What Is ‘Digital’?

Despite working in the digital space for years, now I was quite stumped a few weeks ago when i was asked to define it. Sometimes you can get away by circumlocution or to use the technically correct term, waffling. But given all the hype around digital transformation, I felt that it was a good time to try and get a working definition going. For one it helps to cut the hype. And two, clarifies what is NOT digital at a time when the label is being slapped around with abandon.

So I read descriptions of digital in the media, and on our competitors sites. I listened to analysts and and read books and white papers. I asked our clients what they were doing. And I spoke to the experts in Cognizant, and spent time just thinking about this. And I’m happy to say I’m willing to stick my neck out and try and define digital in less than 25 words.

Of course the problem with definitions is the tradeoff between pithiness, abstraction and comprehensiveness. You can be very pithy but be too abstract e.g. ‘Digital is the future of business’. Or you can take a whole page to define digital, but that’s a description and not a definition. So here’s my definition and you’re welcome to challenge it or differ with it, or adapt it as you wish.

Digital means: exploiting emerging technologies to create user / customer centric interfaces and data driven business models, leading to more agile, responsive and competitive business models.

Let’s break this up.

Emerging technologies are certainly a driving force of digital. It’s the reason why we’re having this conversation. But to be clear, there are many discrete elements that make up the emerging technology theme. Arguably the big bang for ‘digital’ is the launch of the iPhone – because it put powerful computers into people’s pockets. It democratised access and provided a platform for almost all the other innovations. Samsung’s (and others’) lower cost and Android driven imitation of the iPhone ensured a mass market for smart phones. Alongside the smart phone though, you have to consider the continuously evolving web 2.0 (are we still allowed to say that?) and the emergence and maturing of HTML5, Javascript and more frameworks to deliver slick web front ends than you can shake a smartphone at. HTML5 and the ever improving web have had a see-saw battle with native mobile platforms, frameworks and entire generations of technology have come and gone in the past 5 years. Remember MCAP and MEAP platforms, and the allure of cross platform development for mobile apps? All of this have also greatly helped social platforms – which includes Facebook, Twitter, Whatsapp and hundreds of messaging and collaboration platforms.

Behind the scenes: But this is not just about front end technologies. Moore’s Law continues to drive the cost of computing down, leading to significant capabilities to process data – be it the in-memory database capability of a SAP Hana or the emergence of Big Data, and our ability to analyse and make meaning of ever larger data sets in continuously decreasing cycle times. Newer and more efficient Graph (Neo4J) and clustered database models (Hadoop) are supplanting the once ubiquitous RDBMS providers. And the en masse shift to cloud infrastructure and smarter automation has created a whole universe of services – starting with the PAAS and now a generic ‘as a service’ nomenclature.

The Internet of Everything: And to top it all, the next wave of internet connected sensors and devices is just beginning. Another whole wave of connected and smart objects has the potential to change everything, again, in the way we buy and consume goods and services. The Internet of Things does not have a single killer app, yet, but it’s growth and spread nonetheless are accelerating.

Its not what you did, its how you did it: the shift in the underlying methodology has played its role. The maturing and widespread adoption of agile frameworks and the toolkits to deliver them is a key construct of digital. The rapid evolution of technologies both necessitates and enables a much more adaptive and cyclical approach to technology delivery.

Design thinking: Almost absurdly, all this fantastic technology is still not what truly drives the digital change we see in businesses us. That honour belongs to the emergence of design thinking and service design methodologies. Some of this is commonsensical and you would think should have been the norm rather than an innovation. But the mind-shift is fundamental. Industry leading businesses are now recognising the need to be customer journey driven. I use the word interface in a broad sense here and not just restricted to screens. The question to ask is how do your customers, partners and even employees interface with your business? Historically, this was driven by inside-out thinking. In other words, businesses decided how they wanted to run their processes and designed systems and interfaces to match those desired processes. So if a bank’s preference was for the customer to be in the branch while opening an account, that’s how the processes and systems were defined. In digital, those interfaces are conceptualised outside-in. This means the starting point is the user. What does she or he want to do? How does the prospective customer want to open the account? What are her constraints? What would make her choice easer and her experience better? Once you start thinking outside in – you reach a very different point in the way systems and processes are defined. And when you combine this user centric interface thinking with the technology opportunities that are emerging you begin to understand why transformation is the buzzword du jour.

Data Driven Decisions: Implicitly or explicitly, every decision we make (what to wear to work, for example) is made on the basis of data that we process (what meetings do I have, what is the dress code, what is the weather?). Complex decisions require more sophisticated data. Historically this data has not been available to us for many large and small decisions. How much to spend on the marketing campaign? Where to open the next store? Who to hire as a program leader for a new business area? How to implement a hot-desking policy? As a consequence, most businesses have relied on ‘experts’ for these decisions, whether they are from within the business or consultants brought in for the purpose. Experts use their wisdom which is often an implicit accumulation of data from deep experience in that area. What we are witnessing, thanks to the combination of lean thinking and instrumentation, is a seismic shift to more explicit data driven decision making. For example, if everybody used a smart phone to access the office for a month or two, it might provide data that suggests that wednesdays are the busiest day of the week while friday is the lightest. The latter may be visually obvious but the former may not. Or the data may show that on mondays, the average time spent in office by people is actually just 4 hours – because they are in meetings or on projects outside. Suddenly there is explicit data to influence your hot-decking policy depending on what your objectives were. This is a tiny example but very representative of how digital is reshaping our decision making. Now imagine this at scale and for the hundreds of decisions made every day and you get a sense of what I mean.

