Are Businesses Still Missing the Point About Digital Transformation?

The other night I was talking to the Head of Product Management for a company who run several Dating Site brands (facing into differnet market sectors: young, old, gay etc. and across over 50 countries). He was really keen on the term "Digital As Usual" (DAU), because it encapsulates the culture and thinking needed to sustain a Digital Business Model.

So I was quite disappointed to see Raconteur's recent article on Digital Transformation, which shows just how badly many companies are still addressing their move to a Digital Business model. The usual collection of issues showed up: It's an IT problem, its a siloed CDO problem etc. Though, to some extent I think that the authors and experts quoted in the article got it wrong too as they keep talking about Digital Transformation, implying that you get there in a relatively short period of time. The whole point is that you never get there. It is a continuous journey and requires the whole business to act as a team who enjoy voyaging. So instead of transformation programmes, they should think Star Ship Enterprise and understand that what they are really pursuing is organisational excellence and customer delight. Getting that right will move the dial on meaningful organisational measures of performance and deliver revenues and profits (or whatever relevant Value that applies to their organisation) as a byproduct of operating a successful Digital Business Model.

What was interesting in the article was the criticism of organisations who think about digital as just being IT. Whilst in Asia Pacific, a recent survey looked at Digital and IT Transformation. Companies in this region belivve that they are leading the world in digital transformation. Its finding was that where businesses had addressed IT Transformation, they were over 39 times more likely to make better faster decisions than competitors and 13 times more likely to complete application deployments ahead of time, whilst running their critical applications at less than half the cost of competitors (who had not transformed). This is despite the fact that IT leaders are less likely to be involved in critical business decisions that in other parts of the world.

So, IT and lean capabilities are essential enablers, but the senior management team needs to work as a team and not a series of siloed prima donnas. However it is difficult to find anyone who works maturely across all aspects of digitalisation. The Head of Product Management that I talked to (above) freely admitted that his organisation, although growing successfully, does not put enough attention into data quality and avoiding technical debt. And the Strategic Busines  KPIs that they work to are not perhaps the best in optimising customer experience. However, they were very storng on identifying tangible market opportunities, product thinking and lean delivery, whilst enjoying a positive collaborative and innovative culture. They recognised that innovation does sometimes mean learning from failure, although they don't have a strict measure on how much failure is acceptable. But they were doing enought to prosper and continue to learn and grow on their journey. And that is the point.

Aligning Digital Exploitation with Operational Capability

All Enterprises Are Not the Same

One of the tenets of Digital As Usual (DAU) is that most businesses are not pure play digital organisations. In almost all cases there are operations and activities which are essential to either fulfilling service or delivering a product which need to be managed as well. The Digital Adoption Framework assumes an Industry Categorisation Model as illustrated below.

The Industry Categorisation Model identifies 5 Categories along a continuum of Industry Product Nature. At one end of the continuum are “pure play” digital organisations, whose products are Information and Content based. These consist of Market Platforms like eBay and Compare the Markets.com who provide a platform, through which other organisations and people sell their goods and services, as well as Publishers and Providers of Content who provide videos, e-books, podcasts, news, music etc. At the other end are Extractor and Grower type businesses, such as coal mines and cocoa growers who provide natural unprocessed products. Off course not all businesses fall neatly into just one category. A major energy company such as Shell or Exon may straddle several categories along an Upstream (exploration, drilling and extraction) to Downstream (transport, refining and distribution) activities.

So why is this important when thinking about digital businesses? Well each different type of business operates in different ways, has a different level of dependency on capital assets and has different opportunities for exploiting digital technology to augment its business model. Additionally, the whole concept of Lean Delivery via Design Thinking, Agile Delivery and DevOps may have different opportunities and constraints as well as nature of delivery in each category.

Some Examples of Exploitation

The diagram below looks at the potential for exploiting Artificial Intelligence (AI) technologies according to Industry Category.

The “X”s in the table represent significant opportunity for exploitation against a generic type of Use Case. So for example AI technologies (machine learning, visual recognition, natural language etc.) can be used to provide insight and learning in every type of organisation, but there is very little opportunity for them to add to “customer experience” in say mining or farming. Again there is huge potential to build AI capabilities into consumer products, e.g. Alexa in Amazon’s Echo, but there is little opportunity to enhance a product such as iron ore or tree trunks produced from a Natural Product Extractor or a Grower. 

Alternatively for IoT, see diagram below, the opportunities are pretty limited for an Information publisher, but there are many areas where a farmer could use it to track livestock and monitor soil conditions and crop conditions, as well as control assets such as vehicles and trailer equipment.

