Is your jar full yet?

If you’ve never read the “Is your jar full?” story that describes a philosophy lecture a professor delivers to his students, then do take two minutes to read it…  otherwise I may lose you.

It’s an interesting take on fitting the important things into your life but I’d like to turn it on it’s head and re-use the story for another purpose; to describe how to ensure your business transformation programme delivers value.

Let’s think of the planned jar contents as follows (MoSCoW method):

Golf balls – must have deliverables
Pebbles – should have deliverables
Sand – could have deliverables

Our vision statement being “We will fill the jar.”

The students would argue that when you can’t fit in any more golf balls the jar is full and therefore the project vision has been met.

We know this is not the case and that the reality is that it will be a combination of all three BUT when delivering any business transformation project it’s important to not lose sight of what you’re aiming to achieve. I see clients get lost in the detail and, as a colleague puts it, they “look at the bonnet, not at the road ahead”. Some start-ups are a good example of getting stuck tweaking and tailoring until they find they’ve either

a) missed their market time window
b) “perfected” a product that no-one actually needs or wants

Both can be a death knell.

If you’re not careful the same can happen within the scope of your programme.

Trying to fill the jar with sand could be an endeavour that takes you past the point of delivering your vision when all you needed to do was get to the golf ball or pebble stage.

This highlights a key stage in planning which is to determine how to measure success before, or at least early, in the programme.

Including checkpoint reviews against your success measures will mean that you’ll be clear when you’ve reached the “good enough”stage at which point any changes must be considered for the business value they deliver.

I’m not saying you don’t want some sand in your jar but it’s important to understand the value it will deliver.

So what about the beer? I agree with the professor, there’s always time for a couple of beers and what better way to celebrate the delivery of your vision?

What do you think? Leave a reply below or contact me by email.

Digital transformation and the shadow of dot-com

Is the IT boom and bust of the late Nineties making today’s C-suite cautious about the long-term benefits of digital?

Business surveys across different sectors suggest many in C-suite remain slow to adopt digital ways of working and technology as a key source of their organisation’s competitive advantage. Could the failure of dot-com be causing their hesitancy? Here are some ideas…

Dot-com was pre-Millennial

The “dot-com bubble” broadly occurred between 1997 and 2000; a period that pre-dates today’s young entrepreneurs who are passionately trying to bring their own digital services to market. Yet it is their explicit lack of awareness (or arrogance?) about the lessons learnt from this period that arguably validates a market follower strategy. Many of the failed dot-coms had sound propositions for B2C offerings to market; what killed them was that their ambitious business models were unsustainable. Demand didn’t grow fast enough to deliver the rapid returns expected by investors (Pets.com being a notable example where its continued price undercutting on pet supplies and accessories required an unfeasibley massive on-line customer base).

Arguably digital services face similar (harder?) challenges today given they have to compete for increasingly discretionary, disloyal customers who can switch to competitors instantly. This suggests B2C and B2B markets are saturated with digital companies that may have no long-term sustainability – why bet now when you can wait to see who are the real winners? 

The strategic opportunity (and risk, if ignored) is that Millennial entrepreneurs are chasing a customer base that can only grow in size as younger generations continue their embrace of digital (while compelling older groups to accept such services regardless of preference). Whereas in the late Nineties there was limited evidence or insight about market demand for on-line services; today such wants and needs are tangible and measurable as bottom line benefits. Investing now in digital could result in capturing growing revenue streams; choosing to wait risks lost of market share.

Ability to industrialise

Many dot-coms lacked the right supply chain capabilities to fulfil customer orders effectively or efficiently. They focused on optimising the customer experience while failing to put in place an operating model that could scale to demand – for example, Webvan.com couldn’t upscale its grocery delivery operations successfully to meet its commitment to deliver goods ordered on-line within thirty minutes to a customer’s front door; on paper a great customer experience that was practically impossible to fulfil probably even today (perhaps unsurprisingly Webvan.com was ultimately consumed by Amazon).  Many of today’s digital companies are either focused on improving the customer experience through user experience design or by reducing touch points in service delivery – with the exception of IoT it seems there is far less focus on supply chain optimisation and related back-end cost improvements. Like dot.coms, are today’s digital companies focused on realising tactical, cosmetic improvements that deliver short term benefits rather than fundamental end to end transformation required for sustainable competitive advantage?

