Many incumbents today face a pressing problem: how can they offer innovative digital solutions which their customers are willing to pay for if they are still "digitally transforming"?
According to MIT CISR "over 50% of [incumbent] companies" have yet to start or finish building a centralized, shared operational backbone and claim value from it. This means that while digital natives and digitized incumbents are already ahead of the curve riding what we call the second wave of digital transformation, traditional incumbents are still struggling with the first wave trying to become operationally excellent.
In plain business terms, this means customers are slowly and steadily drifting away towards their competitors because they have access to cheaper, better and faster solutions to their pains.
Digital refers to creating new business opportunities, new business models, new customer value propositions, things that are actually hard to imagine. That's the digital part of transformation and it doesn't only refer to operational excellence. It's about innovation, rapid innovation and it's not optional anymore. It's about getting up every morning, imagining what the world will need in the future, and start preparing for that future.
To become digital, companies must design and offer value propositions to the customer that would not even have been possible without the advent of digital technologies. The fact that there is ubiquitous access to data, virtually unlimited processing power and unlimited connectivity, allows for companies to explore new possibilities around technologies such as Social, Mobile, Analytics, Cloud and IoT.
Years ago, the recommendation was "if you want to be a great company, you must design it in such a way that you are able to make good use of the technology". Unfortunately, the reality was that many companies have been investing in technology without taking into account the needs of the customer or creating a unique customer experience that customers, in turn, are willing to pay for.
As an example of this scenario we have a board member's view from a global car company (referring to the general anticipation about Google cars and such): "the question is not how fast will tech companies become car companies, but how fast will we become a tech company".
So, how is it possible to innovate and operate like a digital native or a tech company to solve customer pains?
The answer comes in the form of platforms. These are modular, "Lego-like" business and tech components that are run by interdependent teams. That is, platforms focus on value propositions that serve internal and external clients and to provide value to other platforms. They operate as interdependent entities that interconnect business, technology, processes, people management and the governance of all these elements under a cohesive structure.
Teams are empowered to move quickly to deliver on those promises and make them a reality. They are run by platform owners, who take end-to-end responsibility for providing the solution and operating it like a service. Platform teams are cross-functional, with business, IT, analytics, risk management, to name but a few. They work in an agile manner, delivering the service, enabling continuous business-led innovation, and developing and running all necessary IT. This setup enables teams, and businesses, to deliver value at 10-100x faster rates than traditional IT setups.
Platform-based businesses may be built around 20 to 40 platforms, each of a certain size to provide an important and discrete but manageable service. Platforms can be grouped in three broad categories:
- Core IT platforms (shared IT, the operational backbone)
- Business-capability platforms (services provided by the company)
- Customer-journey platforms (how digital value propositions are delivered to customers)
Platforms are distinct units, but their value is based on how effectively they work together. Most companies overlook the criticality of making all IT components work together seamlessly because their attention is focused on individual projects.
At Enzyme we are building such platforms with our own eSTAR.ai framework and have already applied it to solve several of our clients' pains as shown below.
The key here is the top-down view from the customer's perspective down to the reusability of certain business and technical components that speed innovation and implementation, regardless of the industry and type of client.
This is how one can achieve, paraphrasing Bill Gates, "Digital business at the speed of thought".