Responsive business models:  we are used to stability and to treating change as a temporary disruption between periods of stability. Not dissimilar to moving house. Increasingly though, we find ourselves in a state of continuous change. The disruption is not a passing inclemency, but it is the new normal. Think of moving from a house to a caravan, for example. What the combination of technologies, design thinking and data surfeit allow us, is to build a responsive or adaptive business model that is able to keep pace with a fast changing environment. Think evolving operating model instead of target operating model. Think of the cost of change as a part of the cost of doing business, not as a capital expenditure. Obviously, industry context is vital – Retail banks and media businesses are much further down the path of transformation than, say, infrastructure providers. But while the impact may vary, the change is universal. Digital is not therefore about B2C vs B2B, it’s not about marketing or about your social media. I believe this is fundamentally about your business model being impacted by better data, delivered at the point of decision making.

Agile Strategy: Seen in this way, it would therefore be logical to look at your strategy as an agile and evolving artefact. Many companies still look at 3 year or 5 year plans which are sequential. Instead, we should be looking at rolling 12 quarter roadmaps which reflect our strategy, but which can be modified on a quarterly basis, keeping a vision or end goal in mind. But more about that some other time.

The point of all this is to be competitive. And digital business models which use technology, design thinking and data optimally are far more competitive in the world we live in. I heard John Chambers, the CEO of Cisco, say ‘Change will never be this slow again’. And 52% of companies from the Fortune 500 list of 2000 no longer exist. Collectively that sums up the challenges and dangers of being change resistant. So whether you agree with my definition of digital or not, a response to the change around us is not optional. Enjoy the ride!

Suggested reading:
Code Halos: Malcolm Frank, Ben Pring & Paul Roehrig
Being Digital: Nicholas Negroponte
Dataclysm: Christian Rudder
Mobile Mindshift: Ted Schadler, Josh Bernoff, Julie Ask
This Is Service Design Thinking: Marc Stickdorn  & Jakob Schneider
The Lean Start Up: Eric Ries

Welcome to the 1980s

Antique Telephone

Data Antiquity Award

A fortnight ago, I lost my debit card. I say lost, but my 4-year-old daughter discovered it under the car seat the next day. Of course, by then I had cancelled the card and my bank assured me that a new one was on it’s way. We could do that on the website – it was easier than calling on the phone and listening to ‘music’ for hours. As it turns out this was within a day of my wife’s card expiring, so she was also talking with the same bank for the same purpose – a new debit card.

Cards ordered, we could relax, and get on with our lives. Although we had to rely on using our credit cards at ATMs to withdraw cash. But a week passed and no cards showed up. So we got onto the phone and spoke with the advisor at the call centre. Imagine our surprise, when we were told that the card had been dispatched, but to our previous address – which we had left exactly 13 months ago. The bank didn’t know that we had moved. How was this possible? Even worse, they had my old mobile phone number – which I have not used in 6 months.

We moved house at the end of May 2014. Having done this a few times, we have a fairly comprehensive checklist for all the various updates. From utility providers, to post office, to banks to employers, it’s all there and we’re pretty sure we did it all. In fact, our credit cards, with the same bank have all the right information. We get the statements, and our online purchases go through with the new address confirmation. Absurdly, this information has not filtered through to the savings account side of my bank.

Let’s assume for a moment that we may have made a ‘mistake’ in informing the credit card issuer, and not the retail bank. Is this really a mistake though? As consumers, do we need to inform each part of the bank individually? How bizarre that in the 13 intervening months, the bank has not picked up the fact that our address for the credit card issued by them is different from the address for the debit cards issued by them. This, by the way, is a major high street bank in the UK. I’m not naming them because that’s not the point of this story.

And consider this: quite apart from the inconvenience and the confusion, the bank has effectively posted my card AND my pin to the wrong person. It’ll get sent by registered post – but as we know, anybody can really sign for it. The gentleman who now lives in our house is a very nice man, who hails from China and works in the City, in London. But what if he was a villainous man, easily tempted into transgression? How ironic is it that after all the effort of sending the card and pin in separate packs and taking all the precautions of masking the pin, it gets sent to the wrong person! A reminder that you’re only as secure as your weakest link!

And there were so many opportunities to get it right! Even a simple pop up while ordering the new card, to say thanks, we will be sending your card to this address, and showing the last 3 digits of the post code could be an easy way to trap this error. To be fair, Samir, the guy at the other end of the phone at the call centre, did what he could to rectify the errors and the bank has offered us a £60 payment as an apology. Assuming that the new cards get here by Monday, I’m inclined to get over this and move on. Of course, if the cards don’t arrive as expected, and we have go on holiday on Wednesday without them, I will have to tell them what to do with the £60, and it will not be polite.