A converse view is that digital companies are maturating far more rapidly and successfully then their dot.com ancestors driven by major investment in such transformation by traditional, older companies across many sectors (especially Retail). Unlike dot.coms these companies aren’t starting such industrialisation from scratch; they already have a deep understanding of their own supply chains and have the resources and commitment necessary to drive the required change to fully realise the benefits of digital transformation. Companies behind this curve may quickly become uncompetitive.

Hype versus profitability

Perhaps the biggest criticism of the “dot.com bubble” was that investors were too willing to buy into any idea or gimmick that was remotely connected to on-line services despite contrary evidence about their commercial viability. This could be seen in the proliferation of internet search engines during this era that had little to differentiate them from each other. Even today it’s not entirely clear if the surviving dot.com companies are profitable with, for example, Yahoo generating billion dollar revenues but operating at a loss. Can the plethora of digital companies currently competing for our attention all be successful long-term – the lessons learnt from dot.com suggest not?  

But short-term profitability is not necessarily the primary goal of many digital companies today – instead, profits are used as a source of continued growth and expansion. Amazon, one of the biggest and most influential companies in the world, pursues such a philosophy. Rather than suffer the dot.com fate of cyclical boom and bust, this approach enables its penetration into other services and sectors to drive sustainability – Amazon was originally a book seller; through such aggressive growth it now provides public cloud services as well as retail and media on demand. Is short-term profitability the wrong metric to assess the performance of digital companies?

Closing thought: although the “dot-com bubble” resulted in too many extraordinary failures, this period industrialised and legitimised the on-line customer channel – without such high risk innovation, digital would not play such a dominant, positive role in our lives today.

What strategic risks and opportunities do you think organisations face as digital continues to penetrate all sectors? Please share your feedback below.

For more information about digital transformation please contact the Sopra Steria Digital Practice.

Digital Transformation: the Chief HR Officer’s dilemma

People make digital transformation a success

Their ability to effectively adopt (and adapt) digital ways of working and technology drives sustainable competitive advantage. So how can a Chief HR Officer (CHRO) transform and motivate people to realise the benefits of digital for their organisation?  Here are a few ideas…

Workforce re-skilling or up-skilling

Across social media there is talk daily of new ways to deliver projects and services. “Waterfall” approaches in particular are being seen increasingly as too cumbersome and unresponsive for both B2C and B2B customers.

But that shouldn’t mean people who are skilled and experienced in such approaches no longer have value for an organisation. If anything, it’s not the fact they use “Waterfall” that counts, rather it’s their industrialised and tacit capabilities that delivers benefit. Furthermore, should these resources choose to exit an organisation en masse, it will probably be weakened severely (possibly in terminal decline) anyway.

Consequently, re-skilling and up-skilling activities (like training or mentoring) should be cognizant of the value every person brings to the organisation – no one gets left behind.

These activities are also vital at a time when potentially many people are feeling vulnerable because they feel their skills and experience no longer fit in a rapidly changing digital world. Yet it is their competency, performance and motivation that will make digital transformation successful.

Team risk organisational culture

Innovating products and services using digital confers competitive advantage. Agile’s philosophy of “fail fast, fail often” enables such innovation. To realise the benefits of Agile-enabled innovation requires people to have the confidence to fail and learn effectively from this iterative experience.

People should also feel they are not being blamed individually when innovation fails – for digital transformation to succeed (controlled) risk and reward must be shared by the whole team. Consequently it’s essential an organisation builds genuinely integrated business and IT teams that take risks together to maximise the opportunities for innovation. This cultural value is intrinsic to helping motivate people’s performance because individuals, teams and the organisation as a whole demonstrate that they care about the same things.

