Reinventing business models: what can the public sector learn from digital disruption of business?

In my last blog I wrote about how government is challenged by technological change and globalisation. I now want to explore what governments might learn from the experience of the private sector.

Globalisation is connected to the rise of consumerism. But its attributes of brands, choices, service, access and responsiveness are no longer the preserve of the private sphere.  Increasingly, these attributes define the expectations of the public when they interact with government or use public services.

Unless public services can adapt to these new expectations, the ability to sustain a consensus for the provision of public services free at the point of use may prove impossible in the long term.

Business, of course, has been at the forefront of shaping this ‘new world’. But those forces equally challenge us.

How, for example, does business reform its governance in a way that inspires the trust and confidence of investors and is accountable to employees and the wider public?  How should businesses respond to the opportunities of the global market and new technology, both of which are producing a revolution in the way the business operates?

Let me give you just one example of how these global pressures are influencing business today.

Thirty years ago, businesses could almost entirely rely upon product cycles that lasted for three to five years and business models that could last a decade.  The great companies of the last century created products and refined their supply chains over decades. And they based their business models on relatively stable markets, high barriers to entry and a plentiful supply of relatively unskilled labour.

However many of the most successful companies today are those that have developed a capacity to reinvent themselves – not just once every ten years – but now every eighteen months or two years.

Businesses operate in a global competitive market.  They are challenged to create new value, improve productivity and respond to tomorrow’s customer needs – today.  That global competitive market ensures that today’s businesses simply cannot afford to wait five to ten years to develop a new product cycle or business model. For those companies and communities that are equal to the challenge, this relentless competitive pressure is creating new sources of wealth has increased standards of living.

Next week, I’ll be talking in more detail about innovation and why businesses might have an advantage over the public sector. In the meantime, if you enjoyed this post, I’d be very grateful if you’d help it spread by emailing it to a friend, or sharing it on Twitter or Facebook.  And if you are interested in public sector innovation you might be interested in another of my recent blogs where I wrote about how businesses learn from mistakes.

Judging the young Inventors for #DigiInventorsChallenge in association with Andy Murray and the Digital Health & Care Institute (DHI)

There has been huge excitement in the Sopra Steria Scotland camp recently as we eagerly opened the entries sent to myself, Emily Walters and Graeme Harvey who were picked to be part of the judging panel for the Inaugural Digital Health and Care Challenge 2017.

Teenagers across Scotland are competing in the #DigiInventorsChallenge, giving them the chance to develop a new invention that will transform health, fitness and wellbeing amongst the nation’s young people using technology. The ideas include everything from fitness apps, gaming controllers and online challenges.

The winning team will see their idea come to life through the Digital Health & Care Institute’s innovation model as well as developing the skills and experience needed to make their idea a success.

I am sure the experience will stay with the winners for a lifetime and set them on their way for careers within digital health.

The role of the judges was to critically evaluate the submissions and decide on a shortlist of six teams that will bring their ideas to life at #DigiInventorsBootcamp.  We were all extremely impressed with the original and innovative ideas we received and we carefully considered the following elements when making our blind judging assessment;

  • What is the idea and how will it work?
  • What health and care problem does it solve and why is that important?
  • How does the idea apply to digital technology
  • Why would people want to use the idea and what benefits would it bring?
  • What design and manufacturing problems may occur, is there an outline of a business plan?

When I originally started talking with DHI about being part of this challenge there were three key reasons why I wanted to get involved:

  1. The challenge offers the #DigiInventors insight into a career in tech
  2. Working with young people and gaining powerful user research in their concerns on health and care and how digital services can transform outcomes
  3. Bringing the winning idea to life and working with the DHI to see the design developed and commercialised

Now the shortlist has been issued and so many different ideas have been generated I can see how powerful this kind of engagement is in getting young people to develop creative and entrepreneurial skills.

The next step is planning for the #DigiInventorsBootcamp where we’ll be meeting with the finalists to help take their ideas to the next stage. I’ll be back with more on this later in the year!

See more about Sopra Steria’s involvement with this great initiative.

2020: Retail as a Service?

Digital disruption is typically seen as a form of “waterfall innovation” – where a new entrant unseats legacy players by adopting a radical new approach to service delivery using technology (like Amazon leveraging its own cloud based e-commerce platform capabilities to beat incumbent Retailers on convenience and price). Yet a challenge to this view is that such disruptors are actually applying a form of “agile innovation”, where through incrementally developing their own live services they gradually transform and re-shape a market – a detailed look at Amazon finds its approach to customer service improvement is not disruptive but iterative; where over the last ten to fifteen years it’s used its own net revenues for R&D activities (not for short-term profit) to continually drive massive grow.

