Digital strategies that try to reproduce current operations do not deliver the expected benefits.
Some companies have implemented integrated systems without making fundamental changes to their operating models. You see the same hierarchical structure with its usual issues. The same functional silos blocking communication flows.
Compare this to all the aspects of our lives that have changed because of the mobile phone. How you shop for the best travel deals and book reservations. How you pay for small purchases. How you share moments with your social network.
Successful digital companies reinvent how to work. The basic objectives behind AI and the other digital technologies are all the same:
- Better meet customer needs
- at a lower cost
- and take advantage of new market opportunities
To meet those objectives, successful digital companies have reinvented how to work inside to match what is expected outside.
Think of multichannel customer communications which have been integrated into physical distribution.
Value is transferred to the customer
Digital transformation also means that some products are unbundled. The delivery mechanism is reengineered. More of the value is captured by the customer.
Several industry segments have disappeared because of this. For example:
- You buy your favorite songs, not the whole CD.
- You get them immediately on your phone instead of having to go to a store.
- Airlines and hotels once paid travel agents to source customers and book flights.
Digital transformation is more than just technology
Digital transformation is not just about buying new technology. AI is not just an IT department thing. It is part of the product and part of the marketing process and part of the production process. Think of chatbots which are changing interactions at very important customer touch points.
Some companies would like to set an aggressive digital agenda. Yet the execution of their strategy is hampered by cultural cross-currents. Digital transformation requires a different mind-set, different relationships, a different organization structure.
An outcomes-focused structure
The new process-based organisation structure is focused on business objectives that become possible because of the technology. This determines what activities to do and how to organize them. Then the required competencies are hired, and so on.
There is no unique best organization model. But there is a template that can be adapted to each company’s specific context. It incorporates best practices which have been tested successfully in fast-paced digital environments. Its the Scalable Enterprise.
Roland Farley
514-282-1818