Always aim for better

In an environment where people are making grand claims about their digital transformation skills it’s essential to remember that trust and authority should not be assumed; it must be earned. This approach must come from the top of an organisation and also be a key factor when recruiting resources. Only when everyone in an organisation demonstrates thought leadership and commitment to digital will such transformation succeed.

If you would like to find out more about how digital transformation can benefit your business, please leave a reply below, or contact the Sopra Steria Digital Practice.

The potential impact of digital transformation on an organisation’s strategic assets

And ways of turning them into opportunities for growth

With all the hype surrounding digital it’s easy to forget that the value such transformation creates for an organisation also poses strategic risks. This can be felt acutely in terms of its non-current assets; the fixed or intangible resources owned by an organisation that it uses to generate revenues.

Whether an organisation has made a strategic investment in digital or is competing in a market being disrupted by it, the long term value of these assets will materially change. Here are some indicative examples of such risks and the strategic opportunities they create for sustainable competitive advantage:

Property unprofitability: as customers switch to “virtual” digital channels for products and services, footfall in physical spaces like retail stores fall – yet organisations still carry the cost of maintaining these properties and supplying them with stock. This is a serious challenge right now for many of the UK supermarkets who are experiencing such increasing dis-economies of scale that could result in an unrecoverable loss of their long term profitability.

Opportunity? This could be an opportunity for diversification – reuse these physical spaces for a different, complementary purpose – like blending customer experiences with other brands to increase differentiation, and optimising and consolidating supply chains. Grocer and catalogue brands are already trialling this together in the UK. More radical moves could include re-purposing these properties to serve an expanded range of digital services – such as acting as a high street located distribution and customer service centre for goods ordered on-line or, alternatively, use them to deliver benefits for local communities or charities to help engender a positive brand image.

Equipment obsolescence: the UK public sector has seen a range of IT-enabled channel shift initiatives being implemented over the last ten to fifteen years. However, the rate of technology change has meant many of these assets have already been written off or are fast becoming obsolete. This can be seen explicitly in the vastly different attempts at centralised on-line citizen and business services implemented by the last two British governments. There is also anecdotal evidence of IT hardware being procured by UK public sector organisations that failed to realise any material benefit – for example, handheld devices that were bought in the mid noughties to help council workers carry out field work now rendered obsolete by smartphones and tablets.

Opportunity? In response, the present UK Government has redesigned the way it procures IT services with an emphasis on sharing and mitigating such risks of equipment obsolescence with suppliers, including the requirement that cost-optimised open source, configurable software and cloud hosting must be used. This application of supplier management means it’s in suppliers’ interests to ensure their procured IT services remain up to date (so they don’t become obsolete) while also materially reducing any potential write-off costs for UK Government. A further option could be to rent them from suppliers (to remove the risk of equipment obsolescence) although this could create other complex, unfeasible risks for UK Government about the ownership and liabilities of such rented services.

Intangibles overvaluation:  in this “social media hungry” age where reputation is everything, intangibles are critical assets for any organisation’s growth. These non physical, long-term resources (including licences, software and brand) help an organisation to grow and retain market share. Yet digital disrupters have successfully eroded the value and useful life of these intangibles in many sectors – most noticeably in Telecoms where fixed-line voice licences, text messaging services (i.e., software) and brand, are rapidly losing strategic value as customer loyalty evaporates. In response, many Telcos are pursuing an aggressive ‘digital first’ strategy to drive differentiation and cost optimisation – yet further consolidation of these businesses looks inevitable.

Opportunity? A digital disrupter’s strength comes from leveraging new ways to interact with customers and suppliers without having to make a fundamental change to the underlying product or service. Arguably its weakness is that it can be easily imitated by existing market incumbents (providing they can move fast enough) using a cost or differentiation focus. For example, they “reconfigure” existing intangible assets to engage specific market segments in new innovative ways the disrupters don’t offer because they can’t “change” the product or service itself. Some UK Telcos are proactively targeting B2B market segments with Internet of Everything (IoE) services by leveraging the value of their existing brand and licenced network capabilities. A bolder move could be to exit unprofitable markets like B2C and use these savings to create new “digital intangibles” (such as an IoE design service, apps development, social media branding) to drive strong strategic partnerships with specific B2B clients.

