To effectively compete as a digital enterprise requires new ways of discovering what’s possible
The scope and speed of disruption from digital technologies (e.g. systems of engagement and systems of intelligence) is not only turning the competitive landscape on its head but it is also forcing companies to discover new ways to engage with their customers, employees, supply chain partners, and even their competitors. In an unusual partnership, Amazon and Microsoft just announced that they will make it possible for their customers to access both of their voice controlled digital assistants, Alexa and Cortana.
Is it possible to get a 10x improvement in neutralizing competitive disruptions?
One of the major implications of the unprecedented level of digital disruption is that companies must find ways to neutralize these disruptions quickly and effectively. The goal is not to exceed, but to match competitive features and benefits as fast as possible. This requires a strong commitment to rapid iterations of minimum viable products and services, and to make changes based on actual customer adoption and utilization metrics. It also requires the need to harness the power of machine learning and A.I. to gain real-time insights into what’s possible and what’s not possible.
Nokia’s response to the launch of the iPhone is an example of what cannot happen. Four years after the launch they still did not have a comparable product for their customers. As a result, they went from the leading smartphone provider in the world to a second-tier competitor in that timeframe.
By contrast, Google got the Android smartphone to market within a year and is now the market share leader in smartphone sales around the world.
Is it possible to get a 10x compression in time to value?
Many companies are still satisfied with incremental improvements to expand their product and service portfolios. Their new product and service development cadence is tied to their annual planning and budgeting process where everyone asks permission for more resources and more dollars.
In order to compete in the age of digital disruption, companies must find ways to create exponential changes in speed to market and time to value. To achieve these changes, many companies have replaced a “permission based” product development process with a “show the customer what’s possible” approach using new processes and tools including Agile, Lean and DevOps. A core element of this approach is to develop and release a minimum viable product (MVP) and then make upgrades and changes to it based on end-user feedback. This can reduce time to value from 6-12 months to 6-12 weeks to 6-12 days, and in some cases 6-12 hours.
For example, Intel’s mobile applications development team increased the number of new apps from 57 in 2013 to 164 in 2014 to 238 in 2015. They increased the speed of their product design and delivery cycle by 30% through optimizing their global server capacity.
Is it possible to change your business model?
Microsoft has embarked on a transformation initiative to change its core business model from on premise, on desktop to cloud first, mobile first. Two years ago, it began to reboot its high margin Office software business to a subscription model and has also seen its Azure Cloud business grow three-fold to over $15 billion and 15% of the company’s overall revenue.
In 2013, Adobe Systems began a business model transformation from a product/license sales model to a cloud based subscription model. While revenues initially shrank 8% the first year and remained flat the second year, revenues reached nearly $6 billion in 2016 (up from $4 billion in 2013).
Three years ago, Starbucks CEO Howard Schultz, announced the company was 100% committed to “all things digital.” From the company that was known for creating alluring physical spaces to enjoy coffee and conversation, today over 25% of their orders are placed and paid for digitally. Their digital ordering app has also helped them attract over 13 million members to their virtual loyalty program.
Is it possible to outperform hierarchies with networks?
Conventional business thinking has always believed that hierarchically structured, vertically integrated businesses will outperform alternative business structures. Recent evidence suggests that in the new hyper-connected digital world, horizontal, cross-enterprise networks outperform hierarchies.
By example Foldit, an online video game, was developed by the University of Washington to enlist a network of players worldwide to solve difficult molecular problems. There are no special requirements to join Foldit and many of the 250,000 players have little or no background in biochemistry.
Recently this collaborative network was asked to figure out a detailed molecular structure of a protein-cutting enzyme from an AIDs-like virus found in monkeys to arrest this medical malady. A solution to this challenge had evaded the world’s best individual scientists for ten years but was amazingly solved by the collective intelligence of a diverse group of online gamers in ten days.
Another example is Nest which started as a one-product thermostat company and has now morphed into a multiple-Internet of Things ecosystem with diverse partners including Mercedes Benz. This ecosystem approach has enabled them to expand their product portfolio from smart thermostats to smart security cameras and smart smoke/CO detectors.
It’s easier to get forgiveness than permission, so just do it
In the new digital world, if you are still waiting for permission, it’s likely that you are losing market share and diluting rather than enhancing your customer experience. Customer expectations for real-time access to information, products and services mandate that companies reimagine what’s possible to meet these new expectations.
The good news is that customers are increasingly comfortable with MVP’s and are more than willing to help you make them better. They also like to share ideas and information with each other so if you can facilitate those conversations, it will be to your benefit as well.
As the old saying goes, it’s easier to get forgiveness than permission, so just do it.
As always, I am interested in your comments, feedback and perspectives on the ideas put forth in this blog. Please e-mail them to me at firstname.lastname@example.org.