Not sure how examples from Apple, Amazon, Uber, or Airbnb can apply to your older organization currently on its digital transformation journey?
Not all of us can be digital natives, but a new book from MIT Sloan’s Center for Information Systems Research principal research scientist Jeanne W. Ross (along with Cynthia M. Beath and Martin Mocker), is exploring lessons from established organizations that have made substantial progress in their own digital transformation work.
Designed for Digital: How to Architect Your Business for Sustained Success distills five years of research, which includes case studies and surveys from hundreds of business and IT leaders. Most companies represented were very early in their DX journey, but examples of established companies that found success in navigating the digital waters include DBS Bank, LEGO, Philips, Schneider Electric, and USAA.
David F. Carr, in an article from The Enterprisers Project, outlined five key takeaways from the book:
1) Your business needs a digital design
“Instead of trying to be Amazon, your organization should be figuring out how to continue to do what it does well and add digital products that enhance its products and services,” explains Ross.
To figure out what makes sense for the organization, you need a design for your business, Carr elaborates. That means better distribution. As the book explains, “The accountability framework for digital devolves many decision rights to autonomous teams while creating the context to help these teams make the right decisions.”
2) IT architecture is important, but not the point
Frequently overstated by marketing experts is that digital transformation is more about business strategy than the technology.
“The point is not to design an elegant digital system that will impress other IT architects but to use technology to create business opportunities,” Carr summarized.
3) A robust operational backbone is necessary but not sufficient:
An important distinction Ross and her fellow authors make is between the operational backbone and the digital platform.
The former means the systems at the heart of operational efficiency, like ERP, supply chain, and CRM systems. “If your organization has been around a few decades, your operational backbone includes all the things you were supposed to have been integrating and optimizing all along.”
The digital platform, however, involves the new technologies your organization needs to create digital products. This platform will be a custom creation, due to the diverse needs of business design.
A major reason organizations have for not reaching digital innovation is that their operational systems are holding them back, which pivots to the next takeaway observed by Carr.
4) Pivot to digital ASAP
“The need for a robust operational backbone may mean your organization needs to devote more energy to boring but important backend systems before it can do the cool new digital stuff,” explains Carr. “On the other hand, be alert for the point where it makes sense to declare your operational backbone ‘good enough.’”
An example used in the book is of Schneider Electric, a multinational headquartered in France that makes electrical distribution and management products for utilities and industry. Management recognized the wasted potential of divergent IoT and cloud efforts, gathering them into a coherent cloud platform.
5) Create a digital platform, not an isolated app
While a series of apps might be the “cooler” approach, a digital platform offers reusable components with support for all digital products — both now and future ones — ingrained in its design.
A perfect, flexible, and scalable platform isn’t going to happen immediately, so evolution is a necessity once the work is started. As the book explains, “Digital companies will be tempted to simply code the functionality for any given offering in a one-off, monolithic fashion.” This strategy could work in the early stages, but will culminate in a rework when customer demands create opportunity for adaptation.
