Recently I was chatting with a founder of a midsized manufacturing company who’d recently attended a digital transformation workshop. He was thinking of creating a mobile app and a software product in order to ‘become digital’ and was looking for feedback. I suggested that digital is more a way of thinking than it is about deploying the latest tools. We took a step back and reflected on historical turning points that heralded new models of culture and society.
When Nicolaus Copernicus published “On the Revolutions of the Celestial Spheres” in 1543 he placed the sun, not the Earth, at the centre of the solar system. The Copernican Revolution wasn’t merely a breakthrough in astronomy it was a milestone in a transformation of thinking that arguably started with the invention of the printing press and the fall of Constantinople and culminated in the publication of Newton’s Principia Mathematica in 1687.
The Principia, with its framing of natural laws, in turn, launched a new wave of scientific rationalism that blossomed into the enlightenment and eventually ushered in our modern world.
What Copernicus did was shift our way of looking at the world we live in – from our being at the centre, to us as part of something bigger than ourselves. It also heralded an era of reassessing traditional thinking using a new set of logical and physical tools.
- Capabilities are built in layers of abstraction. New capabilities are built upon existing layers and typically end up being the foundation for new ideas and thinking. As Newton said: “If I have seen further, it is by standing on the shoulders of Giants.”
In the digital context, this would be seen through layers of the technology stack. The creation of next-gen capability requires a good appreciation of both capability and constraints of the underlying layers.
- Innovation happens at disciplinary intersections. Typically, the most significant breakthroughs originate at the intersection of fields. Think of the ‘Medici effect’, their patronage of the arts and sciences creating a crucible of ideas in Florence and firing the Renaissance.
You can see similar cross-pollination of ideas with research into protein-folding driving sequence-matching algorithms in the machine learning domain, and advances in defence technology finding applications in GPS, logistics and cyber security
- Exponential rate of change. The impact of change is often not immediately noticeable as the direct change tends to be subdued and takes time to manifest. Once the additional capabilities start coming into play, the changes start exploding. This is hard to fathom. As the famous futurist and inventor, Ray Kurzweil said:“Our intuition about the future is linear. But the reality of information technology is exponential, and that makes a profound difference. If I take 30 steps linearly, I get to 30. If I take 30 steps exponentially, I get to a billion.”
In order to benefit in a sustainable manner, change management around both process and human dimensions becomes extremely important as we progress in deepening transformation
The Three Elements
In a typical organisation there are three key elements of value creation:
– Product or Service Design
– Customer Acquisition
– Product or Service Delivery
These core value elements are enabled through organisational shared services such as Human Resources, Finance, Administration and Technology.
It is important that we don’t miss the forest for the trees, as cutting-edge technologies can seem quite enticing but can also distract from value created. Business transformation should be framed in terms of how it can transform these elements to enable the organisation to improve value creation in terms of revenue growth (or impact delivery in terms of non-profits), cost and time effectiveness in execution, and in lowered risk.
These could help us to re-interrogate core assumptions on existing businesses::
- Can product manufacturing be scaled up and down based on market needs? This would unshackle enterprises from traditional inventory models in a volatile world with supply-side shocks.
- Is execution speed a game-changer in the business? In many industry sectors, cycle time for servicing is a significant differentiator including quick-commerce and instant loans.
- How do I engage with customers and prospects throughout the lifecycle of the engagement in the channels that they prefer? This requires the ability to create a consistent interface on a shared-data foundation.
- Is extreme product personalisation a viable option for this product category?
- Are there opportunities to innovate in customer engagement?
- Can a very different execution and operating model be created by exploring asset ownership and ecosystem participation?
In subsequent articles, I will talk around how the organisational structure and capabilities need to be reconsidered in order to generate the maximum benefits.