Something is happening in the executive management teams these days, they are looking to re-invent their business models using information technology – They call it Digitalisation.
Historically we have done some key steps that have brought us here:
- We have gone though a process of acquiring or building IT systems to support business processes until all manual and physical work has become digitized. The IT function operates the applications and the business use them.
- Then we have integrated systems and made them share information across applications to improve business processes. We start automating some processes.
- Now that «everything» is digitized, connected and exist in a «virtual twin» world, early movers are inventing new business models that completely disregard old business processes. They focus how to create the wanted effect and function, in stead of improving «how we have been doing things».
Because of this, the worlds biggest hotel chain has no rooms (Airbnb) and the biggest taxi company in the world has no cars (Uber). How will future engineering projects be executed and industrial plants be operated? How will public administration functions be produced?
To dive deeper into the digital drivers, have look into the topic Industry 4.0
In many cases we see that the old IT department is not invited to the executive table when new digital business models are being imagined. The IT department may lack the strategic business sense needed to be a relevant partner for the executive management team. This may be the result after years as a business support/service function and a outsourcing candidate in harsh times.
On the other side there is a challenge with the business lines having limited insight related to the disruptive potential of relevant technology. The interrelations between business lines makes it an executive management issue to find new ways of delivering the wanted effect. Many lines of business have no interests in re-inventing their department into obsolescence. The good old «Kodak moment» of organizational development.
The old gap between business and IT has reached the executive board room, mature companies are loosing their market shares to the agile digital business models.
How to do it
This post aims at describing some additional ways to bring together executive management, IT resources, internal experts and external resources when needed. Here you get some proven methods and processes that explain ways to re-invent your business, get the executive sponsorship and how to transform.
The approach is ment as a contribution to the existing strategies such as R&D projects, vendor collaboration, IT business relationship management, proactive IT business analysts, hired advisors, enterprise architects, internal business and IT projects etc.
What is a business model?
To get started we need to understand what a business model is. When analysing and inventing new business models, Osterwalders´business model canvas is a great tool. Here the different key components of a business model are mapped out and important relations managed. The canvas can describe the company as a whole or an internal business function delivered by a business unit to other internal customers.
The business canvas allow for creative brainstorming and exploring alternatives. It becomes clear what you are offering to who along which channels based on different pricing models. There is several online tools that are based on the methodology that can be a great help when getting into the details (www.strategyzer.com).
Enter, the Chief Digitalisation Officer
How do we build a robust digitalisation capability? A function where executive management, technology know-how and the tactical level in lines of business collaborate creatively to explore new business models and ways of creating value without fear of consequences?
Many companies start out with a chief digitalisation officer (CDO) with an executive mandate to facilitate digitally enabled transformation trough existing business lines. This facilitates a common vision and a clear focal point who can facilitate common architectural and business related issues. It also rises the focus and drive out of business lines and up to a strategic and corporate focus.
The first step the CDO does is usually to build a backlog of business case driven initiatives. These initiatives may spread from R&D projects, internal development projects, prof of concepts for new technology to a feature wish list to the local ERP provider for the next user conference.
This is a classic approach, but there may be some disruptive ideas that are not explored along this linear approach.
If we look at organizations that have managed the successful creation and deployment of new distruptive business models and solutions, many of them follow agile start-up principles. They start small, fail fast and move on with more knowledge. Established companies are now adopting best practices from such start-up entrepreneurs to fuel their business transformation.
Create and test new ideas to sove business challenges fast – SPRINT
Jake Knapp from Google Ventures (GV) have fine tuned their methodology over several years and describe the approach in the book «SPRINT – How to solve big problems and test new ideas in just five days».
Having the CDO sponsoring such a business laboratory is a powerful combination. Here the team easily invents, tests and learn how disruptive business models could work, providing the executive management with valuable insight.
A sprint team would consist of free thinkers from business lines, maybe some outside partners, internal IT architects and analysts together with discipline leads from the business. They get the freedom from normal operations to really explore new approaches without the interference and pressure from existing power structures.
The sprint team should include designers, engineers, product managers and business experts. The ideal team size is 5-8 people. The team expertise should mirror the challenge they are trying to solve and should be designed to match each case. Specialists who have insight into how others have transformed similar business functions could be a good help in triggering new ideas.
If larger teams are needed they should be split into smaller teams working on the same challenge or separate challenges depending on your desired deliverables. They deliver their findings to the chief digitalisation officer who is responsible for bringing the ideas into the relevant business lines.
These are examples of roles/diciplines that Jake Knapp propose should to be part of the team:
Sprint Master – Facilitating the sprint
But as explained the team should be designed to have the right knowledge and attitude to create and build new solutions.
Using such an approach a CDO probably gets the firepower needed to champion new concepts that may disrupt the status quo. The next step in the innovation process is going from a tangible SPRINT output to a minimal viable product (MVP). This is all about building a proof of concept and testing it in real life. This step should build on some agile and lean methodology support.
Scaling up and improving great concepts
Eric Ries has described the principles behind the Lean Startup that is helpful for managing scale-up of the SPRINT findings. The core idea is to build and release the minimum needed functionality to some users, then measure and improve in a scientific manner (also called a proof of concept). If needed, you pivot around and change the approach measuring the success rate of the new course. The method works just as well for intra-preneurs as entrepreneurs.
By carefully improving the solution by measurement, learning and releasing a new version, the solution scale up following viral patterns of user adoption.
Having the combined effect of these approaches to the CDO´s disposal, the chance to radically improve and implement new and disruptive solutions and business models increase. In such an approach digitalization is not an IT project. It is a creative multi-disciplinary search for new ways of creating value and solving challenges through continous test and development with executive management support. This process may redefine how value is created and future-proof your company.
At Bouvet (www.bouvet.no) we love preparing, facilitating and supplying your SPRINT and DevOps teams with designers, analysts, prototypers and developers.
Your business experts and our prototypers and developers blend together in a integrated team in search of new and exiting solutions for your business.
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