The implication is that a Retailer can exploit the competitive advantages of digital disruption by using an iterative service delivery approach – so what could be the benefits and challenges of this “Retail As A Service” model? Here are some ideas…

OpEx Funded Innovation – A major blocker to Retailers investing in digital transformation is that it can involve significant upfront capital expenditure to deliver a return in investment that is difficult to forecast and realise. Applying an “as a service” approach, an alternative could be to deliver small, incremental improvements using a portion of Retailer’s margin earned during the same financial year. No big financial risks, the Retailer can only invest what it earns from the market with the added benefit that such OpEx funded innovation can rapidly pivot to changing customer demands. Yet any slicing of margin will impact a Retailer’s profitability – its owners or shareholders would need to tolerate a different form of financial risk to make this approach acceptable; reduced, variable short-term profit for potential significant long-term gains.

Zero Physical Asset Operating Model – Could the application of a service-based approach to delivery be extended beyond the traditional areas of IT and back office transformation into other parts of a Retailer’s operating model? For example, a Retailer could run a “zero physical asset” business; where front-end services like stores, supply chain management, even sales staff resources are provisioned on a pay-as-you-go basis. A key benefit would be that the Retailer doesn’t run the risk of owning fixed term assets like property or technology that may become commercially unviable or obsolete. However, this would create new risks – a key one being that the Retailer becomes wholly dependent on other service providers’ availability and ability to innovate to meet its competitive needs.

If you would like more information about how digital transformation can benefit your retail business, leave a reply below or contact me by email.

AI Empowered retail roles: the new competitive advantage?

A Retailer can potentially use Artificial Intelligence (AI) to empower its people to analyse, transact and crucially sell faster and smarter to customers than its competitors. So, what might these jobs look like? Here are some ideas…

“Fixers” – Retailers are always looking to optimise their supply chain costs while improving the customer experience. A key pain point is last mile logistics – the need to offer increasingly timely, flexible delivery of goods to individual customers while maintaining the right economies of scale on distribution to achieve margin. A Fixer – possibly a third-party platform service provider – bids for and delivers instant solutions to solve these daily challenges. Their unique ability to use AI to continually optimise delivery routes and facilitate the sharing of local stock between Retailers (often competitors) to satisfy customer demand 24/7 places them at the heart of the Retail Sector in 2020.

“Instore Experience Trainers” – AI doesn’t innovate by itself; this advantage comes from people teaching or training it to deliver delightful and compelling customer experiences on any channel. An Instore Experience Trainer is someone who spends their working day testing different AI driven experiences from different Sectors and then uses this emotional insight to teach an Artificial Intelligence capability new ways to better engage customers instore – rapid human innovation scaled to differentiate thousands of individual customer interactions with a specific Retailer.

“AI Scanners” – As Artificial Intelligence grows so too does the opportunity for competitors to use it to analyse a Retailer’s offerings for strengths and weaknesses. An AI Scanner is monitoring daily how customers are engaging a Retailer’s Artificial Intelligence to identify such behaviour and its source to enable a proactive response to protect market competitiveness.

If you would like more information about how artificial intelligence can benefit your retail business, leave a reply below or contact me by email.

Artificial Intelligence: The new entertainment experience?

Artificial Intelligence (AI) can radically transform how we interact with a range of services, with Amazon’s Alexa being a notable example growing rapidly in popularity. But in what ways could AI disrupt how we use and consume entertainment? Here are some ideas…

Dynamic film narrative

An AI can use Machine Learning to find hidden insights in a data set to identify remedial action. This capability could be used to enable a film viewer to directly interact with a film’s narrative – pausing the action any time to tell the AI (or even the film’s characters themselves?) how they think and feel about the story. Sentiment that an AI can then analyse in the cloud to learn what an audience wants next that’s fed back to the content producer – greater plot exposition, more of their favourite characters or action. AI-driven blockbuster entertainment that never flops!

Game voice user interface

Natural Language Processing (NLP) enables an AI to understand and respond to spoken and written commands. In terms of a console gaming experience, NLP could transform such experiences. Rather than using a controller to direct and interact with non-player characters within a game, the player could talk to them directly, naturally – a new level of gameplay design that creates truly immersive experiences.

Personalised content maker

AI’s ability to analyse massive amounts of data from potentially any source is enabling deeper, richer forms of Personalisation. Could an AI use this capability to create brand new content (stories, images, even films or music) to an individual’s specific tastes and mood? On demand entertainment that always delights, never gets boring or ends – the perfect TV channel you won’t want to switch off!

If you would like more information about how artificial intelligence can benefit your retail business, leave a reply below or contact me by email.

Doing more with less: digital transformation and social care

In a recent blog, I highlighted the need to shift thinking in government from efficiency to productivity. I used the example of education and highlighted innovations that might increase productivity through digitisation of teaching services and communication. I now want to extend the debate by looking at social care.

Social care services cover a range of home support services provided for the young and the elderly and people with disabilities, to assist people to remain in their own homes and communities. In England, social care is predominantly the responsibility of local authorities. They are facing unprecedented pressure due to rising demand and an increase in customer expectations. Growing numbers of older people often have increasingly complex needs.

