How to Build and Accelerate Digital Transformation and Innovation
The CEO of Microsoft, Satya Nadella, repeats the message: “all companies are software companies”. “Every company is a software company. You have to start thinking and operating like a digital company. It’s no longer just about procuring one solution and deploying one. It’s not about one simple software solution. It’s really you yourself thinking of your own future as a digital company.”
To stay competitive, organizations should pivot toward “rapid incrementalism” — incrementally altering existing structures to make the most of what is already in place.
To take the advantage of Digital Transformation Opportunity organizations need to gain insight into the opportunity and size of the rapidly growing digital transformation market, the digital maturity of their end-customers, and the business attributes for success. Therefore, they will align business strategy to the digital transformation market opportunity.
What is digital transformation?
Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how organizations operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure.
Innovation is a new idea, creative thoughts, and new imaginations as the application of better solutions that meet new requirements, unarticulated needs, or existing needs.
One of the most popular method in Innovation is Design Thinking, which is a methodology to better understand requirements, challenge assumptions, re-frame the problem and propose solutions. It is often used with lean canvas to develop proposed service/product and agile methodology to deliver the proposed service/product. I would like to highlight that lean canvas is to develop specific service/product within a business. Business model canvas is used for overarching business to find the right operating model for the organization.
The Value Proposition Canvas is a tool which can help ensure that a product or service is positioned around what the customer values and needs. Then you can use Design thinking to develop new concepts for experimentation. After use lean canvas for to transform product or services by applying enterprise architecture with agile methodology to deliver the proposed service/product combining emerging technologies (Cloud, Blockchain, AI etc.) with people. Finally, Business model canvas for new business models.
A Recipe to build and accelerate digital transformation and Innovation?
· Defining a clear vision and strategy is key to developing a strong roadmap to help move organizations forward. Action is to Aligning business strategy to digital transformation.
· Creating a unified and elastic culture that invites diversity allows for change to be positively accepted. Action is applying smart simplicity and empowering employees.
· Amplifying organization’s unique potential transforms what you currently have to what you can become. Action is Engaging customers and optimizing operations.
· Developing organization’s capabilities continuously enables you to improve productivity and efficiency. Action is transforming products and optimizing operations
Digital Transformation and Innovation Pillars
· Engaging Customers: Aligning customer engagement strategies for success on the digital journey by giving them new experiences they love
Understand how organization is engaging customers across the transformation lifecycle and integrating customer centricity across the business and through data driven insights. Align customer engagement strategy to help customers succeed on their digital journey. You can tailor individual customer experiences by harnessing data and drawing actionable insights. To stand out, you must understand customers as individuals and find new ways of interacting with them.
· Empowering Employees and Smart Simplicity: Aligning skill sets and culture with the digital revolution
Help employees achieve more by creating a work environment that’s intelligent, flexible and secure, and creating opportunities for people to collaborate from anywhere, on any device. Simplify organization by identify and resolve unnecessary complicatedness and deliver lasting, measurable change. Smart Simplicity’s six simple rules aren’t solutions in themselves, but rather a set of strategies that are based on economics, game theory, and organizational sociology. These rules enable organizations to promote new behaviors and improve performance. The first three rules create the conditions for individual autonomy and empowerment to improve performance.
1) Understand what people do: Find Out What’s Really Happening in Your Organization Know the contexts that shape behaviors. Learn how your people cooperate, find resources, and solve problems or fail to do so.
2) Reinforce integrators: Identify integrators — those individuals or units whose influence makes a difference on the work of others — by looking for points of tension, where people are doing the hard work of cooperating. Integrators bring others together and drive processes. They work at the nexus where constraints and requirements often meet. Give integrators the power and interest to foster cooperation for dealing with complexity. Remove managerial layers that don’t add value.
3) Increase the total quantity of power: When creating new roles in the organization, empower them to make decisions without taking power away from others. Providing a few tools simultaneously is more effective than offering many tools sequentially. Regularly enrich power bases to ensure agility, flexibility, and the ability to adapt. Power determines the capacity to impel cooperation — and that’s essential for addressing business complexity.
4) Increase reciprocity: Set clear objectives that stimulate mutual interest to cooperate. Make each person’s success dependent on the success of others. Eliminate monopolies, reduce resources, and create new networks of interaction.
5) Extend the shadow of the future: Have people experience the consequences that result from their behavior and decisions. Tighten feedback loops. Shorten the duration of projects. Enable people to see how their success is aided by contributing to the success of others.
6) Reward those who cooperate: Increase the payoff for all when they cooperate in a beneficial way. Establish penalties for those who fail to cooperate. Performance evaluation and reward systems are the key — but instead of using them to punish failure, use them instead to punish failure to help, or to ask for help. smart organizations accept that problems happen for many reasons, and the only way to solve them is to reduce the payoff for those who don’t contribute to a solution
· Optimize Operations: Modernize portfolio, transform processes and skills. Automating business processes to compete.
Accelerate the responsiveness of your business, improve service levels, and reduce costs with intelligent processes. By coordinating people and assets more efficiently, you can respond to issues in real time — and even preemptively solve them.
· Transform products: Innovate products, services and business models.
Embracing the breadth and value of Intellectual Property. Learning how to develop and capitalize on products and own intellectual property (IP), leverage data to enter new markets, revise business models to prioritize agility, and make customers new business partners on the joint digital journey. Understand the breadth and value of owned IP, and where your strategy should align. Using data as a strategic asset and shifting from hindsight to foresight, you’ll be able to differentiate and capture emerging opportunities. The opportunity to embed software and technology directly into products and services is evolving how organizations deliver value.