Fresh from this brush with data antiquity, we ran into another one, this time a Harley Street clinic, who called my wife for an appointment. “Can you come tomorrow?” they said. We made a herculean effort to get there, the next day, beating tube strikes and insane traffic. The appointment was actually on the following day, and the doctor was unavailable. I asked them, why didn’t you send through a confirmation email which would have sorted out the error or misunderstanding? “Mumble mumble” was the only answer I got.

It seems to me that despite all the hype about connected worlds, smart products and big, gargantuan data, we’re still at the starting block in so many ways. I’ve been in London for 12 years now. I’ve never tweeted a single word about Bollywood, yet Twitter regularly asks me if I want to follow the latest Bollywood stars, or Indian TV personalities. And I’m sure many of you, like me, have been unwilling recipients of re-targeting ads – being told about great new folding cycles a month after you searched for and actually bought it. In all these ways, we’re still in the trough of digital disillusionment, to borrow a phrase from Gartner.

I guess the question left in my mind is, how many businesses, big and small are discussing big data and digital transformation projects before getting the basics right? How many are trying to leap into the 21st century, with one foot still stuck in the 1980s?  A good digital strategy should ensure an appropriate choice architecture which allows you to focus on getting the basics right while simultaneously creating a roadmap towards a bigger vision.

So the next time you encounter data-antiquity as a customer, or in your business, remember that in the digital era, there is no excuse for getting the basics right and that a good data foundation is at the heart of any digital transformation roadmap.

Digi-Tally: Through My Digital Viewfinder, Jan 21, 2015

This is still the week of the CES after-glow, and there’s a lot of reflection in the media about what we saw at CES. In a nutshell, and as summarised in the TWIT podcast, no tablets and more cars. Autonomous vehicles has been one of the areas that has moved forward quicker than most of us had anticipated and may have great positive externalities by way of enabling a sharing economy for transport. In much the same way as the word “television” has been redefined in the past decade, we may be entering a similarly transformative phase for ‘automobiles’. It may well be a reaffirmation of the name – a self driving car is after all truly auto-mobile. But increasingly we may start to see the car as a network, a node on a larger network, or a collection of smart (and inter-changeable) components. On the other hand the broader IOT examples keep mushrooming, and we’ll no doubt be exposed to weird and wonderful examples of the power of Internet of Things – from smart security to home automation, and from wearable health and wellness monitors to self managed environments.

It’s also been the week for spotlighting the great transition of technology eras – as we move from the PC & desktop era into the untethered, wireless, mobile and ubiquitous computing era, the struggles of Intel and IBM amongst the behemoths of the 90s and 00’s are sharply in focus. Intel shipped over 100m chips, but are still dramatically dependent on the shrinking PC market. They’ve made an entry into the wearables, tablets and sensors space (interestingly, by acquiring a Chinese firm), but the numbers are still small and analysts aren’t convinced yet. IBM have just announced a 11th straight quarter of declining revenues. The slowdown is precipitated by the hardware business, with the digital arms, including mobile, security and cloud showing strong growth but very low numbers. Overall, a 16% growth in “digital” is probably not good enough, and the combined weight of 27% is impressive, but you sense that the bits that are big aren’t growing fast enough and that the parts that are growing well, aren’t big enough, to actually create an overall positive outlook for IBM just yet. At Cognizant, we often speak about the shifts of the “S-curves” we are currently in between the Web era S-curve (dominated by fixed wireless and PCs) to a digital S-curve – dominated by ubiqutous, nano-computing and wireless connectivity. Intel and IBM’s challenges are symptomatic of the difficulty of transitioning success from one wave to the next. But to state the blindingly obvious, they will not be alone. How will your business make this jump?

I continue to believe that 2015 will be a year of digital infrastructure. Broadly speaking this should include cloud, middleware and security, for most large enterprises. Of these, security has been much in the spotlight of late, with Sony obviously being the most high-profile victim. But arguably, despite the political intrigue and the alleged involvement of North Korea, the hacking of the US Central Command should be more akward, geopolitically speaking. This list of famous hacks from The Telegraph has some fascinating nuggets. From the unintentional Morris worm (Morris is now a professor at MIT), to the Target and Sony Hacks of the last 12 months. Two trends stand out. The first is the increasingly political colour of the hacks – indicating that this is now a serious form of warfare or international espionage. The second is the simplicity of many of these hacks. DDOS, phishing, these aren’t particularly sophisticated attacks, but they indicate that as humans we often represent the threats and weak links in the security environments of our organisations.

The HBR carried this great example of the success of Nordstrom’s digital strategy. I think all success stories tend to get over-simplified to an impractical level, in our hunt to find an easy formula. Usually there are dozens, if not hundreds of things that need to go right for a major project to work well, and it only takes a few to not work well, for it to be a limited result or an outright failure. This is why we have many more failures than successes of course. So while I agree about the arguments in this piece, I would hesitate to consider this as a necessary and sufficient condition for digital success. Nordstrom’s strategy comprises of a focus on customer experience, and the extensive use of digital (SMACIT) tools across the length and breadth of the business, to effectively create a new business model. As always, both God and the devil lie in the details.