What strategic risks and opportunities do you think organisations face as digital continues to penetrate all sectors? Please share your feedback below.

For more information about Digital Transformation please contact the Sopra Steria Digital Practice.

The “observer effect” applied to digital transformation

A different take on GDS’s Performance Platform

The “observer effect” states that whatever you observe, by the very act of observation, it changes. Developing tools to measure the performance of a digital transformation – such as the GDS Performance Platform – is a key step of any transformation journey itself, as it can accelerate the process and guide it to bear positive outcomes.

The act of measuring is change itself

In science, the term “observer effect” refers to changes that the act of observation will make on a phenomenon being observed. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner. A commonplace example is checking the pressure in a car’s tyre: this is difficult to do without letting out some of the air, thus changing the pressure.

The GDS’s Performance Platform

Started as a simple dashboard to display web traffic data on gov.uk, the Government Digital Service (GDS) Performance Platform has now become a key tool that gives departments the ability to monitor the performance of their digital services in real time, aggregating data from a range of sources including web analytics, survey and finance data.

The digital by default service standard – a set of criteria for all government services to meet – now mandates the following four key performance indicators (KPIs): cost per transaction, user satisfaction, completion rate, digital take-up. These KPIs can be used to measure the success of a service and to support decisions and planning of improvements.

Similar to the tyre pressure, the very act of measuring those indicators is influencing and accelerating the transformation process, focusing the departments’ attention to delivering efficiency and quality of service to citizens. This is a key enabler of any transformation journey and it will be interesting to see how far the Performance Platform will go in the coming years.

(Note: although this example is specific to the public sector, the above is easily applicable to private organisations too – this will the subject of another blog post).

Where next? The difference between performance and evaluation

Performance measurement and evaluation are complementary activities. Evaluation gives meaning to performance measurement and performance measurement gives empirical rigour (evidence) to evaluation.

Performance measurements do not question the objectives themselves and, therefore, stop short of any final judgement as to whether the programme or activity was good or bad – only if it was successful (or not) within the narrow confines of its mandate.

The current debate on Gov2.0/Government as a Platform is precisely around the purpose of governments in the 21st century, with two schools of thoughts arguing that it’s the profitable thing to do or, well, it’s the right thing to do.

Although a clear approach on how to evaluate the impacts this approach will have on the wider society is not yet agreed, tools such as the Performance Platform can and will inform and support this discussion.

What do you think? Does this capture the distinction between programme evaluation and performance measurement – or is there a lot more to it? Is your organisation measuring the performance of its transformation? Leave a reply below, or contact me by email.

Three ways to tell if your digital strategy is moving in the right direction

So you have a digital strategy in place and being implemented. It’s early days and things seem to be moving in the right direction… but you’re not so sure?

Here are some ways to help quickly assess if your planned business transformation will deliver the right customer and business benefits in the end:

1. Assess senior managers’ understanding of the agreed business case

Different managers and their business areas will need digital to deliver different benefits for it to be considered a success. But all should have a shared, consistent vision about why your business is making this major investment. Ask your senior team individually to briefly explain the key reasons and intended outcomes of your organisation’s agreed digital strategy – any material differences (or lack of understanding) could indicate some fundamental issues with implementation at this early stage.

Worse yet, if a senior manager answers by only referring you to your Chief Digital Officer (or equivalent) to explain what’s going on there could be some serious issues about their buy in to the whole enterprise!

2. Consider how dependent success is on mobile

SMAC (social, mobile, analytics and cloud) are arguably considered to be the key integrated capabilities businesses must have to successfully compete today. It’s likely your digital strategy will include these elements with a focus on mobile as the main platform to deliver the right customer and employee experience.

However, there could be a risk that your strategy makes your proposition to market too reliant upon mobile to remain competitive (while taking for granted or neglecting your wider value chain). This is especially important given this platform is subject to further disruption and challenges from other emerging technologies (most notably, wearables).

