Every day is another step in the process of digital business reinvention. It’s a continuous process and one which will arguably never die. When Madonna burst onto the scene in the early 1980s, there was little reason to suspect that she’d have more than her 15 minutes of fame. But in the nearly three decades since her debut album, she has managed to remain a media icon. Her secret?
“I think reinventing yourself is vital to your survival as an artist and a human being,” Madonna once said. Fittingly, the name of her 2004 concert tour – her sixth – was “Reinvention.”
The reality is that digital is here to stay. McKinsey allude to this in their article on Digital Reinvention: http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-reinvention. To just take an existing product and put it on an e-commerce site or digitizing a customer experience is not a digital reinvention. Digital reinvention is a rethinking of the entire business itself.
Companies need to ask some fundamental questions, such as:
- What is my core business today?
- Will it exist tomorrow?
- If so, how do I adapt to the ever changing digital world?
- What is my core value proposition? Is this important? Do I need to reinvent continuously?
- Where will my company end up?
Netflix’s evolution is an excellent example of continuous reinvention: from a company that rented DVDs to a company that streams entertainment for a monthly subscription to one that now creates its own content.
Digital business reinvention, as the term implies, requires a significant commitment.
It is clear: digital success requires investment to be aligned with strategy. And it needs to be at sufficient scale. Digital leaders have a high threshold for risk and are willing to make bold decisions. Is this you and are you ready for the digital business journey?
Whatever fundamental change digital business reinvention demands, it doesn’t call for a “throw-it-all-out” approach. A furniture manufacturer will still likely make furniture after a digital business reinvention. But it may do it in a way that’s much more agile and analytically-driven.
There are many elements of a transformation:
- from end-to-end journey redesign
- embedding analytics into processes
- to open technology platforms.
They require a myriad of capabilities, from agile operations to cloud-based infrastructure, and very importantly new talent. But despite being written about often, what’s missing is a comprehensive view of:
- how a company sets the right ambition,
- how to structure the right elements for the transformation,
- then how to undertake the change journey.
In digital business reinvention, what is the core and why does it need to change?
“Think of your core muscles as the sturdy central link in a chain connecting your upper and lower body.” That was the guidance from Harvard Medical School on how to stay in shape. The authors defined the core as the central set of muscles that helps a body maintain its power, balance, and overall health.
That’s the essence of what we are talking about when changing the core of the business. The set of capabilities that allows the entire business to run effectively needs to be overhauled. A company’s core is its value proposition enabled by its people, processes, and technology. These elements are critical in any transformation. Failure to address them will ultimately lead to failure because the legacy organization will exert a gravitational pull back to ‘normal’ practices.
So lets delve a little deeper into these areas.
Any digital reinvention must address the value the company provides to customers (whether existing or new) through its products and/or services. Inevitably this is based on a clear strategy that articulates where value is being created, shifted, or destroyed. Crucial to getting this right is identifying and evaluating existing assets that are most important and understanding what customers actually want or need. This can be surprisingly difficult to do in practice. The value that Amazon originally provided, for example, wasn’t selling books online but rather providing convenience and unheard-of selection. Understanding the real source of its value allowed Amazon to expand exponentially beyond books.
Of course talent is important, but a reinvention needs to involve more than just hiring a few digital designers. Talent priorities should be based on a clear understanding of the skills needed at all levels of the business. This requires investing in building relevant digital capabilities that fit with the strategy and keep pace with customers as they change the way they consider and make purchases. At the same time, targeted hiring should be tied to those capabilities that actually drive financial performance.
Enabling that talent to thrive requires a digital culture – customer-centric and project-based, with a bias for speed and continuous learning. In fact, cultural and organizational issues can lead to the squandering of up to 85 percent of the value at stake. Making sure the new culture sticks requires re-building programs that reward and encourage new behaviors, such as performance management, promotion criteria, and incentive systems.
Rewiring the mechanisms for making decisions and getting things done is what enables the digital machine to run. Digitizing or automating supply chains and information intensive processes as well as building new capabilities like robotic process automation or advanced analytics, for example, can rapidly increase the business’ clock speed and cut costs by up to 90 percent. One temptation is to focus on simply digitizing existing processes rather than really rethinking them. Often, the most productive way to tackle this issue is to identify the customer journeys that matter most to the business and then map out the touch points, processes and capabilities required to deliver on them—without regard to what is already in place. Re-architecting processes requires establishing governance and decision rights to provide clarity and accountability, as well as embedding advanced analytics, automation and machine learning capabilities.
While digital reinvention is more than just a technology overhaul, technology is crucial. Ensure that each IT investment responds to clear and robust business needs, and does not delve into “tech for tech’s sake.” Identify how best to work within an ecosystem of partners and vendors, and assess which legacy systems to keep, which to ditch and determine how to help older technology work in a digital world.
Enough food for thought for today. Feel free to contact me to discuss how we can begin your digital business reinvention. It does not need to be rocket science. It just needs some critical questions answered and a simple easy-to-do process on how to implement change and reinvent your business digitally.