And what should we make about Google’s change of tack on Google glass? It was initially interpreted as Google pulling the plug on a venture with mixed success, which it has a history of doing. But it seems apparent now that Google are taking a leaf out of Apple’s book and going design-first. By handing this product to Tony Faddel, of Nest and iPod fame, Google seem to be acknowledging that the technology (which works) needs to be nested inside a highly usable, and ideally beautiful product. This is hardly a revelation but if this is indeed the thinking, then it’s wonderful to see Google, the spiritual home of engineers, acknowledge the role of design and user experience.

Also, at CES, there was much buzz about more wearables – watches from Sony and HTC, and other devices. Smart watches look like being the wearable de l’annee, but the hunt for the killer app is still on. Any guesses? What would you use a smart watch for? What problem could you solve? Or what wonderful new benefit could you imagine? Like many others now, I don’t wear a watch to being with, so it would have to be a compelling benefit to make me wear a watch again (one more device to manage!).

It would be remiss of to not mention this video from Ola Cabs in India which a colleague kindly sent me. It’s refreshing to see such a stark focus on user experience from an engineering point of view, rather than design alone. Anybody looking to build a product should see this.

And finally, on a lighter note, this set of maps, yet another example of the emotive power of data in our lives, my favourite is the first map, on second languages spoken in the boroughs of London. Amongst other things, it shows you the patterns of immigration and the abundance of Indian and Polish people in London. May be there needs to be a new alliance for the IPOs (people of Indian and Polish Origins) a microcosm of a geo-political shift, a trading block and a platform for cultural enrichment hitherto overlooked. I mean, all this technology, data and understanding should bring us closer, right?

Doing Digital: 10 Starting Points

There is an alluring future that digital enthusiasts like us love to project. It involves the excellent and industry shaping use of analytics and big data, whist getting our customers and consumers to love us on web, mobile and social platforms and willingly offering us their data so we can turn it into ever more gasp-worthy products. In this world, we’ve magic-wanded away the infrastructure challenges, the silos and politics of real businesses, the cultural inertia and significant technological challenges.

Most companies that I know get this picture and they agree with the destination but have no idea about the journey. Most importantly, they don’t know where to start. Here are 10 recommendations / observations for getting your digital show on the road.

(This post comes from an opportunity I had to speak about digital recently. At the time of writing this, I’ve identified at least double this number of recommendations, but for the purpose of this piece, here are 10 basic ones). 

Understanding How Digital Is Different:

  1. Digital is creative and emotional: Traditional IT works from process outwards, building on conformity and compliance, and the focus is on the logic of the solution, and it’s efficiency. Digital starts with the user journey inwards, building on individual creativity and embracing diversity of users and behaviours. The focus is on engagement, and getting users to use your product, over the many viable options available to them. Consequently this is about the emotional connect to the user. The only right solution is the one that engages your users. One of my favourite examples is the “get me home” button on the national rail app. It ticks the boxes for emotional responses while also enabling a context sensitive and customised response all at once. 

  2. Digital is lean. I don’t think it’s a coincidence the digital explosion is synchronous with the widespread adoption of lean and agile thinking. In the way that technology landscape is morphing and changing, it is far more important to be agile than to be right. You can be right once, bur it’s likely you’ll be wrong often. On the other hand, lean methodologies allow us to live with change and learning. This is why Evernote which performs that most basic task of taking notes (and on which I’m actually composing this piece) is able to succeed against a Microsoft, Apple and a hundred other note taking softwares. Most of the digitally successful companies I’ve worked with have started small but innovated fast and often. 

  3. Digital is Di-Phy. An increasingly intermingled amalgam of digital and physical environments. When thinking of solution architecture, we not only have to think about software, OS and hardware, but also of the physical environment in which the solution exists. An excellent and simple example of this is the QR codes on London bus-stops which when scanned, indicate bus times. It’s a highly responsive system which is actually faster than the otherwise excellent bus-timing applications which exist. But one which requires thinking through the solution, user experience, deployment and use, across the physical and digital elements.

How To Do Digital

  1. Start anywhere but start now: Many people I know agonise over which business processes to start with first. While you could certainly spend a few days in shortlisting the most critical user journeys that define your product or service, it’s probably more important that you start soon, rather than start with the right process. Start anywhere, somewhere, but start today. Transform one user journey. This will typically necessitate new processes and changes to existing processes. It might even lead to the creation of new products or services. Most importantly this will create a significant number of new digital touch points which will be sources of new data. 

  2. Digital Infrastructure is critical: The digital tools usually get the most amount of attention – mobile, social, sensors, and more. But you need to consider a stratification within the tools. The three mentioned above and project-level analytics can be considered at a project level. However, you also need to consider the digital infrastructure layer, which should be addressed at an enterprise level. This includes cloud, security and middleware as well as enterprise analytics. The last of these deserve special mention and we’ll come back to it. But cloud, security and middleware are critical to almost every project, yet are best managed as a common, infrastructure layer, where the investment can be shared between a number of projects. Cloud solutions can be used in the enterprise to enable any number of services for projects to consume, so the benefits are more than just the cost savings of scale. Middleware includes both MBaaS products (e.g. Kidozen, Anypresence) and API Management ones (ApiGee), for example. Security needs to be thought end to end, including authentication and identity management, especially in a multi-device, cloud based environment. Most companies still seem to be underinvesting in digital infrastructure. I believe 2015 may be the year that digital infrastructure may become front and centre for CIOs. 

