Digitalization

There is a lot of current focus on #Digitalization, as organizations race to define a robust Digital strategy. Through this article, leveraging experience I have tried to define what Digitalization entails – and have attempted to define a framework, in terms of steps which could be followed, to develop their Digitalization strategy, in line with their organizational context ; and the considerations involved therein in terms of effective implementation.

[A] What is Digitalization:

There are multiple interpretations, as to what Digitalization encompasses.

Gartner defines Digitalization as : “Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”

Coming from my experience - Digitalization could also be looked upon as - An outcome of the confluence of fourth industrial revolution technologies – creating an ecosystem, connecting man/machine/data relevant to our day – day lives and business with the internet, which are interconnected through platforms. This has the potential to transform organizations through data driven insights – not limited to generation of new business models

In industry parlance – Digitalization typically involves broadly two components:

(i) Process optimization (Internal). Involves optimization of current business processes and (HR, Finance, etc) leveraging automation – and also looks at developing great frictionless customer experiences

(ii) New Business Model Generation (External). Looks at two aspects – generation of new services and generation of new business models in terms of revenue generation

[B] Developing a Digital Strategy:

Thoughts in terms of developing the Digital strategy:

(i) Cross Functional Team. The business leadership should assemble a  cross functional team comprising of business and technology representatives, identified across the organization. Typical skill sets to look for – tech savviness, willingness to explore new ideas, functional expertise, and a good track record. This team should be given a time boxed deadline/s for development of the strategy (a quarter is a good idea) for completion. Additionally, a steering group – comprising of senior business leadership should also be constituted to oversee the exercise. The cross functional team – should work closely with the steering group, to help with adequate governance, guidance and transparency

(ii) Develop Baseline list of (Current) Digital initiatives. The cross functional team initiates the exercise, reviewing the organization’s strategic business priorities, and developing an understanding of digital objectives, already underway – to develop a consolidated list.

o Alignment with overall Enterprise Business Plan / Strategic plan (AOP, 3-5 yr plan). Scrutinize business priorities. Conduct a business SWOT (Strengths, Weaknesses, Opportunities, Threats) for business pain points, leading to opportunities ready for digital disruption. Review data flows across enterprise business processes – to identify process optimizations and business metrics for insights generation. Research extensively – identifying best practices for #digitization and leverage of #deeptech capabilities. This should lead to development of a reference document, as a baseline of (digital) initiatives, which could be undertaken by the organization

o Existing (Digital) Project Inventory. Inventorize the various digitization activities/projects and spend, already underway across the enterprise. This can be done through workshops, surveys, inputs from various business units plans. A lot of ad hoc digitization initiatives within various business units would be identified (which could be scaled up to other business units, within the enterprise)

(iii) Thinking Layers. Taking the (consolidated) Digitization activities list in the above phase (ii above), as the starting point – develop the activity list to align further with key stakeholders – to get Top Down (Management), Bottom up (Employees), Lateral (Peers) , Outside in (Disruption) and Deep Tech (Latest technologies) perspectives. For simplicity sake – let’s call these different perspectives as Thinking Layers.

Incorporating these various Thinking Layers across the (thus far) identified digital initiatives would infuse the strategy from different perspectives, making it robust – and also leading to alignment across the ecosystem

 o   Top Down. Do stakeholder interviews with CEO/senior management – and figure out digital ambition of the company (where does company want to be (vision) – in terms of way forward, in industry – and organizational, industry imperatives

o  Bottom Up. Idea Generation.  Crowdsource and develop an idea pipeline – with input from (internal) company employees.  Various tools like org surveys (eg Sharepoint), workshops, etc could be leveraged

o  Lateral. Benchmark against peers and outside industry (best practices). An effective methodology, would involve - for every given business process element – to develop a digitization index/score, which is reflects digital maturity benchmarked against competition. Based on the Digitization Index (DI) score gaps – identify projects and program list

o  Outside in. The Google check. Think how Google, Amazon, or a startup would reimagine your business model – if it were to enter your industry/business (Disruption). An effective tool could be to look at each process element, from a disruptive potential standpoint. The variance analysis would be insightful, and generate/validate digital perspectives

o  Deep Tech. Across all business processes – apply the technologies filter – the medley of various fourth industrial technologies like # IOT, #Blockchain, #Analytics, 3 D Printing, #VR/AR, #AI, Computer Vision and Digital Twins. During the analysis, also define the approach towards AI - thinking, how far is your industry from Singularity (i.e when machines become equal or more intelligent than humans)

 (iv) Consolidate. Combine the output of all these Thinking Layers, to develop a consolidated list of digital initiatives for the enterprise. Prioritize these programs, against weighted measures (Digitization Index) – leading to development of a ranked list of digital initiatives. These initiatives should involve development of Platforms, which can be leveraged to monetize data across the ecosystem, through exposing information (API’s) 