One way to test this is to review your strategy’s effectiveness without mobile  – how hard would other assets in your digital mix like social, analytics and cloud have to “sweat” to deliver a comparable (or better) customer experience? How adaptive are they to different platforms apart from mobile?

The customer is king; mobile is king. Removing this focus enables the identification of potential gaps in your digital strategy that could be turned into opportunities to integrate these wider SMAC capabilities deeper into your value chain to drive sustainable competitive advantage.

3. Compare your digital strategy’s transformation roadmap to your previous change programmes

Like any other large scale business transformation programme there is a risk you might be trying to deliver too much change too quickly – an initiative overload that results in failure.

Digital transformation is about adopting new ways of working using the right technology to differentiate the customer or employee experience and optimise costs – the same ultimate goals of any business strategy. This means you can and should regularly compare the progress of your digital strategy implementation to previous experience to assess its ongoing performance and feasibility. Continually applying your own baseline understanding/insight of your organisation’s people, processes and technology capabilities should help mitigate delivery risks and enable you to realise the right tangible business benefits from digital.

If you would like to find out more about how digital transformation can benefit your business, please leave a reply below, or contact the Sopra Steria Digital Practice.

New kids on the blockchain

At Sopra Steria we often talk about a world ‘beyond digital’. This is so that we can help our clients to prepare themselves and their organisations for the challenges they are likely to face looking out three to five years into the future.

I shared some of the topics we have identified for a world beyond digital with an audience of digital and eCommerce professionals at a Thought Leaders of the North West event a couple of weeks ago. Our themes seemed to resonate with those in the room prompting plenty of discussion and debate.

One theme attracting a lot of interest was the ongoing challenge we face in the world of Information Security, where we see protection from attack being built into new products and services from the ground up rather than as an afterthought.

We also see an emerging era of unprecedented corporate responsiveness and agility as industry giants look to iterate their business models ‘on-the-fly’ in response to unforeseen threats and attacks in the way Sony Pictures did recently in immediately releasing ‘The Interview’ to digital channels and abandoning its plans for a full theatrical release.

Disintermediation is another concept having an immediate impact on the way we live, work and do business. Services such as Uber and AirB’n’B are already beginning to transform different aspects of the travel industry through their creative use of the crowd, the cloud and the semantic web.

In financial services we see the ‘blockchain’ threatening to disintermediate the traditional banking industry as Bitcoin continues to gain profile and transacting in such crypto-currencies nudges its way ever closer to the mainstream.

“whilst barriers to entry are very low, barriers to mass acceptance remain incredibly high”

It was in this field, at a second technology event I attended recently that I witnessed a tense debate between an established retail bank and an up-and-coming Bitcoin podcaster.

The bank, when talking about FinTech start-ups looking to establish themselves in the emerging global Bitcoin economy, outside of a traditionally regulated banking industry, suggested that “whilst barriers to entry are very low, barriers to mass acceptance remain incredibly high”, which is the kind of thing they used to say in the music industry in the 1990s.

Nevertheless, the power of the ‘blockchain’, the virtual ledger where the crowd validates transactions without the assistance of traditional banking infrastructure and regulation, may actually be found beyond Bitcoin trading, as new and emerging use cases emerge for this technology bring it further into many people’s lives.

One such service which could be leveraged by the blockchain may be that of personal data broking, where citizens take control of the value of their own personal data and begin to firmly negotiate with local and global organisations alike based on the value of their own data as derived from their own connections, online activity and their extended social graph.

Sopra Steria is working with some of the world’s most exciting start-ups in exploring these concepts, as these ‘new kids on the blockchain’ begin to collaborate with us and our clients as, together, we continue to play a vital role in the transformation of business for a world ‘beyond digital’.

We’d love to hear how you think ‘blockchain’ technology will transform our lives. Leave a reply below, contact me by email, tim.difford@soprasteria.com or on Twitter, @timdifford

Photo: used and modified under Creative Commons license thanks to BTCKeychain