  3. Meaning Making is the promised land: Ultimately this game will boil down to the quality of data you collect, the efficiency and effectiveness of algorithms you can write and the new meanings and insight you can create, to serve customers better. However, starting off with a ‘big data’ project may not be the right approach. You also need to improve the quality and depth of your own data, which is best done through digital touch points. The Code Halo (TM) model recommends that you create an inventory of touchpoints. The Mobile Moments Model from Forrester Analysis suggests identifying those specific points where you can change a customer perception or experience via mobile led experiences. You get the drift. You need to start with simple digital models, but keep at the back of your head that the goal is to feed that meaning machine you’re building. Make sure you identify and collect the right kind of data through each of your digital projects.

What do IT Departments & Vendors have to do differently?

  1. Engineering & Design Culture: This article by Mark Kawano, a former designer at Apple points out that contrary to popular belief, it’s not that Apple always employed the best design talent, but it was more that Apple had an engineering culture that viewed design and user experience. This happy confluence of engineering and user experience design philosophies has very powerful synergies. It means that engineers never build without thinking about user experience, so the bar is already set pretty high. It also means that any inputs from user experience experts is sought proactively, consistently and valued highly, as a part of the engineering and technology development process. Much of traditional IT still treats UX as a necessary evil that must be endured to “beautify” the great work that engineering has already done. This culture is prevalent across the vendor community as well as IT departments. As such it results in the proverbial ‘lipstick on a pig’, in terms of output. It is not a coindence that IBM are among the top recruiters of design talent right now, but it remains to be seen whether the average engineer sees user experience design as core to his or her work. 

  2. Stakeholder Complexity: Typically the stakeholder map of a digital project is very different from that of a traditional IT project. Suddenly you have marketing, communications, sales, LOB associates, and many others around the table, engaged in the minutiae of the execution. Consequently, you need to have project and program management of a very different kind – you need to speak the language of all these different groups of people and not rely on IT jargon. This is a slightly greater challenge for offshore providers as there are a few more linguistic and cultural barriers to cross. 

  3. Rejigging the commercial model: Most businesses work with budgets and ROI calculations. Vendors work with gross and net margin projections for programmes and clients. In digital projects, owing to the the stakeholder complexity as well as the uncertainties, it is imperative that we err on the side of over investment in managing the early stages of projects. Note, this is different from over investing in the solution or technology. It just means creating a stronger, more robust program & project management and user experience layers, to work through those initial hiccups. The project over it’s lifetime will in all probability more than pay back that earlier investment. Don’t look for project margins for the first 3 months. 

  4. Collaboration on steroids? Last, and certainly not the least, in this list, is the heightened need for collaboration. As white space opportunities open up, which don’t sit in the traditional industry vertical or horizontal boxes, there is an increased need for joined up thinking. Consider for example the connected home – part media, part utility, part telecom, it provides opportunities for entirely new value propositions comprising a wide range of technology solutions. The same would apply to Connected Cars, Smart Cities, or Wellness markets. Traditional IT departments and IT Vendors are long used to working in specific sectors and visible reward mechanisms. This kind of fuzzy collaboration with lack of clarity about the outcomes and rewards at an individual level, requires a mind shift from this traditional mode of thinking.

Once again, I can think of at least 10 more areas of difference, either in philosophy or in action, but we’ll save that for a later date!

Digital: Time To Put The Horse Before The Cart?

As somebody who has come into the technology world with an education in economics and business, I have always been the one to argue vociferously, that it’s business first and tech after. You must first sort out the business objective, change, process impact and then select or customise the tool to the business needs.

Of late, in the digital environment, I am learning to question and often invert this logic.

Cart horse

But let’s remind ourselves of what ‘good’ means, in traditional technology projects. The correct flow has always been:

Business need –> Process change –> Define the ‘to be’ stage –> deploy appropriate technology –> impact on user behaviour –> outcome achieved.

As a consultant, I’ve made a living out of fixing this flow. Or specifically, fixing projects that have confused this flow. Many IT projects have historically gone bad because the technology came first, and nobody had thought about the business outcomes, or the desired process change.

But I find myself regularly giving advice in the digital projects which includes putting in the technology early in the game. Why is this?

To start with, traditional technologies were not intuitive. Many long suffering users would argue that they are often the absolute opposite of intuitive. It is definitely true that these technologies and tools are process centric. They are based around a view of a business processes that is deemed the ‘right way’. As such they are based on conformity, and used to drive process adherence.

Digital technologies, on the other hand, are fundamentally based on diversity. This is not diversity as in customising the font and the colour-scheme. Think of a smartphone, which, from the moment you start using it, starts to morph into something that is uniquely yours – in the applications you carry, the way you arrange them, the way you use it, and what you use it for. This is not about selecting from a limited number of pre-defined settings. It is creating enough degrees of freedom and choices so as to enable, mathematically speaking, options which are many orders of magnitude higher in number. A virtually infinite number, since you can’t humanly work through all of them. Or think about any two people’s Facebook or Twitter feeds.

Even the way 2 people use map applications can vary. My wife prefers Apple Maps (yes, and I still love her!). I can’t get away from Google Maps. The way we access the apps differs, how we check directions differs. Even the way we search varies. Both of us use exactly the same model of the iPhone.

