Tag Archives: business model

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Digital Transformation – The Cultural shift is paramount

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Last month we met with CIO’s and EA’s to discuss the most important elements of succeeding with Digital Transformation. The first thing we discussed was the definition of a ‘digital transformation’ – to discuss and facilitate the discussion of how to differentiate it from ‘digitalization’. In essence, the following focuses on the transformation, not to mix up the two terms.

As ‘digital transformation’ at the heart it is about data and enabling a new business model, it is also about establishing a new culture. If ‘digital’ loosely means data, and ‘transformation’ means changing shape; then ‘digital transformation’ is about transforming the shape of the business model to use data smarter, i.e. it is about moving the organisation to a new paradigm where existing processes are ‘split’ rather than fitted and optimized to become data-driven.

This also brings us to the main take-away. We can enable a digital transformation faster with proper technology and roadmaps, but at the heart, it is about people and changing culture. To succeed with the transformation, time and space should be challenged, which will impact the culture in different ways  – and it will challenge managers in todays business operations.

This brought us to the second observation, if people are not freed-up to work with the new shapes, they typically drown in day-to-day activities focusing more on lean and continuous improvement. This is why many organisations decide to move transforming development to new sites or do acquisitions, as it seems too hard to change the prevalent culture.  

It brings to the surface the dialog of Schein versus Porter – is it the culture or the strategy that drives the change – What drives what? They main take-away seems to be that the culture shift is paramount to the change, if not, the transformation effort may dilute. If we want to change the culture, we need to consider how this should be ignited, proven and collectively accepted. Hence, the organization may have to challenge itself to step outside the comfort zone and challenge the type of earnings and offerings. A research by Warren Ritchie indicates, that innovation does not take-off by size of the company. On the contrary, most innovation comes from either smaller or very large corporations as they both manage the working culture with slack and innovation focus. But be aware, most large corporations may tell you they have an innovation culture, but they may mix-up the words of a culture of continuous improvement versus that of transforming the paradigm!

To example this, e.g. Spotify and other music streaming services decided not to invent a larger CD; and likewise, Philips who introduced the CD did get royalties from the former music cassette – they both changed the way services could be delivered – challenging the media, space and time. Is it likely that the organisation and culture of Spotify is different from that of the labs building hardware devices in the 90’s? – absolutely.

In a nutshell, different shapes of the business model, offering different services by use of new technology, time and space is the driver of the digital transformation. This will not circumvent continuous improvement of the existing processes of today’s operations, but it is not the same approach and success factors, see post. To succeed with a larger change, the shift of culture is paramount, needs to be addressed, but proper technology and approach may accelerate the pace in which your organisation can succeed. 

We can help you to plan the change, and may with our digital transformation suite accelerate the pace.

We power your digital MooD.


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From Watch to Move – Digital Transformation

Category:Services,UK Blog Tags : 

Very often, we hear the terms ‘digital’,  ‘become digital’ or ‘go digital’ as phrases for businesses being more modern and streamlined, however, it is clear from many articles and posts that people not necessarily mean the same thing with these terms. Largely spoken, they are all related to the two words

  • digitization and
  • digital transformation

However, digitization and digital transformation are also not the same thing, but even though these terms also are sometimes mixed-up, they may also correlate. This has recently been spotted in the great post by Jeanne Ross, try not to mix up these two words! However, they both belong to the digital agenda!

What is ‘digital’?

I have the age to remember the first digital watches – and how the CD-player as an innovation moved the music from analogue devices into the era of bits and ‘digital’ format – which eventually led to streaming of music data. And looking up Wikipedia (in English), it says that digital usually refers to something using digits, particularly binary digits; that was indeed the case of the CD-player versus the analogue voltage of record players. Now, the original meaning of the word ‘digital’ originates from Latin, which means typically finger or counting fingers, or just a finite number or digits. In other words, the simple evolution gives that digital is something that eventually ends up as a finite number of computerised bytes delivered somewhere of ‘some contents’ –  we may just call it ‘data’. So if we apply the definition that digital means ‘data’, then at its heart, digital is about the creation of data from hardware and software; digital is about the intelligent transportation of data; and digital is about the use of data to power smart industries and businesses!

With digital in the meaning of data from anywhere in the business, consequently, digital transformation may be seen as the ‘planned change’ to a future usage of ‘data’ involving new (sometimes disruptive) technologies. Hence, digital is an embedded ingredient of both ‘digitization’ and ‘digital transformation’. Digital is the key ingredient of Digital Governance.

Digitization

Digitization is often known from public sector, service sector and LEAN where the efficiency of the getting more ‘digital’ processes and lean processes by avoiding paper, snail mail, etc. is being achieved. Different companies are not all equally forefront in digitizing the business. Borsen recently posted an analysis of Postnord (Danish/Swedish mail provider, former royal post). In Denmark the public sector has achieved a higher digitization than the Swedish one. This has been achieved with a high management-focus on digitizing the work flow and citizen correspondence. In other words, the word ‘digitization’ involves standardizing of business processes and is associated and motivated by cost cutting and operational excellence; or as one could say, to do more of the same – just more electronically. It is not that these companies are passive, it is just that they don’t change the business model, but may watch the ‘new kids from the block’ introducing new games and business rules.

“Digitization involves standardizing business processes and is associated with cost cutting and operational excellence. In essence, it imposes discipline on business processes that, over the years, were executed by individual heroes in a variety of creative (but not always optimal) ways.” – Jeanne Ross

Digital transformation

Digital Transformation represents a higher degree of change. However, we would argue that the key differentiator is that it is based on a different paradigm! It ‘splits rather than fits’ the existing processes, hence, it is a top-down approach to transform a company from as-is to the next digital era.

“Digital transformation is the strategy to execution toward a new business model which is based on a different paradigm, that it splits rather than fits the existing processes, and for that you need to map-out your future business model. Don’t start with your existing processes; start with your future operating business model!”

To make a transformation into a digital company, you need to consider the new way such a future company can achieve a market place with (maybe radical) different services, offerings, delivery methods, locations and meet-up. Companies that strategically seek to analyse and build this way, will not only look for more electronic ways to do the business of today, but they will seek a new operational model to serve customers with a different supply chain and operating model. These companies realise that they have to move the business model to reach the desired outcome.

Both disciplines are valid

Both disciplines are valid, but they clearly work from different paradigms. We recommend companies who want to become digital to work with it strategically, then to drive the strategy-to-execution and make it actionable and achievable. It is a totally different exercise as to digitize existing processes!

Where digitization involves a blueprint of all the business capabilities, then to map the low-hanging fruit to digitize the processes in prioritized order, then the digital transformation starts with strategy and architecture and forward-thinking; then to make scenarios or risk assessments to map out the actionable insights.

One may see the digitization as a pre-burner or enabler for the next steps, but if the paradigm of the business model isn’t changed nor if the digital transformation isn’t led by the business strategy, then it will have a hard time to sustain. We often recommend in workshops to illustrate examples of both artefacts, simply to get to the open-ended dialog of ‘where are we heading’ versus ‘where do we want to move to’.

Clearly, to strategize and map out the actionable insights may involve implementation and change management. We can help you to succeed!

We power your digital MooD!