Digital and Digitisation
Why so digital..?
Nearly every senior executive, Board or company is working on a digital strategy or trying to figure out how to take advantage of digital disruption.
There is no consistent definition of what digital actually means so I am not going to even try and solve that conundrum here. I can share some of the the ingredients for digital success thatI have found to be helpful when framing a company's digital agenda:
In what way is digital important to you?
What does digitisation mean to you?
What does digital strategy mean to you?
Who will own the digital agenda?
What is your aspiration for the customer experience?
What are you key customer journeys?
How do you attract customers to those journeys?
How do you keep innovating?
How will you create and deliver your digital products and services?
Can you benefit from moving to the continuous delivery of change?
How best should you move from 'project' delivery to 'product' delivery?
In what way is digital important to you?
There are numerous approaches to developing a Digital Strategy and just like any gold rush, there are a lot of people selling shovels promising to help you find your pot of 'digital gold' - whilst there is no silver bullet a few key questions can really help frame your digital agenda - it is really important to be clear on digital strategy versus digitisation and to understand that "digital" really means business transformation in a digital world:
Digitisation: What does digitising your business and its products and services mean - this is not a strategy question - it's much more about operational excellence but it is important:
What would happen if you set the goal of having 100% of your products and services online?
How does your product and service proposition compare to your competitors?
What value would digitising your core operating model create? Can you envisage a future in which your business is leveraging machine and/or system generated information to quickly process transactions that enhances the performance of your people?
One final set of questions relates to SMAC (social, mobile, analytics and cloud): Social, Mobile, Analytics, Cloud and IoT all have a role to play in every digital strategy; they are normally significant enough in isolation to merit their own focus; bring them together as part of a broader approach and for some companies they will create huge amounts of value. Cloud in particular can be very powerful as a way of reducing capital costs, speeding up delivery and removing the complexity of on-premise infrastructure.
Digital Strategy: where and how will you play in the future? where can you create a new value, perhaps by creating a new category of product or service as a sustainable source of competitive advantage? Play Bigger have some great views on what it takes to be a 'category killer' written by one of my old colleagues (recently published in HBR - see here). Chris is well known for his passion on category design "Category design is the ability to shift markets to embrace new products & innovations. It is arguably the most important skill in business." Digital Strategy is much more about identifying where value will be made in the future, and less about improving the current business - which is why in my experience, digital strategy is fundamentally different to digitisation. The concept of Living Services is very exciting and set to change how we think about what we do.
Finally, who owns the digital agenda? it's critical to make sure digital is committed to as a driver of transformation. Without clear ownership, efforts tend to be nothing more than a veneer or a side-show. Harvard Business Review claim this superficial approach to digital is the status for most companies - see here. Digital is a step-change opportunity that all executives at the top table need to to exploit together, "Digital" is a team opportunity.
What is your aspiration for the Customer Experience?
Typically an area underestimated in terms of its importance by many companies, although that is changing. What is the customer experience you're offering in the market and how does it compare to the best? The best may not be in your industry...
What are your key customer journeys?
How good are those journeys?
How good are the individual touch-points?
Do you have "customer experience architects", "Journey Managers" or "UX designers" on your payroll? If not, I suspect you have a fragmented digital (and probably fragmented non-digital too) experience for customers and staff. The king of user experience design, Jakob Nielson started life as an engineer a long time ago now - it is not a new discipline but it is one many companies still overlook. His work has pioneered best practice in this area for decades now. It is an area typically under-appreciated by IT and often missed by Marketing - yet it can sometimes be the deciding factor between success and failure.
The experience is king, so pay attention to it.
How will you deliver your Digital products and services?
Delivery is a broad topic - from organisational ownership of digital, governance, technology and process, to culture, finance and people. Setting up the broader environment for digital success is clearly critical, but then comes the crunch point - how to actually build and deliver digital solutions.
There are numerous ways to engineer and deliver digital products and most companies will have a range of options open to them. Marty Cagan’s book, “Inspired” is a must read - frankly it tells you everything you need to know.
I share the same views as Marty, at the heart of transforming how to deliver in a digital environment is the adoption of some form of continuous delivery to end users, the ability for products and features to be delivered or updated frequently. The techies currently call it DevOps.
DevOps has been established by Facebook, Amazon and Google but many large-scale traditional companies have now adopted it. Whilst the IT folks call it "DevOps" and the marketeers refer to it as "continuous delivery"; the bottom line is represents the culmination of many disciplines coming together in a perfect storm. It is the engine room of digital delivery - connecting a regular flow of new features to customers with an in-built feedback loop. Data in, experience out.
DevOps helps organisations create a very fast, or even continuous flow of features through the product development lifecycle, all the way through to live deployment. In the last four years Amazon has gone from 15,000 such deployments a day, to 136,000 per day - yes, read that again, it's not a typo, it really is "one hundred and thirty six thousand deployments" per day. You can read how here.
Note the reference to the product development lifecycle - how well defined is that in your organisation?
DevOps may look like an extension to scale agile methods used by many companies but you only have to read Gene Kim's the Phoenix Project to see the difference; whilst it builds on processes, tools and methods, some of which go back many years, it is a significant shift. DevOps is a much deeper change to digital product delivery enabled by trends such as the emergence of microservices through to the increased use of automation in software development.
It will be a challenging journey for many companies to adopt the product-centric mindset DevOps drives. Furthermore, it drives changes in the culture of a business by allowing teams to work quickly and independently. It's no surprise that nearly every high performing IT function (when measured against value delivered, quality and cost) has embraced DevOps. Puppet Labs have published some eye-watering findings here.
Finally, the impact of having your own high quality software engineers should not be under-estimated. One of my favourite case studies is the American healthcare.gov programme (see here) which tells the story of how a bunch of engineers from Google and some other tech startups took on a $200m programme and delivered the same business outcome for $5m.
The world has changed; every department in your organisation is now a software division as well.
In conclusion...
Digitising your business and its products and services is a great place to start when mobilising a digital strategy; furthermore, moving over to continuous delivery can have a hugely positive impact - typically way beyond expectations and fundamentally change a company’s culture to be much more customer-centric. Any organisation significantly increases its chance of finding a new idea that becomes a category killer when it is continuously delivering products to customers. A relentless focus on the customer, followed up with listening, learning and innovation, will always lead to new discoveries and in the digital arena, these can quickly scale into highly valuable businesses. But digitisation is not digital strategy - and analysis into how value will be created in the future remains an important skill. The worlds of strategy, marketing and engineering have collided...