Digital technologies are as we all know based on user centric approaches. They are built based around user journeys, not business processes. This philosophy shift, is the second key difference, and is the reason why these tools and technologies far more intuitive. The tech is not being used to corral a diverse user base into standardized work processes, it is in fact liberating them to do things their way, while allowing an underlying process to support a massive variety of users.

The combination of these 2 means that the technology can embrace the diversity of people and behavioural spreads without having to apply blinkers.

So far so good, but that still doesn’t explain why we should put technology and tools first, does it?

Now consider that in enterprises, technology is something that is done to people. Users are essentially recipients of the technology that is planned, designed and implemented by a specific set of people. Digital technology is more of an interplay than a one way street. And while traditional technologies are deterministic, digital is exploratory and discovery driven.

A critical pillar of this is the move to agile methodologies. I met a start up recently which has been self funded, has 6 people, has an excellent product, and has had 28 releases of its app within the past 3 years. The best businesses today tend to talk about a ‘tight development cycle between user feedback and new features’ – this tends to be in the range of a fortnight to a month, between releases. This also implicitly means that your users are now willing participants in the product roadmap and there is very little second guessing of what the users want.

When you pack all of this together, you can now see why in the digital space it makes sense to get technology into the users hands early. To summarise, the technology is intuitive, and digital solutions are typically discovery driven and supportive of huge diversity, and the delivery and continuous improvement is driven through tight agile cycles. So giving something that simple that works, to the user community, engages them, draws them into the development and improvement process and creates outcomes that you possibly couldn’t imagine even with the best product team. Its why Evernote or WhatsApp, which are fundamentally simple, even primitive propositions – note taking and text messaging, respectively – are able to take market share away from Microsoft or even Google, in the case of Evernote, and Vodafone or (earlier) Facebook, in the case of WhatsApp.

I argued earlier that Digital is all about big vision and small action. I’m now going a step further that the small action may well be to get a simple tool or platform to your users in the shortest possible time, rather than spend weeks and months drawing process maps and building complex systems. Now, obviously there are risks here. Simple and quick does not mean poor quality and badly thought out or executed. This isn’t a short cut, it’s a methodology which requires skill. The skill to strip a complex idea to it’s MVP version, and then to elegantly execute it. User experience quality is non-negotiable. And it has to solve a problem, not half a problem. And the best measure of this, is that it has to make the users’ lives a little easier, in however small a way. The challenge is that only the user can assess whether this has actually happened.

I was pleasantly surprised when I flew into the US this time to notice there were self service kiosks at immigration, at Atlanta. Sadly, the output of that processes was only to verify the fingerprints and then stand in another queue to meet a person. In a competitive environment (which I appreciate this isn’t), this would be the equivalent of solving half a problem.

So the way a digital “cart-before-the-horse” process might work is:

Product vision —> User journey understood —> MVP delivered —> engage with feedback —> co-create product roadmap with users —> co-own the outcomes —> deliver the (modified) vision.

So we’re back to the idea of customer journeys, and understanding how to simplify or transform them. If you were creating a new consumer product, such as the next Dropbox or Spotify, you have a certain level of freedom, I would even say simplicity as you have a clean sheet of paper with respect to your back end, processes, service and fulfilment. The challenge for enterprises is that simplifying one customer journey may require cutting across multiple business processes. This is why this is much harder for large businesses. From the earlier world where we built software to replicate our desired view of the process, we are now building tools that are perpendicular to process thinking. This can be messy, politically, operationally and commercially, for large organisations. Offering a transformation of how automobile accident claims are settled by an insurance company may require multiple departments, processes and existing technologies, to be impacted. So it would be a mistake to think of this as a trivial exercise of throwing a bit of technology out.

Also, digital processes typically apply to the systems of engagement – broadly speaking, to those components or aspects of your systems which need to interface with humans – be they customers, partners or employees.

And here’s the catch. Once users start to engage with your MVP technology product or solution, they start to drive the evolution of that platform. You now have the proverbial tiger by the tail. You can’t go halfway down the process and then abandon the needs and feedback that your users prioritise, even if it goes against what your Senior Vice President of Product Development (or other HIPPO) wants you to do.

So while it sounds simple, this is actually quite a profound change for enterprises, and especially for the entire ecosystem of IT teams and traditional IT vendors but one that you need to embrace unless you want to become a victim, rather than a proponent of Digital Transformation.

Digital: Big Vision, Small Action

I’ve been a part of scores of discussions and projects around digital transformation, strategy and innovation. I’ve also been in the trenches trying to make some of this stuff actually happen. Over the years I’ve developed a strong olfactory sense of ideas that aren’t going well and those where there’s clearly a smell of success. 
 
I’ve spent many moments reflecting on these experiences. Sometimes at airport lounges by myself after day long meetings, nursing a glass of wine. At other times, in heated discussions with colleagues, locked in the deadly embrace of entrenched opinions. 
 