This moves us onto exploiting iterative approaches within an organisation. The other night I was talking to someone from a major pharmaceutical company. Drugs take years of research to identify promising candidates for a problem and to test for efficacy and safety, as well as meet regulatory demands. There is little opportunity to exploit Iteration in this type of product development. But for the company overall, there are opportunities around internal processes and with Agile Marketing.

Agile Marketing is a growing area of adoption within industry and works well for consumer driven businesses. At its core is the use of small integrated product teams which focus on market research, product promotion, delivery of marketing and promotional materials, advertising and the information analysis systems used to support marketing data analysis. These teams tend to work in multiple sprints testing out marketing promotion hypotheses and rapidly identifying which approaches produce optimal results, to improve overall revenues. 

Iterative development also its quite different for delivering an oil tanker or a film, to the development used to support a consumer service. In the case of the former, iterative design, development and continuous testing techniques are used to deliver a single integrated complex product over a period spanning many months if not years. In the latter they are used not just to deliver the product, but to continuously keep it fresh, up to date and moving ahead of competition that is playing catch up.

So it's important not to adopt a one sized fits all approach, but to really get down to what can work for your organisation. This is part of what I talk about in my book.

Are You as a CxO The Real Culprit?

Digital Impacts on Business

In a recent article in the Sloan Management Review, it was mentioned that 87% of executives think that Digital will affect their market place. Yet out of the 75% who thought that their enterprises are adequately prepared, only around 10% saw it as a potential threat to their business.

This is only one symptom of the many aspects of CxO behaviour which are affecting the success of organisations which want to adopt a digital business model. Overall, there is often a lack of realisation that the CxOs themselves are inadvertently sabotaging their organisations' efforts.

Executive Behaviour Can be a Problem

In many cases, in the same manner that many executives don't understand what it means to be a project sponsor, CxOs have failed to actually engage with the issue. They don't seem to think that they should spend the time to get involved in deep market analysis and identify real game changing opportunities. They just want to automate yesterday with some sexier technology.

Additionally, they don't get the need for acting as a joined up team or building a positive culture which supports experimentation and innovation. In fact, many executive teams don't seem to understand that innovation means doing something that no one else has done before, so there are bound to be a few issues along the way as a product team discovers what works and what does not.

David Snowdon provided a great framework with the Cynefin model to explain what is involved with emerging practice and chaotic conditions.

This is why the DAF (Digital Adoption Framework) places significant emphasis on cultural change as promoted in The Way of DAU. Culture is a known inhibitor to strategy implementation, as witnessed by the well known quote that Culture Eats Strategy for Breakfast. Culture change starts with the C-Suite and ripples down. So any CxO looking for digital success, should be asking whether he or she needs to reach out work with C-suite peers to build a better team. Otherwise, failure beckons.

Executives Need To Learn How to Promote Innovation

On another tack however, a research based article on innovation and executive behaviour published in the Harvard Business Review, outlines some personal behaviour characteristics of entrepreneurial CEOs and other top executives: 

• associating, 
• questioning, 
• observing, 
• experimenting, 
• networking.

Their observation was that CEOs in successfully innovative companies take more ownership of innovation, look outwards and provide leadership to the innovation process and get personally involved.

Agile at Scale

In a recent report The State Of Agile 2017: Agile At Scale Forrester stated that DevOps adoption is beginning to drive Agile adoption and that many organisations are adopting both simuultaneously in large scale transformations, i.e. they are going Lean as suggested in the 3rd layer of the DAF Framework (see: The Way of DAU (including the DAF) ).

Additionally, Forrester identifies major impediments:

• Culture & Behaviour,
• Availability and Commitment of skilled product owners,
• Effective Executive Leadership,
• Lack of project / programme frameworks

As key blockers to successful adoption which further re-inforces the Digital Adoption Framework principles and recommended activities for iteratively adopting a digital business model.

Anyone who wants to discuss can find the discussion group here on LinkedIn.

All constructive thoughts and suggestions are welcome.

Agile Business

A recent article in Raconteur discussed business agility and outlined some interesting case studies such as Lego and Volvo which are trying to pre-empt market trends by getting there first. It also mentions Google as the champion of "Failing Fast", without really getting into the ethos of innovation requiring experimentation and an appetite to learn from failure to either tune or abandon hypotheses on what will work in the market place.

It was also interesting that the article quoted a recent CA survey stating that:

87% of executives think that responding more quickly to new opportunities will give them a distinct advantage - whereas with DAU and the DAF, the belief is that you have to identify them and try to get there first. Responding quickly is only enough to keep up.

