t Always Thus
Metrics are one area where we can easily form views that they ‘have to be this way’. Metrics are often driven by prior year plans, industry standard comparisons or by the expectations of analysts and investors. It is taken as gospel for businesses and industries to have standard growth rate, cost to income and other metrics.
If you want to get a sense for the changing dynamic of metrics read back in the history of business to completely different eras. Here we can see innovation in metrics changes the fundamental understanding of business activity.
If you read the biographies of early industrialists and railroad barons in the US you will find a very different perception of shareholder value and company performance. Shares in the late 19th century in the United States traded like subordinated bonds. The questions of valuation were how large was the dividend the company might pay and how close the shares traded to par. Innovations like consistent approaches to value accounting practices and models of cashflow valuation were introduced to sustain the modern approaches to valuations.
Metrics Illuminate and Create Blindspots
Metrics are how businesses see. As they say, if you want something done, measure it. However, the light that measures cast also creates shadows and blindspots. What doesn’t get measured, doesn’t get done.
A fixed view of metrics makes them a fertile ground for entrepreneur change. The traditional competitors will struggle to see and understand the performance of new businesses because they will be trapped judging the new threat by old metrics.
There are many examples of innovations that change the metrics. Here’s a small sample:
Traditional businesses with their measures of success will often miss these changes initially or see them as unsustainable. If you are assuming the irrationality of your competitors, look again at their metrics. Ultimately, new valuation models and new investor expectations develop around the new metrics provided that they prove more effective.
The worst outcome for the future of your business is that you are happily delivering your plan as the value erodes away.
Don’t accept as gospel the returns, growth rates and margins that you have inherited in your business. You can’t bank a percentage. Focus instead on exploring with new metrics to measure the effectiveness of your business in creating sustainable value.
Rationing of resources through budgeting processes impedes organisations ability to respond to disruption. Is it time to become a Responsive Organisation instead?
The Telstra Digital Summit 2013 had a group of exceptional speakers with Robert Scoble, Shel Israel, Brian Solis and Tapan Bhat all sharing their perspectives on digital transformation facilitated by Monty Hamilton and Gerd Schenkel of Telstra Digital. In addition there were panels on Telstra’s digital journey and the experience of a group of Pollenizer start-ups.
What did I take away?
Be Human 2
Just like the recent Products are Hard Conference, the key theme of the day was a need to deeply understand human behaviour. Whether it was the impact of sensors on our understanding of customer action, big data, focusing on design for customer journeys or building communities, better performance depends on better understanding of human behaviour.
— Simon Terry (@simongterry) November 12, 2013
We are reaching a point where the opportunity of technology to enable us will offer wide choice, our understanding of human behaviour will enable us to design our responses. Ultimately our ability to build and leverage human relationships with technology will be key to our success.
Robert Scoble reminded us all that 3% response or click rates are 97% irrelevance rates. That 97% irrelevance is a large drag in a real human experience and our businesses. We need to leverage our understanding and relationships with our customers to do better by being more relevant – personal, timely, trusted, insightful and offering valuable choices
How we want to offer our product no longer matters. We are no longer in a broadcast or distribution world. We are in a personal, engaging and much more human one.
Customers will have the ability to pull and to choose. We will be designing our paths of choices that will be triggered by customer actions. Instead of pushing out to customers, the questions is what paths we offer to lure them in informed by our understanding of their customer behaviour. When they come in, we will need to deliver to them the best of our network of capabilities. That requires a fundamentally more responsive organisation.
Human nature revolves around trust assessments. It came up again and again during the day. Businesses need to see building deep and trusting relationships internally and externally as a key part of competitive success. Remember trust demands internal and external alignment, real capabilities and consistent delivery.
Design and Learn for Scale
— Simon Terry (@simongterry) November 12, 2013
Fixed mindsets, static knowledge and narrow focus may offer comfort but run high risk in times of volatile change. Leverage the scale opportunities of the new global network economy. Most of all design your activities to learn and grow at scale. Australia is a small market and Australian businesses have the talent and potential to reach far.
We don’t know where we are going
From big companies to little startups, the comment was the same. The outcome cannot be predicted: Jump off a cliff and build the plane on the way down. That will demand a significant improvement in your organisations agility, engagement and trust in people to deliver before you hit the ground. Command and control, hierarchy and meetings won’t save you. To borrow a Telstra phrase used in the day, you may need to invest early in ‘a few long poles’ to establish connections and options to accelerate your responses later.
Disclosure: I received a free ticket to the summit and a copy of The Age of Context by Robert Scoble and Shel Israel thanks to Telstra Digital.