Innovation comes from its funding and governance. Therefore, organizations need robust Innovation System to deal with its investments in the technologies, programs, products and customer support which are necessary to achieve its objectives and create value for its customers. Main objective of this system is to create products and services that satisfy specified needs and provide measurable improvement to organizations capability at a fair and reasonable price. Below is the innovation system.
Funding Process (Plan, Program, Budget and Execution): Financial Management (FM) is the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. The Funding process is focused on the Financial Management and Resource allocation for current and future programs. Funding process has 4 phases;
1. Planning: The Planning Phase is the process for determining what capabilities are needed for the future from strategic guidance.
The Planning phase is the definition and examination of alternative strategies, analysis of changing conditions and trends (threat, technology etc.) and economic assessments. To understand implications (short, medium and long term) of current and future choices.
2. Programming: The Programming Phase is the process for balancing and integrating resources among the various programs according to certain priorities.
The Programming phase defines and analyses alternative structures, systems and support systems together with their multi-year resource implications and the evaluation of various tradeoff options.
3. Budgeting: The Budgeting Phase is the process for convincing Investors and Executives to provide the necessary resources and then balancing the checkbook to ensure the resources are spent accordingly.
The Budgeting phase includes formulation, justification, execution, and control of the budget. The primary purpose is to scrutinize the first one or two years of a programs budget to ensure efficient use of resources.
4. Execution: The Execution phase is the real-world application of the Funding Process.
The execution review occurs simultaneously with program and budget reviews. The execution review provides feedback to the senior leadership concerning the effectiveness of current and prior resource allocations. Over time, metrics are being developed to support the execution review that will measure actual output versus planned performance for the programs. The execution review may lead to recommendations to adjust resources and/or restructure programs to achieve desired performance goals.
Management Process: Management process focused on Leading, setting goals, Planning, Organizing, Co-Ordination, Motivation, Control and Communication. Management process provides governance policies, principles and forms management foundation for all programs. Risk Management process identifies specific statutory and regulatory reports and other information for each milestone review and decision points. This process has following steps:
1. Planning, it determines the objectives, evaluate the different alternatives and choose the best. It is deciding in the present about the future objectives and the courses of action for their achievement.
2. Organizing, define the group’s functions, establish relationships and defining authority and responsibility. Identification of activities required for the achievement of enterprise objectives and implementation of plans; grouping of activities into jobs; assignment of these jobs and activities to departments and individuals; delegation of responsibility and authority for performance, and provision for vertical and horizontal coordination of activities.
3. Staffing, recruitment, placement, selection and training and development of the skills for the people for manning the jobs.
4. Directing, is to give the Direction to the employees, leading the employees to perform efficiently, and contribute their optimum to the achievement of organizational objectives. Inspiring the personnel with zeal (great motivation and enthusiasm) to work and co-operate for the accomplishment of common objectives.
5. Coordination, establishing such relationships among various parts of the organization that they all together pull in the direction of organizational objectives. It is thus the process of tying together all the organizational decisions, operations, activities and efforts so as to achieve unity of action for the accomplishment of organizational objectives.
6. Controlling, ensuring that the divisional, departmental, sectional and individual performances are consistent with the predetermined objectives and goals. Deviations from objectives and plans have to be identified and investigated, and correction action taken.
7. Communication, to inform the right things, to the right people at the right time.
Requirements process: Provides established methodology to identify, assess, validate and prioritize capability requirements, gaps and redundancies in the spectrum of Doctrine, Organization, Training, Material, Leadership, Education, Personnel, Facilities and Interoperability, Policy. (DOTMLPF-IP) Through:
· Capability Based Planning (Define capabilities, assess requirements, propose solutions)
· Application of Concepts of Operations (CONOPS), Analysis, experimentation, urgent needs and tasks) and Integrated architectures (Enterprise Architecture) in Experimentation, Foundation, Migration, Modernization and Optimization Phases. Examine current, new or proposed capabilities required to solve a current or emerging problem. Describes how a system will be used from the viewpoints of its various stakeholders. This provides a bridge between the often-vague capabilities that a project begins with and the specific technical requirements needed to make is successful.
· Integrated, collaborative review process
· Leverage expertise Industry standards, best practices and all stakeholders.
Which results Initial capabilities, capability development, capability deployment and operational support. Thereby defines Organization standards and specifications.
DOTMLPF-IP spectrum is to avoid the “hammer to every solution looks like a nail” approach:
· Doctrine: a stated principle of affairs. The way the organization creates value
· Organization: how organization organize itself to create value
· Training: how organization prepare tactically; basic training to advanced individual training, various types of unit training, joint exercises, etc.
· Materiel: all the “stuff” necessary to equip its forces, so they can operate effectively.
· Leadership and education: how organization prepare their leaders to lead. From senior leaders to its managers; professional development.
· Personnel: availability of qualified people for peacetime, and various contingency operations
· Facilities: real property; installations and industrial facilities that support the forces.
· Interoperability: the ability to be interoperable with forces throughout the alliances
· Policy: any, interagency or international policy issues that may prevent effective implementation of changes in the other DOTMLPF-IP areas
Let us see a model that represents the concepts and their relationships involved in all the life cycle activities for capabilities. Innovation C3 Taxonomy enables a common language and a tool to synchronize these activities and improve connecting Strategic Concept and Guidance through levels of ambition expressed in the Digital Transformation effort, to Communications and Information technology architecture and design constructs. This is the generic framework and contributes to a key component of the interconnectedness and interoperability: Exploiting technology to help deliver interoperability. The taxonomy below depicts the high-level operational environment of the organization, connecting Vision, Mission and operational capabilities to technology capabilities.