The lasting impact of real digital transformation

We live in the digital age. Everything is changing, all of the time, and it’s just warming up. For businesses, the uncertainty is scary. It’s also exciting because possibility and opportunity are everywhere. 

The game changed

Technology has always been the great enabler. Just look at the Industrial Revolution. Nowadays advancements are leapfrogging at accelerating speed because modern technology is powered by software. Digital technology levelled the playing field. Now competition comes from unexpected places. Upstart companies with bold business models move fast, ship often and design for customers first. And they’re gaining market from the big boys. 

The customer economy changed

People behave differently too, and are doing new things because of digital technology. They use digital products and services in unexpected ways. With powerful capabilities they now communicate with each other and with the companies that serve their needs and interests. They chat privately with friends, send messages to public groups, and reach strangers around the world. They share their opinions in online reviews, tweets, Facebook posts and YouTube videos. They’re discerning and not afraid to wield their choice. They seek products and services that add value to their lives, and they want them from companies they believe are fair, genuinely care, and demonstrate social and environmental responsibility.

The digital revolution is a customer revolution

There’s no way to predict how the digital revolution will play out. Every industry will be disrupted, probably sooner than we think. Adapting to this reality is the most urgent challenge facing business leaders today—how to sense oncoming change and emerging opportunity then respond to it rapidly and effectively?

The best way to predict the future is to invent it.
— Alan Kay

The companies thriving amidst the volatility and uncertainty don’t move at an annual pace. They've adapted to harness continuous change. They sense instantly, respond in real time, and innovate continuously at startup speed. Every day they try out new things in the market, observe people's behaviour, measure the effect and adjust quickly. In return customers get to experience new offerings as they evolve, and vote with their wallets. These companies are having an ongoing conversation with customers, employees, partners and stakeholders that’s rich with information about creating customer value. They don’t have strict plans. Instead they're learning their way forward.

Contrast this with incumbents who must protect their core business for as long as possible. Who, for a while, manage to make enhancements through localised digitisation efforts but, despite facing the continuous threat of disruption, inevitably succumb to the pressure to deliver higher share prices in the short term. Financial engineering wins out over refreshed customer value creation. These established companies rarely get the chance to sustain a longer term effort to create fertile ground for future growth engines. Unlike Amazon with its ambidextrous strategy rooted firmly in its organisational culture, they can't execute today’s business while also cultivating the business models for tomorrow that will disrupt their market and even their own business. 

Grand challenges and the greater good

Disruption is all the rage. When its impact is positive for society as a whole, disruption is a good thing. Rather than looking for markets to disrupt, we must look for the human endeavours we can empower with digital technology. This is a greater good than just getting one up on the competition. 

Today’s grand challenges and wicked problems need more than clever code. They need a different approach. One that embraces change and enables continuous experimentation. One that’s inclusive and sees entrepreneurs, design thinkers and creative technologists collaborating with industry experts and customers, cancer clinicians or climate scientists, to reimagine what’s possible and do the remarkable. 

The new digital playbook

A new digital playbook has emerged from the trenches of online product and service development. It is tried and tested and fully equipped to deal with uncertainty through rapid change with limited risk. Its principles harness human culture, curiosity and creativity, and encourage constant experimentation.

Quantified outcomes

It’s difficult to predict what the market needs yet projects are still planned as if we know exactly what's going to work. Projects are managed by specifying the outputs or deliverables, which are nearly always features. This stops us adapting to what’s being learned. Businesses must shift from delivering the outputs they think are needed to realising the business outcomes they want. They must declare those outcomes in a way they can be measured, and give teams the freedom to try different approaches, experiment, and learn how to get there given constraints like time and cost. 

Inclusive collaboration

Mobile-first apps with their gesture-driven customer experiences, industrialised digital platforms, and the API economy are ushering in complexities that require us to collaborate like never before. Digital ventures need agile teams that are more cross-functional than ever before. One dedicated team of designers, developers and digital workers of all kinds; entrepreneurs, business stakeholders, domain experts. Businesses must encourage them to bring all their courage, curiosity and creativity to the table, and have continuous conversations with users and customers to understand unexpressed and unmet needs and determine the market demand.

Learning Culture

To be able to sense and respond, people must be learning all the time. To understand customer behaviours and the data they generate everyone must develop the new universal skills of customer listening, empathy, assessment and dialog. Learning needs a culture of openness and humility that supports curiosity, welcomes other ideas, and respects the skills, strengths, and humanity of fellow collaborators. It must give permission to fail, embrace the willingness in people to admit they don't know the answer, and celebrate their eagerness to go find it. 

In the long run, the only sustainable source of competitive advantage is your organisation’s ability to learn faster than your competition.
— Peter Senge, The Fifth Discipline

Continuous Adaptation

Agile practices enable product teams to make small changes in an ongoing way, continuously sensing the performance from customers and responding with successive adjustments, be they new features, business rules, pricing, marketing language, support policies, or anything else that contributes to business success. The core principles underlying agile methods have fundamentally changed planning to leverage continuous learning—listen rather than predict, make a credible guess, get feedback in nearly real time, then adjust the plan. Similarly Innovation Accounting and Beyond Budgeting have changed how to budget. It’s no longer affordable to make commitments a year in advance when every day there's new things being learned. This changes how digital products and services are marketed and sold.

The playbook requires three fundamental changes in organisations and to ways of working: 

  1. Future-embracing management practices must be inculcated, which can operate adaptively rather than perpetuate the illusion of control in the face of uncertainty.
  2. Entrepreneurialism needs to become a key trait in all employees. People not bound by convention or obligation to past ideas are more likely to question assumptions, imagine new possibilities, and rethink the way value can be created. 
  3. Scientific inquiry and research need to be integrated into every kind of work to establish rigour in approach and generate timely, relevant data to inform decisions.

Making life brighter

I believe the new digital playbook can increase technological breakthroughs, spark new ideals for digital business, and create more companies that invest in the future and demonstrate social accountability by spreading opportunity and creating shared prosperity. Companies changing to more adaptive, humane and effective working practices will be better positioned to deliver more benefits that are meaningful to more people. 

I am committed to a vision where policies, objectives and incentives change to the long-term. There will be less bureaucracy and more growth coming from organic advances in customer delight than from mergers, acquisitions, and financial engineering. And most significantly, there will be opportunity to redesign the economy to be inclusive, more sustainable, and more innovative. This is the lasting change of real digital transformation. 

I face the future with open arms and a smile on my face.