65% expect higher customer satisfaction and retention - which may be right about satisfaction, if their organisation has adequately focused on customer experience and design thinking, but kind of misses the point that customers are less loyal in the digital market place unless an enterprise maintains its innovation and keeps its image clean (through transparency, ethics, sustainability etc.).

58% expect higher employee satisfaction and retention - which again has some qualifiers around culture (collaboration, empowerment, personal development, communication etc.) design of work and eliminating frustrating nugatory tasks which are endemic in major corporations.

I also thought the author slightly got it wrong when reporting that Agile is chaotic. Agile is in fact highly organised, but it is a good way of coping with chaotic conditions. Anyone who has seen Snowdon's Cynefin framework would appreciate that.

Anyone who wants to discuss this can join the Way of DAU discussion group on LinkedIn.

Agile Portfolio Management

The Agile Business Consortium recently published its book on Agile Portfolio Management. See a recent article here AgilePfM .

Key things about it that are complementary with the The Way of DAU are the insistence of alignment with strategy and value, the emphasis on innovation and collaboration and the highly iterative nature of the activity.

It fits nicely into Layer 2 of the DAF framework.

A Day In the Life of a Product Manager

Getting up super early, Marjory K'Ting rushed her breakfast of extra strong coffee and a bagel so that she could catch the red-eye commuter train to Doontung where they were holding today's consumer workshops for the Zeting shopper app, MyWay. 

On the way she read through the latest KPI scores for the current version app. It was showing good overall trends, though she noticed that one of the target segments, for young professionals was not responding as expected to the app. What was going on here then?

On arrival she headed straight to the KafMeUp coffeeshop whose owners had agreed to let them run their workshop in am area set to one side.  There she found Zak, her super keen intern assistant lounging around outside just as KafMeUp's proprieter Ivan Blunt arrived to open up.

Inside they started to set up at their reserved area with signs inviting passersby to drop in and participate in exchange for a free breakast, paid for by Zeting. As they were doing this, Gordan Keek, one of the developpers and Susan Chain (the retail specialist) turned up and started to fill up on pick-me-up sized mugs of coffee.

Just as set up was complete, and KafMeUp's staff were ready to open up, the first customers came in. Zak's role was to meet and greet the customers and invite representative members of the public to take part in the workshop. Arty Tariq, the lead tester then arrived and joined the group, panting heavily as his train had been delayed and he had run all the way from the station to get there on time.

Gordan was their to demonstrate the current prototype for the next release of the MyWay app. Arty would capture their responses, helping refine detailed requirements, design features, usability concerns and identify appropriate test cases.

Marjory and Susan were going to review the current user experience, focusing on a couple of scenarios which had recently been identified as priorities from customer feedback. Before she started, she asked the team to see if they could explore the young professional segment issue as well.

By mid morning, they were exhausted. They had spoken to 50 or so shoppers and office workers who stopped by the coffee shop on their way to work and had a pile of material to analyse. In the taxi, on the way back, Marjory spoke to the team and got their gut feel response from the morning's work. Overall, it seemed that the work had confirmed a lot of their initial research and assumptions, but that there was a perception problem around the app with young professional who did not feel that it catered to their ethical concerns or help with finding green sourced and sustainable products. Also there was a lack of coverage of certain classes of lifestyle service and product which they liked.

She was going to have to address that soon. Which meant another meeting with the solution architect, the analyst and the project manager to see what could traded against these new requirements. Arriving at the office she quickly called up her diary and scheduled a meeting to discuss how to accommodate this within the forthcoming release.

Slipping down to lunch in the nearby deli-cum-eatery she started to think through the implications. Retailing would need to research and add lines. She would have to update the targeting and messaging of the marketing campaign for the new release. The media company used would need re-briefing and she would probably have to present an update to the Integrated Product Team and then she would have to re-forecast the numbers for the current release's performance, the costs of the new release and the anticipated uptake and revenue for the re-defined release. The product road map would also need updating and Oh! she needed to do a quick first impressions adjustment to the forecasts for this afternoon's operating plan review with the CFO and the CMO.

A few adrenalin filled  hours later she had, survived the monthly operating plan review, but with new actions to confirm her gut feel projections with more definitive estimates. Although, it was not all bad, if they met the young professional consume segment's needs and got the message through to them, then there could be a revenue boost of anywhere between 10 and 30%. They just needed to execute well.

Back to planning again, she added all her new tasks to her to do list and went downstairs to see what was going on in the Integrated Product Team's End of Day wash-up. Progress was good, and most of the issues raised appeared to have a doable action, but the bad news was that young Kendra, their graduate app developer had accepted a job offer from GitYrRox and would be leaving next month. 

