Wednesday, July 31, 2019

The conflict between digital transformation and speed

Just one more post about the importance of speed and agility and I'll leave this tired trope alone.  It took over 50 years for a reasonable majority of US households to obtain landline telephone service.  It took less than 10 years for a majority of households to obtain cellphone services and less than a handful of years for a majority of households to access and use Facebook.  There are a few points to make about that progression:

  • The initial investments were huge - putting wires up all over America, especially when many people still lived in rural areas, and the costs and benefits of a home phone were tenuous.
  • As people became convinced that home phones were valuable, cell phones emerged and again the cost/benefit was relatively uncertain when anyone could drop a quarter into a neighborhood pay phone.  When the phones started offering other features and immediate convenience became paramount, cell phones really accelerated.
  • Facebook and other platforms are built on the previous two ideas - ubiquitous connectivity through a global backbone and often wireless connectivity based on smart phones.  Building on these or other platforms, one can get to the market much more quickly and efficiently for digital products.
These ideas matter because we are increasingly acquiring digital products and exchanging information, even when we are acquiring or using physical products.  Thus, the idea that "digital transformation" is vital almost goes without saying.  What few people are talking about is the conflict between being "digital" and acting at speed.

Mutually reinforcing or at conflict?

The supporters and especially the vendors who are backing "digital transformation" want you to believe that you can work at speed only through digital transformation, and for the most part they are right.  But what they aren't telling you is there is no final destination for digital transformation.  It isn't a place on the map, but a journey that once started never reaches a destination.  Once you create fully digital business processes you'll need to collect and manage the data and obtain insight from the data to put back into your business.  Analyzing and understanding the data generated is just as important (if not more so) than simply automating and digitizing the processes.  Yet analyzing and understanding the meaning of the data is more difficult and more time consuming.

So good digital processes and insights CAN offer more speed to insight, speed to product and speed to market.  But only if your systems and processes are tuned to digital work, and only if you can manage the data generated.  But as only close observer of the IT revolution knows, once on the treadmill, you can never get off and it only goes faster.

Plus, there is a "dark side" to technology and the IT that supports it.  Any architecture that makes you efficient, able to process more data or make more decisions, often also makes your processes and decision making more structured and more rigid.  ERP has proven this time and again, helping organizations work more efficiently but often locking them into older operating models and processes.

Will digital transformation be an accelerator or an inhibitor?

The reasonable answer to the question above is:  yes.  Initially, digital transformation will accelerate business operations.  Of course many companies are just beginning this journey, and are learning how to make sense of the data they generate and obtain new insights.  Once they begin to fully engage the benefits of digital transformation, will these mechanisms and processes become enablers or barriers to future changes in business models?  If history is any guide, we can project that digital transformation will become first an enabler, and then potentially a barrier to agility and speed.

That's because any new implementation is first a disruptor and then becomes the norm, to be coddled and protected.  Plus, an additional challenge is that the more data is created and the more valuable it becomes, the more important it is to manage and analyze the data, creating a vicious cycle.  One wonders at the amount of data that will be generated in the next few years and how much of it will be actively and successfully analyzed and interpreted.

Speed and agility will be paramount

One other item - no matter how important the data becomes, moving with agility, decisiveness and speed will always win.  The ability to preempt competitors and customers with attractive and viable solutions, getting there first with the best product and accruing as much market share as possible, will be the deciding differentiator.  So no matter how much data you can accumulate and analyze, if it becomes analysis paralysis, slowing and diverting your company from working at speed, digital transformation won't be helpful.

The question companies should be asking themselves in the face of digital transformation messaging is:  how does this digital transformation help me make better decisions faster, and move at better and more decisive speed than my competitors and customers?  If you can't answer that question definitively, reframe your digital transformation activities and projects.  Notice I did not say "stop" those projects, because you should be experimenting now.  But these projects must help you get smarter and faster simultaneously.  Getting smarter without getting faster is second or third place.  Getting faster without getting smarter is suicide.
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posted by Jeffrey Phillips at 7:42 AM


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