Digital Transformation


All swans were white, until they weren't. The black swan has arrived. The ripple has begun.

What if an executive told you that they wanted to increase their ROI in online sales by 10% in the next year? What would your answer be?

Last week, a colleague asked me this question. I wanted to give the stock standard answer, "...bench mark data, trends over time, correlate to product/feature analytics to determine investment strategy..." but I am tired of those answers. Most of the time there is little to no data to quantify strategic themes, investments in relation to delivered products, services, or features in the Industry 4.0 economy. Usually consultants succumb to saying what people want to hear because the truth isn't very palatable and most aren't eager to pay for it.

The simple truth is, if you want your company to remain competitive and prevail in a digital world... it is time to grow up.

After conducting research in industries using Lean management systems I have found one common differentiation between those and current digital operating models - disciplined strategic positioning and product investments. Take oil & gas as an example. What if the head of engineering asked for $100M because the engineers thought there was a better, faster way of building a refinery? What would be the response?


The value proposition would be scrutinized on every level. Does it fit in the overall corporate strategy? Is there budget in the transformation investment category? Is this truly a transformation? Competitive analysis, ROI, etc. There would be due diligence and a predictive approach. The environment is predictive and the customer needs are known making product management disciplined, wishful thinking would never be tolerated.

The same discipline is not applied in Digital Product Management for the following simple reasons:

  1. Current operating models have been developed for a highly predictive environment that produces known requirements.

  2. Technology has always owned all things technical and have not required (or allowed) the supply to be led by demand. Technology has traditionally owned demand and supply, removing any reliance on enterprise product management.

  3. Digital disruptions have caused predictable organizations to fall over the cliff into a state of chaos leaving them with a desire to meet emergent customer demands in a predictive environment, while being innovative. This is impossible.

The Digital Era has created the black swan effect that has expanded well beyond the doors of the technology department and moved to the forefront of every business executive's agenda. Everything that was known about business is now unknown.

It will take a long time for me to forget the 2016 presidential campaign (I am neutral on politics, I watch from a sociological perspective). Donald Trump is the black swan. I predicted he would win from the primaries forward. How was he successful, even with mistakes that would have buried any other candidate?


He disrupted politics by addressing the 'Why' and won people's emotions, quick and early. While other politicians run on the 'How' and 'What', he was able to avoid these details during the entire race because he gave a strong 'Why'. Even when followers were embarrassed by his actions, they still followed because the 'Why' was stronger.


CNN reporters, in a state of depressed disbelief, grappled to understand how this happened. How did they miss this? The polls said it couldn't happen. The morning following the election, with the results in hand, a few reporters admitted,

"Maybe we have lost touch with the American people."

Donald Trump disrupted everything the media thought to be true. After that sobering morning they returned, with zeal, to business as usual... still out of touch with the American people, with a false trust in predictable approaches. And they have continued this throughout his presidency, they just cannot adapt to his approach.


The same is true with the digital disruption (or should I say eruption). We need to recognize that digitizing solutions is not going to solve the digital disruptive explosion occurring in every industry. Investing in bigger, better technical solutions by itself is no more effective than CNN applying better algorithms for their polls. To make it in today's face-paced Industry 4.0 economy, a complete shift in thinking, responding and leading the market must occur.

Continuous improvement of the candle did not produce the light bulb.

Successful Digital Transformation requires a focus on the four M's while measuring value flow and developing a results oriented culture.


What must happen?

  1. Organizations must transform to a Digital Operating Model to be adaptive and respond to emergent needs.

  2. Digital Product Management must be developed with technical demand driven from a disciplined strategic product investment practice with measured results.

  3. The enterprise transformation road map must move the organization from chaos to complexity through levels of awareness, there is no quick fix.



For a true impact on the bottom line executives need to understand two things. First, let's admit that the organization is currently going out of business and continuing with the current approach will produce failure. Next, to truly survive in a state of explosive disruption, develop a road map to successfully navigate the transformation mine field.


To survive and succeed the transformation is three fold and must be supported by every level in the organization.

  1. Structural transformation - change to a digital operating model.

  2. Process transformation - change the way things are done.

  3. People transformation - change the way people work and think about work

To succeed in this current Industry 4.0 economy, organizations need to transition to a digital operating model that is focused on people, customer and societal results, before business results, followed by aligned leaders who support the delivery of outcomes that can be tested and provides learning.



Organizations must change in order to compete. The transition to new ways of working, learning and measure will only be successful if treated like a scalpel in the hands of a surgeon.


A haphazard approach to transformation is not only ineffective, it is dangerous to the life of your organization. The black swan has arrived, is your organization ready?

 

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