Organisations are driving new business visions based on digital transformation. However tinkering with mobile apps at the edge of the organisation is not a digital transformation strategy.
The work of digital transformation starts with the Business Model and as Kim and Mauborgne state in Blue Ocean Strategy, “You must seek an alternate approach to slugging it out against competitors, by dodging them!”. Their preface provides the impetus for digital transformation.
Digital Business Models are novel ways to generate demand from new users, products, partners, markets and they can create new value. For a well worn example, Apple uses millions of 3rd party apps to generate demand for iPhones.
Therefore business transformation aka digital transformation, aims to;
- Challenge the status quo
- Re-examine ways of doing business
- Unlock value in new opportunities
- Embody journey-focused innovation
- Contextual interactivity, be predictive and automated
The model we favour for the initial vision formulation is the Business Model Canvas proposed by Alexander Osterwalder. When thinking about potential business models we use a number of other models to help facilitate thinking including; External influences (STEEPV), Competitor Analysis, Blue Ocean Strategy, SWOT, Porter’s Five Forces, as well as a review of appropriate digital disrupters. We can spread this review over a number of workshops and some of the research such as Competitor Analysis is performed outside the session.
The idea of channels is also becoming conceptually redundant as the Digital-citizen switches seamlessly between wearables, mobile phones or even the presence of a physical establishment (yes, they’re making a come back!). The omni-channel idea flowed from here but is being superseded by the concept of the omni-citizen, which aims to deliver augmented service to the customer at the point of relevance.
There are a number of considerations for the organisational side of the model to also bear in mind. If the size and complexity of the organisation is significant, the “Key Activities” will represent the organisation’s Business Capabilities – and defining a Business Capability Model is a cornerstone for transformation, which we will build out in later stages.
The second consideration is that digital organisations are non-linear and processes live in an eco-system of services. How partners interact through external APIs will provide new ways of driving value within your organisation. The PSD2 act for banking is a perfect example where banks will need to make available external APIs for payment services and find new value beyond the traditional models.
Means and Mission
The Business Model Canvas provides a method to prototype ideas, which drives the team to a consensus about the organisation’s Mission and what sets your organisation apart from the rest of the competition. This provides context for everything that follows including vision, strategy, goals and objectives.
A few mission examples include the BBC’s, “To enrich people’s lives with programmes and services that inform, educate and entertain.” and Google’s, “To organise the world’s information and make it universally accessible and useful.“.
We use Walter Gast’s series of principles which have been used to help many organisations develop mission statements and are a credible starting point;
- What “want-satisfying” service do we provide and constantly seek to improve?
- How do we increase the quality of life for our customers and stakeholders?
- How do we provide opportunities to productively employ people?
- How do we create a high-quality work experience for our employees?
End State and Vision
The End box paints the organisation’s ambition. The Vision may represent the most critical component since it acts as a conduit between the Mission and Strategy. Without a clear and compelling Vision to guide, you may wind-up with a workforce lacking direction and a failing strategy.
A well-constructed Vision portrays the organisation’s desired future state and is both quantified and time bound. The quantification dimension is often stated in terms of enhanced revenue, profit, customers, markets served, and so on. Timing is at the discretion of the organisation, but is typically 5 to 10 years. With a quantified vision, an organisation can assess the gap between current and desired performance.
A few vision examples include Microsoft’s, “A computer on every desk and in every home; all running Microsoft software.” and an historic one from Wal-Mart, “Become a $125 billion company by the year 2000”.
A Goal is something your business aims to be and is long-term and directional. An objective is a specific target that helps to measure whether that goal is achieved and these will be covered in the Strategy stage.
The steps can be summarised as:
1. Start by defining the digital business model – how will it provide the competitive advantage you desire through new digital revenue models? Do you understand your competitors and your opportunities?
2. Define a set of key journeys across the eco-system and re-imagine through digital strategy using concepts such as self-service, social, mobile, predictive analytics, machine-learning, automation, cloud based services
3. Clarify you mission and vision by understanding what your organisation wants to be relative to the market
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