Against each of the prioritized initiative/s – an estimation of funding required should be developed, to develop a MVP (minimum viable proposition) product

(v) Phased Approach. Basis business considerations, in terms of available funding and timelines – time phasing of the initiatives (as in iv) should be done, with clearly defined business outcomes for each phase

(vi) Top Management commitment. This prioritized plan – should again be presented to senior management for approval – before the process moves into Execution. This should serve as a baseline, progress against which should be tracked, in various governance discussions

[C] Execution: Once the digital strategy has been delineated into phased initiatives/deliverables – organizations can look towards implementation considerations -  Buy vs Build approach for each initiative, potential companies/startup for acquisition – for technology or talent acquisition (acquihire), investment in a digital innovation center. Agile methodologies should be leveraged to quickly define, test, and come with working prototypes. Practice Strategic Restraint - if an idea is not working, resist the temptation to continue – and deprioritize quickly (Fail Fast). Needless, to say effective governance – in terms of tracking deliverables against plan, should be implemented

[D] Considerations: As organizations work through their Digitalization strategy – some of the considerations and challenges which would be needed to addressed, as the program moves along.

(i) Extensive Change Management interventions need to be exercised

a. Bi Modal. Digitalization implementation requires an agile, quicker iterative approach – and organizations can look to implement a bi modal approach. Digital projects could be implemented leveraging agile methodology, whilst other projects can continue to operate in the conventional/traditional project management approach. To instill organization commitment, part of the annual objectives / KPI’s could be composed of digital objectives (eg. Achieve 10% of additional revenue share through digitalization) . Visits of the senior leadership to digital hubs like Silicon Valley, etc would also help generate awareness, and the disruptive potential of deep tech technologies to the organization

b. Mindset Change within IT organization. This is crucial, as IT organizations can have a preference for legacy, and need to coached in the infrastructure and new working required for digitalization. For example, IT teams may have apprehensions in terms of moving the infrastructure to cloud. Also, Agile project management approaches like Scrum should be prioritized, rather than sticking to the sequential waterfall methodologies

c. Org structure – Review org constructs/company policies – in terms of enabling and facilitating the digital way of thinking/mindset

(ii) Fail Early, Fail Fast. Exploratory outlook and pivoting, is key towards success. Look to exit from a project/POC, if the team feels business outcomes, would not not realized, during the course of a project. Many a times, there is a tendency to keep the project running, even if the team is not getting traction

(iii) Secure Funding. Given the exploratory nature of digitization, defining business cases with financial metrics (ROI, Payback, etc) may not always be possible. Thus, senior leadership expectations should be aligned accordingly. Only projects, with assured funding should be undertaken

(iv) Talent. Hiring the right #talent is key, towards success of the initiative. Hire niche talent across different tech ecosystems (small teams across Israel, Berlin, Amsterdam, India, Silicon Valley could be considered). Also, having an enabling culture for this talent ecosystem – should be a key focus. Developing centers of excellence (COE) across the various deeptech technologies, is beneficial in developing expertise within the team

(v) Security. #Security considerations should be incorporated during the ideation phase itself through leverage of frameworks like Security by design, etc. In the exploratory phase, security principles tend to be overlooked, which can lead to security issues, during go live/production. Various regulatory frameworks, government regulations and data privacy standards (eg GDPR, etc) should be incorporated in the design. Thus, in an increasingly digitized world, security should be addressed on a proactive basis during the design, rather as an afterthought

(vi) Collaboration. Tools facilitating, information flow across the ecosystem stakeholders should be set up– so that various players across the ecosystem – internal and external can collaborate effectively. Central repositories (eg. Sharepoint sites) could be leveraged for company wide visibility and communication

(vii) Program Governance. Regular program updates and meetings with the steering committee and senior leadership should be conducted, basis a preset calendar. It is beneficial to enable governance, against each individual project levels (this should be decided upfront). Good governance enables progress tracking across initiatives, visibility of project status to all stakeholders – driving transparency (engendering trust), addressal of risks on a timely basis and providing oversight by senior leadership - thereby enabling alignment across all levels of the organization.  From experience – setting up a Project management Office (#PMO) can be effective in anchoring the project portfolio, and providing program governance, contextual to the organization needs

(viii) Enterprise Digital architecture. It is crucial, to define the architecture principles , which would define the various digitalization initiatives. Architecture considerations, could involve providing direction in terms of which technology stacks to use, preference for cloud, leverage of open source platforms, integrations to legacy systems, guidance on buy vs build decision/s and data governance towards data sharing with the ecosystem. Conformance and alignment to these principles should be closely tracked during project governance discussions.

#digitaltransformation #3Dprinting #digitalstrategy #digitaltwins #leadership #strategy #technology #changemanagement #cloudcomputing #cybersecurity