Now she just had to survive the evenings drinks at the local cocktail bar whilst the ceremonially on boarded the new operations team lead Justin into the team and took pictures of him wearing a funny hat for the internal magazine. She hurriedly, phoned to leave a voicemail for her partner, asking him to leave a snack out for when she got home later that night and headed off into the social fray. ...

This is a mythical story about a product manager in an integrated product team. The aim is to convey a little of what is involved, but also how important collaboration is across the end-to-end process of developing and delivering products, whilst innovating iteratively in a customer focused manner. It's all part of The Way of DAU

Digital Patterns

Most software developers are familiar with the concept of a pattern. They use them to describe types of programming problems which can be solved in the same generic manner.

This was originally developed to support the indexing of re-usable code and trading in 3rd party off the shelf code components, with the idea of improving overall development productivity and quality. The quality aspect arising from the assumption that such code would be designed to be flexible and robust in many scenarios.

The idea was not actually that novel as it replicated the concept of group technology in manufacturing, where a group technology code defines the shape, size and manufacturing characteristics of 3D parts or components. The idea being that groups of machines could be set up to manufacture families of parts more quickly than traditional methods where machines were grouped functionally and work meandered all over a factory between the functional groups of machines. 

Anyway, patterns have become such a useful metaphor that developers will often describe what they are doing in terms of what the pattern is and therefore what tools and approach they are using. Consequently, the concept of patterns has also been adopted to describe aspects of solution architecture and encourage design re-use within enterprises.

So I have been struck recently by the fact that going digital or adopting a Digital As Usual model might be facilitated by certain organisational patterns.

For example, Lean and Agile solution development is usually product and product team based. The product team integrates the viewpoints of several functions involved in developing and exploiting the product typically including users, product owners, analysts, developers, testers and DevOps engineers. This might be called the Product Team Pattern.

Some approaches to delivering digital products also look at mass customisation via standard features. The principle being that a product is constructed from a number of features for which there may be a number of standard options. The product is then tailored to a customer's needs by selecting which features and which options the customer wants. This then gives a tailored product experience with most of the benefits of a bespoke product, but better economics and more consistent quality because each feature and each option is standardised. This might be called the Adaptive Product Pattern.

A recent article in the SLOAN MIT Management Review, Is Your Company Ready for a Digital Future? described a "Future Ready" pattern, in which it identifies a combination of Customer Experience and Process Efficiency capabilities as delivering this type of pattern resulting in low cost innovation, superlative customer experience, modular agility and the ability to exploit data as a future asset. Whilst this complements the thinking in "The Way of DAU", it struck me that perhaps there are other patterns out there which need to be identified. 

Any thoughts anyone?   

The Way of DAU - The best a business can be

Just to let you know, The Way of DAU is now available from Amazon as a paperback. (click on Amazon to see) and the e-version should be available soon. 

This is a deliberately simple book on the quite complex subject of how to adopt a sustainable digital business model. It was inspired by my personal frustration with incomplete models and advice available for Digital Business.

Digital operations have now replaced traditional Business As Usual business models. The Way of DAU promotes 10 basic principles, an iterative Framework (the DAF or Digital Adoption Framework), and positive cultural values to achieve the behaviours needed in successful digital businesses.

The book is based on a mixture of personal experience (in an organisation struggling to reinvent itself) as well as collected best practices. The current edition represents an MVP version. I hope to collect constructive feedback via a LinkedIn Group to drive future releases of the book. (see: The Way of DAU Group ).

The Way of DAU - The New Digital Philosophy

For those of you who have come to accept that Digital has become the new normal, it it is not surprising to know that there is a new acronym DAU or Digital as Usual. This replaces the old one BAU or Business as Usual.

There is even a philosophy known as The Way of DAU (pronounced Dow). This is built around 10 guiding principles which encapsulate current best practice in the Digital world.

For those getting started, the principles are useful for driving adoption and practice of Digital. They are:

1.       Understand the Market;

2.       Identify what Changes Rewrite the Rules;

3.    Select High Priority Opportunities;

4.       Build Product Focused Culture and Teams ;

5.       Walk in your Customers’ Shoes;

6.       Embrace Opex;

7.       Go Lean;

8.       Cherish Information;

9.       Nurture Partnerships;

                    10.     Harness Fear of Obsolescence.

Although there is an assumption of a continuous iterative loop to be followed when applying them.

That's all for the weekend.

Digital Adoption Framework

A lot get's talked about Digital, but there are few comprehensive approaches to adoption available for reference. 

This is why I was interested when I came across Vadrim's DAF diagram, reproduced below. Enjoy!