Six Signature Moves for Businesses to Outcompete in the Digital Era
In this edition, we will explore the key drivers of digital transformation and discover how leading companies have rewired their businesses to achieve their digital ambitions.
Quote of the Day
“The enterprise that does not innovate ages and declines, and in a period of rapid change such as the present, the decline will be fast.”
—Peter Drucker
Discovery Learning
The strategic challenge of navigating the digital and AI landscape is not new, but it is becoming more urgent. While 90% of companies have initiated digital transformation efforts, only a third have realised the expected revenue benefits (McKinsey).?
Achieving meaningful scale and value in the digital age necessitates six key shifts, each of which establishes new processes and capabilities. Amazon, Freeport-McMoRan, DBS, Google, and the LEGO Group are five well-known companies that have successfully implemented these changes to achieve their digital goals. Let’s look at six strategies for rewiring businesses to thrive in the digital and AI-driven era.
1. Shifting from Digital Initiatives Focus to Customer Focus
Rewired businesses prioritise data-driven customer service improvements. This approach creates a self-sustaining cycle, demanding clear organisational priorities and choices to deliver value.
To maintain this focus, rewired companies follow two key practices. First, they set a clear customer-centric goal that permeates the entire organisation, as evidenced by Amazon's commitment to customer service at all levels, including logistics. Similarly, DBS’s digital strategy is focused on improving customer journeys and reducing pain points, as seen in its effort to streamline credit card origination from 21 days to under four.
Second, these companies make product management a strategic priority by investing in talent, tools, and processes. Freeport relies on quarterly business reviews (QBRs) to set objectives and key results (OKRs) and makes allocation decisions with the guidance of senior product owners. Google, known for its quarterly review of team progress against specific OKRs, insists on key results to drive work priorities.?
2. Shifting from Hiring Digital Talent to Cultivating Digital Talent Across The Organisation
Companies understand that their most valuable asset is their talent pool, and they are committed to nurturing internal expertise. For example, once the LEGO Group realised that around 70% of its code came from external sources, it initiated a social media campaign to showcase the complex technical challenges it was addressing and established digital studios in Shanghai and Copenhagen. These efforts, among others, enabled the LEGO Group to more than double its number of systems and software engineers.
Furthermore, it is critical not only to attract top digital talent but also to provide an environment in which they can thrive. This includes career advancement opportunities, exposure to cutting-edge technology projects, and ongoing skill development opportunities. Google, for example, rotates developers throughout the organisation to broaden their skill set and provide new learning opportunities.
In an era of rapidly evolving technology and coding practices, providing time for technologists to continually upgrade and broaden their skills is essential. DBS promoted tech literacy throughout the organisation by encouraging better communication and collaboration between technical and business teams. The company provides executive training in key digital competencies such as data analysis, innovation, and customer journey thinking.?
3. Shifting from Agile Teams to A Product and Platform Model
To support a larger number of teams, businesses must transition from a factory model with centrally managed agile teams to a product and platform operating model that allows for scalability while eliminating traditional bottlenecks such as approval processes and budget requests. In this model, IT's role changes from being a "requirements fulfiller" to overseeing technology platform teams and sourcing tech talent for product teams.
For example, the LEGO Group formed teams to oversee each digital product required for specific solutions, each with its own executive sponsor and business and IT leaders. A business lead served as the product owner for the product team, ensuring that the solutions were adopted by the business. All product team members shared KPIs and incentives.
DBS followed a similar strategy, with platforms managing groups of product teams that cater to enterprise-wide requirements. A "two-in-the-box" approach involved joint leadership from business and tech for product teams, giving platform leaders flexibility in resource allocation.
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4. Shifting from Central Technology to Distributed Engineering Excellence
To tackle complex technical challenges, rewired companies follow these steps:
5. Shifting from Centralised Data to Organisation-Wide Embedding
User-friendly tools facilitate data access for all teams and processes in a rewired enterprise. As an example, DBS initiated a project that combined diverse models to enhance its detection of money-laundering threats. They used rules, network link analysis, and machine learning to extract information from both internal and external data sources. This resulted in the implementation of an AI-powered anti-money laundering surveillance system.
To support the development of data and AI products, a solid underlying data architecture is crucial for managing data flow and access. Freeport's success with AI modelling was made possible by its comprehensive central data warehouse, which allowed for real-time capture and correlation of performance metrics.
Google, on the other hand, has prioritised secure data access by establishing a central data repository accessible to all employees for a variety of product and development purposes. Furthermore, Google has created a tool for synchronising data from multiple sources using predefined key identifiers, such as customer IDs.
6. Shifting from Short-Term Gains to A Culture of Scaling
First, these companies foster a culture of learning leaders who value customer-centricity and digital expertise. Leaders prioritise learning over knowledge, fostering innovation through rapid testing and improvement. For instance, DBS invested in training managers to embrace change and empower them to contribute effectively to product and platform teams.
Second, rewired businesses closely track progress, similar to cost management. DBS uses a real-time dashboard to track approximately 100 ongoing initiatives, ensuring that issues are identified and resolved quickly to maintain transformation momentum. Amazon takes a similar approach, regularly evaluating initiative progress and reallocating resources to successful ones.
Last but not least, these companies promote a culture of autonomy and continuous improvement by making solutions easily reusable across multiple areas. For example, Freeport repackaged a machine learning model to predict copper recovery, allowing for efficient reuse of about 60% of core code while customising the remaining 40% for each site.
Recommended Readings on Digital Transformation:
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