At the same time future spending on social care is very uncertain. According to the Institute for Fiscal Studies, demographic pressures will cause per-capita spending to fall in the absence of additional funding. And local authority revenues are expected to fall by 7.4% between 2015 and 2020.

Social care providers are adopting new models for delivering care

Where is this happening? Connecting Care is a partnership across the Bristol, North Somerset and South Gloucestershire area. The partnership comprises 17 different organisations (including the three councils, hospital trusts, ambulance trusts, GPs and community health providers) with 14 individual client record systems interacting between them. Client data is gathered from each participating organisation and carefully matched to display an integrated data set for each person.

This is one example of service integration through voluntary cooperation between the public, private and community sectors. Where there is a cultural shift, with services integrated through digitisation, there are substantial benefits for:

  • Administration: Supporting integrated case management systems, with a broader overview of needs and options to inform individualised planning and cross-sector coordination, using tablets for care plans, risk assessments, health assessments, safeguarding and medication (documented on the system in real time).
  • In home care and support: A combination of digital records and web-based access to information for staff and enhanced communication tools for service users and their family and friends, ultimately allowing service users to organise leisure activities and plan their own care and support.
  • Financial support: Increasing digitisation of the payment of financial support, including determining and verifying eligibility, and calculating and making benefits payments, ultimately leading to greater choice between different care options.

The major limitations of the digital social care market are not the shortage of technology

Innovation uptake is slow compared to other parts of the public sector. It is important to recognise that there are a number of complex challenges to successful digital transformation . Most of these challenges relate to the human dimension – the readiness for change amongst citizen’s and service users to an increasingly digital environment, and concerns about the privacy and security of personal data.

The practical reality is that the speed of advancement in technologies undoubtedly exceeds the speed with which the potential benefits can be realised in the delivery of social care. So, what are the practical steps that the public sector can take to speed up the deployment of innovations in social care and protection?

  • Step 1 – Greater transparency of processes and operations and encouraging participation of public, private and community stakeholders in policy making and service design.
  • Step 2 – Promote engagement and co-operation across different levels of government through adequate incentives, quickly moving to the pooling of resources and shared agreements and targets.
  • Step 3 – Develop clear business cases to sustain the funding and focused implementation of digital technologies projects.
  • Step 4 – Build institutional capacities to manage and monitor project implementation, with a significant emphasis on procurement and contracting practices.
  • Step 5 – Integrated data and better usage to measure productivity and efficiency in all parts of the value chain of public service delivery.

These practical steps do not just apply to social protection – they are equally relevant to other public services, including, health, education and other welfare services.

I’ve been really enthused by the examples of productivity enhancing innovations provided by public servants since my last blog. I would like to hear from more public servants about how they are using technology to enhance how they work and deliver services to the public – please get in touch by leaving a message or sending an email.

Intelligent personal assistants: an opportunity for retailers?

Alexa is arguably the tipping point for intelligent personal assistants; with Amazon’s open source approach to sharing its app (“skill”) development capabilities the sky’s the limit for this new, disruptive form of natural language driven customer experience. But what could retailers make of this opportunity? Here are some ideas…

It’s not the hardware but the cloud analytics that matters

Critical to any retailer using an intelligent personal assistant to innovate their brand is that these use cases should primarily focus on the business outcomes from using its cloud analytics capabilities, not the front-end device itself.

A retailer, for example, could use Alexa to provide instore guidance to shoppers to help them find items or make simple queries, physical customer browsing behaviour captured in the cloud that when combined with online experiences enables deeper, more contextual forms of personalisation across all this retailer’s channels.

An opportunity to simplify (and risk of complicating) customer journeys

A unique strength of an intelligent personal assistant is that it has the potential to smartly rationalise customer queries and transactions – an opportunity to turn chatbots into compelling conversational experiences a customer would have a preference for using over engaging a person or using a digital channel.

But there remains a significant user experience design challenge for its natural language driven interface – at what point does the buying journey become too complex for this channel and risks increasing friction for a customer? Any form of customer experience that requires a customer to look at detailed product information or make comparisons between products could be difficult and hard to follow through spoken voice generated content alone.

Alexa’s use of APIs could enable a retailer to combine this channel with its mobile e-commerce site (or in-store tablets) for example to create a seamless, holistic experience where complex information is shared visually driven by a customer’s voice commands and smartly informed by Alexa’s AI.

Bricks and mortar as a truly experiential destination

Perhaps the most exciting thing about Alexa (and intelligent personal assistants in general) is the potential for them to create unique, personalised experiences instore – a direct, deep relationship between a customer and a retailer’s brand. And because its cloud driven this enables interconnectivity (IoT) with other instore technologies such as targeted digital signage, interactive mirrors, social media engagement and mobile point of sale.

If you would like more information about how digital transformation can benefit your retail business, leave a reply below or contact me by email.