In a nutshell, in my experience, it boils down to a simple credo – big vision, small action. This is a viewpoint you will see reflected in a lot of contemporary writing and thinking around lean and agile models, but somehow, while thinking big comes naturally, it’s very hard for big companies to act small. But every day I see signs that the smartest companies are recognizing the value of lean teams, working on small outcomes, which create momentum and the building blocks of great change. For most others, fail-fast is something they like to talk about but it stays on the slides rather than finding its way into the program. 
 
Don’t get me wrong, big ideas are critical. They underscore the vision and direction in which we need to move. The big idea is the north star of our journey. But you cannot negotiate even half a mile of unfriendly terrain with your eyes fixed on the north star. And all too often we fall into the trap of big idea & big action. 
 
A typical idea of a big action is when a large company goes – ‘we are going to completely re-engineer the way we sell our widgets to our customers, across our 16 divisions and migrate from a direct to indirect sales network whilst improving our net promoter score and digitise our entire sales process while we’re about it’. You’ve all been there I’m sure. 
 
I’d like to highlight five very specific benefits of small action – those agile, lean projects which we love to quote but seem reticent to undertake. And why, especially in the world of digital change and transformation, they are even less useful than a hippopotamus at a barbecue. 
 
The first challenge is politics and alignment. If you want to make a big change, in large organisations, you are expecting to get the buy in of a dozen or more senior people, who may well have contradictory expectations and competing ambitions. The time taking process of consensus building is the anathema of change, and often the end product of a consensus is an unwieldy compromise which no longer has the ability to deliver the benefits anticipated. In contrast, the small action looks at creating the smallest viable version of this change, may be in one division and one product line of a less prominent business unit. But however insignificant it is, you can never argue with success or with data, and small change grows quickly on the back of data and proven success. The power of digital is that it IS possible to create successes and gather effective data on a small scale.
 
Speed is an immediate victim of the big change process. Likely timelines for getting alignment with senior teams can take months. It can even take months just to get the right people into the room, to discuss the key issues. In fact, the small change approach can deliver large transformations faster because once it gathers speed, the change rate is exponential. A few years ago, I was working on a large complex program with half a dozen workstreams, which had gone on for over a year with almost zero success. People were demotivated and change resistent. One of the little things we tried was to take one of the workstreams and just focus on making that work over an 8 week timeframe. In two months, we had a success story, and suddenly everybody wanted to be in on the journey. The entire program was completed in under 8 months. 
 
The actual implementation of a large scale program can be exponentially complex in terms of detail. This is not to say it can’t be done. If you were building a new airport terminal, you would have to take on and manage the complexity, but in the digital world the number of unknowns is also very high. It may sound simple to say “we’ll combine our CRM data with our transaction system, to create better views of customer history” but in one company where we tried it, we stumbled on firewall access, data structures, speed of response, security issues and user interface design. You can gloss over those challenges in a powerpoint presentation but not in the actual implementation. Will your grand plan survive it’s first brush with reality? In a small action approach, you can break up complexity into much more manageable chunks and solve them one at a time. Whatsapp recently announced that it had added the much awaited blue ticks for message delivery. The service has grown a lot both in features and popularity, but the first version of Whatsapp was launched in 3 months with 4 developers working. Evernote still releases a new version every other week. 
 
You see, it boils down to learning. In the large change programs, we spend a lot of time discussing with ‘experts’ and owners of expertise areas. We seek advice and inputs and then we expect armed with all that planning, that things will go as per schedule. Small change makes no such assumptions. Small action learns ‘on the job’ and consequently it learns in real time. One is a learning by talking, the other is learning by doing. I think we all know which is more effective. In my experience with digital tools & projects, nobody’s really an expert – everybody has gaps in their understanding. So learning from expertise is immediately limited. 
 
Finally, the digital landscape itself is changing. From regulatory stances on privacy (Google) or entering new markets (think Uber), to new platforms, tools, models and disruptive players, there is a high change environment in which you need to operate. Given this, the danger of the big change approach is obvious, with it’s slow and complex  approach, it may be outdated by the time the implementation has actually started. And often the fear of going back and re-negotiating the same issues, means that the program just gets shelved. This is probably the single most common outcome of large change programs in the digital environment. It gets put on the shelf and people just stop talking about it. Ultimately, it becomes a symbol in the organisation of project failure. People go ‘rememeber project Orion?’ (nudge! nudge!). The only way to address this is through the calculus of small change. Stick to small agile action which can help to absorb directional change brought about by the environment, and you never have to jettison a very large amount of work, so the risk is never too high. 
 
A couple of years ago, we were pitching some new and exciting technology led change program to  a client who are a well known Utility company. Our approach involved running programs of change, integrating complex back end systems and creating an agressive 6 month program of work. One of the seniormost execs in the room from the client organisation started the meeting by telling us how he along with a couple of his engineers had just spent the weekend ‘playing around’ with a new location based open source utility which they found to be quite interesting and had built a pilot for replacing their existing clunky routing application and were planning to roll out the change to a small set of service teams within the next 7 days. It suddenly made our 6 month change program look very glacial. 
 
Think of a snowball that you start rolling down a snowy hillside, and how it gathers pace and bulk as it moves. This is how small change works. Now think of repairing a car by a committee of people with specialised and disparate skills taking the entire car apart, and then putting it back together again. This is how big change works. In the digital world, only one of these approaches is effective. 
 
