Creating Digital Value, Calling Designers to Embrace AI, and Avoiding Operational Debt

A weekly round-up — 3 discoveries, 1 reflection and a quote worth remembering in the innovation & design space—for leaders invested in digital transformation.

By Maish Nichani

#1 Four levers that create digital value

This MIT Sloan School of Management article describes four levers organisations can structure around: Customer, Capability, Commercialisation and Component. Customer and Commercialisation are external-facing, while Capability and Component are internal-facing. Leaders pay more attention to the external levers because they are tangible and can see immediate impact if they exercise them. The internal ones take time and commitment to build, and the effect will be felt many years later. For this reason, we frame our projects as double-loop projects - one part focuses on the delivery, and the other focuses on building capability. This way, one is continuously investing in building capability with every project.

#2 If designers don't embrace AI the world "will be designed without them" says Brian Chesky , founder of AirBnb

”My recollection in the 1990s is that a lot of the most prestigious design jobs weren't in the internet, they weren't web designers, they were print – people came to digital design very late…A consequence of the best designers not going to the internet or into web design till very late was that people designed a world without them.”

Design, to me, is a deliberate attempt to create value. The opposite of a deliberate attempt is a random attempt. The value may still be created but in a wasteful way. As AirBnB founder Brian Chesky articulates in this article, by embracing AI, designers can create the right kind of value (humanity-centred) faster. The world needs us urgently, and we should rise to the occasion.

#3 Unbridled innovation: a rude awakening for Singapore’s banks?

”The “move fast and break things” Silicon Valley philosophy, while a mantra that seems to rule in the startup world, can have severe repercussions in the banking sector. For institutions that millions rely upon for their daily transactions and financial well-being, the unintended consequences of this approach can be far-reaching and devastating.”

Unbridled innovation is not the problem with the DBS and Citibank outages in mid-October; it is having the internal operations execute at the same levels of customer experience. In Working Backwards, the book that wonderfully documents the Amazon culture, there is a story about the invention of Amazon Prime, the loyalty programme that offers free shipping. In its pursuit of customer convenience, Amazon wanted to offer “free and fast” shipping to its customers. This meant a complete overhaul of its supply chain. Instead of using a “Band-Aid” approach, they planned a top-to-bottom approach that would scale, including shifting their fulfilment centres and overhauling their codebase. In other words, they did not accumulate any operational debt. Hopefully, this case will highlight the need for operational excellence alongside product innovation.

Internal reflections

Sticking with the book Working Backwards, the authors mention the concept of an “institutional no” and the “institutional yes”.

”The institutional no refers to the tendency for well-meaning people within large organizations to say no to new ideas. The errors caused by the institutional no are typically errors of omission, that is, something a company doesn’t do versus something it does. Staying the current course offers managers comfort and certainty—even if the price of that short-term certainty is instability and value destruction later on.”

I see this playing out with leaders, especially under VUCA situations. So how did Amazon pull off Prime even when it was a costly and untested idea? The answer lies in Jeff Bezos’s customer obsession principle. While executing Prime was notoriously complex, the intent was blazingly clear - Prime will make customers happy. “If we can get this to work, it will be big.” Having clear visibility and intent on why something is important is half the battle won. If a company has a clear intent, it is easier to change an institutional no to an institutional yes - “We’re going to do this. We’re going to figure out a way.”

Quote worth remembering

“I think if you believe that a particular customer set is important, like sellers in that case, and you believe you have identified what some of their nontransient needs will be, and you believe the addressable market is big enough for it to matter—if you really believe those things, then it pays to be stubborn in pursuing that.”

Jeff Bezos on being stubborn on doing what is right and being flexible in the details.