So the next time you encounter a digital transformation initiative, remember: politics, speed, learning, scaling and environmental change are the 5 reasons why it makes sense to commit to big vision but small action. 

Digital Transformation: From TOM to EOM

TOM / EOM – sounds like a soup you might order. But for the purpose of this discussion, put your appetite to one side, and think about Digital Transformation. 

 

TOM or the Target Operating Model is the staple of the consulting framework in transformation environments. The logic being, you have an initial operating model and you enter a transitional phase, driven by internal and external change, and you emerge with a new “target” operating model. It’s an excellent construct and very useful for delivering change. 

 

In the digital arena, though the idea of the Target Operating Model is challenged because of a number of reasons. 

 

Critically, it assumes that the change is a finite and one time activity. This is no longer true. Consider the landscape today. You enter a phase of virtualisation of your servers and networks, and before you finish that you’re in the middle of the mobility revolution. You combine cloud and mobility to create another transformation and everybody is talking about big data and social analytics. And then there’s the Internet of things, machine two machine and smart environments waiting to happen. So which points do you pick as the start and end of the change? And if you took this whole set as one change, would you even survive it?

 

And then, if the change is not a finite or a single event, what do you assume as your end state or ‘target’ environment? And if there is no target environment you can define, how can you create a target operating model? Would it not be outdated even as you were implementing it? 

 

There could be an argument that these individual technology waves do not affect the business model and are just technology changes. I would disagree with that. Yes, moving from one vendor to another, or upgrading from version n to n+1 is a technology change, though even those projects need to be seen as business change projects. But the waves of technology I called out earlier – from Cloud, to Mobile, to IOT are all pretty fundamental shifts – often creating deep changes in business models. 

 

To add to these problems, as this article in the Forbes highlights, many organisations undertake digital transformation without actually knowing what it is. Many don’t really understand the transformation, many others just see it as platform upgrades. 

 

So here’s the bad news, your digital transformation project is not a one time exercise, there is no target environment and so your target operating model may be in need of an update by the time it’s bedded in. 

 

The likely scenario is that there will be multiple waves of transformation. And here onwards they will all be digital (or at least until we come up with a new word). 

 

Which leads me to my proposition – that perhaps the right way to think about this is as an Evolving Operating Model, rather than a Target Operating Model. 

 

What would be the key features of an evolving operating model? Here are three key ones, though there may well be more. 

 

Building a change capability – at the core of this is the creation of a Culture of change adaptability. I’ve consulted for many organisations where the smallest change has to be handled with kid-gloves and is a source of anxiety and organisational stress. These are all big changes we’re talking about, so there’s a lot of work to be done to make people change friendly. This should ideally be reflected in contracts with employees. HR needs to take a leading role here and ep build a culture of change through awareness, education, self-empowerment and counselling. At the same time, leadership needs to invest by ensuring the right people are chosen and then given the time to grow into this change culture. Based on my experience, there are parts of the world, such as Europe, where this would be a harder process than, say, in Asia. European business cultures are much more rigid about roles and function, and these are often defended by regulation. Also, in Europe, there is often a much higher premium on matching exact experience to a role, rather than bet on adaptability. One of the ways to address this is to balance the majority of such fixed role people with a handful of adaptors – people who can foster a pro-change environment within the business. 

 

For example, I met a European company in the travel segment who could not even change business rules in their enterprise apps, or implement a mobile app store without validating the decisions with worker councils. 

 

Funding Change: Not a capital expense but the cost of doing business: Build in the cost of change into your cost of running the business. Rather than the one hit capital expense of a digital transformation project, budget for change annually, that LOBs and divisions can draw from, with the right checks and balances to ensure governance is provided. There is every likelihood that each of the next five years will require significant changes to some part of your business or the other. Rather than running it as a giant centralised project, or leaving this to individual departments and LOB’s who may not value this investment, organisations should explore creating an investment bucket which is made available to teams based on their justification, against a stated vision. But this investment is locked down for change efforts and cannot be used for other purposes. 

 

Earlier this year, the BBC announced a program of saving £48m and reinvesting at least £29m of that into Digital Transformation services across channels, mobile and digital journalism. Cooperative Bank had set aside £500m on IT alone, to enable it’s digital transformation. Your budgets may be comparable to BBC, or Cooperative Bank, but in all probability they represent significant amounts of money. 

 

The big bang approach assumes that one large and hugely diverse project is the best way of optimising the way this budget is spent. Reality may be very different. 

 

Instrument your company: Build an instrumented organisation where process change can be systemised easily, using BPM, middleware, SOA, and other architectural approaches. This is fundamental in order to plan, implement and measure change. For example, if you want to change your mobile customer service layer, with new processes without necessarily having to make big changes in your CRM or ERP systems, you need a decoupled approach that will allow you to modify or even replace your mobile front end without always having to change a legacy application. But also, it will be faster and quicker to implement a new process if the systems can change quickly, rather than become a symbol of the organisational inertia. 

 

A good analogy and one you hear often in business discussions is about turning the tanker. We talk about large businesses being like large tankers – hard to turn. But your digital transformation should not be seen as that one awkward turn. It’s more like suddenly being in an environment where you will need to turn and often. The real challenge here is actually, how do you stop behaving like a hard to turn tanker?