Experimentation: organisations investigate with cutting edge technologies, some may seem far fetched others more practical. During the experimentation phase organisations are searching for digital technologies which may lead to a competitive advantage. During this phase there are no fundamental changes to business models or processes, this is an investigation into potential technologies which may or may not lead to enhancing existing capabilities or creating new ones with the aim of integration into existing business models and process or the invention of new ones.
Integration: during this phase the digital transformation team narrows down the options from the experimentation phase to a few probabilities that could generate genuine value for the business and its customers. Once a viable candidate is selected the organisation defines a digital business model and tests it.
Reinvention: In the third phase the organisation takes a validated business model from the previous phase, and reinvents themselves by it. This change could be minor, or it could fundamentally change the business the organisation is in.
| Experimentation | Integration | Reinvention | |
|---|---|---|---|
| Digital Giants | use experiments to expand their reach into new industries. They are willing to take risks with new technology because even if they fail, they can learn something useful. | embrace strategies and structures that put digitization at their core. | determine what business they’re really in. Old boundaries dissolve, and new business models emerge at the intersection of traditional industries. What drives the digital business is successfully solving problems that affect large segments of society. |
| Startups | in the tech industry are always experimenting because they don't know if their business idea will be successful. They look at experiments that match or challenge their business idea so they know when to change their strategy. | ||
| Industry Incumbents | look at experiments that either complement or challenge their current business model. Complementary experiments show what new technologies are available and how to use them to enhance existing capabilities. | feel this phase more acutely than tech entrepreneurs and digital giants; integration involves challenges to a company’s business model and organizational structure. Organisations which are not digital by nature, generally have more uncertainty during this phase than their tech savvy counter parts |
Experimentation
To successfully transform into a digital organisation, experimentation must be conducted with an open mind in search of new technologies which could either enhance existing capabilities or create new ones. There are two stages of experimentation: Observation and Commitment.
In the first stage, the organisation must observe digital trends within their own industry, as well as the broader technological landscapes in search of value added technologies. A team dedicated to collecting and filtering relevant information from digital innovation, such as Palo Alto as well as direct competitors within the organisations markets. This digital team's overall goal would be to develop a compelling narrative for discussions within their organisation of how to leverage existing as well as upcoming technologies to strengthen their capabilities as well as potentially develop new ones.
In the second stage once potential solutions are identified, the transformation team should hold design thinking workshops to challenge assumptions. The team can leverage 'frame storming' sessions to dig deeper into problems and answer pertinent questions such as:
- What problem are we trying to solve?
- Do we understand the root cause of the problem?
- What will be the impact of solving it?
- Is it worth solving?
- How can we solve this problem?
- Is the solution feasible?
In a frame storming session, we can ask these questions sequentially, get all the participants to list their answers, and vote. Once we can step through each question with unanimous or near unanimous agreement of the group we may very well be looking at a viable value-added technology for our organisation.
Integration
To withstand competitive threats, companies in the digital economy must align their business strategy and their digital structure in order to facilitate rapid and cohesive response to change. The most successful organisations recognize when digital collision is occurring and are able to adapt rapidly to these new market forces. There are two stages to this integration phase: Coexistence and Transition.
In the first stage, the organisation's goal is to leverage the technology identified in the experimental phase to understand how that technology can be incorporated into the existing business model or how it can be leveraged in a new model. This can be accomplished by:
- Sharpening the value-to-cost advantage: Creating value in untapped markets by simultaneously pursuing differentiation and low cost can be an excellent strategy.
- Examine the possibilities of an alliance advantage: Consider ways to tap into pre-existing relationships to defend the traditional business while incubating a new one.
- Evaluate the possibilities of acquiring other companies: Buying tech entrepreneurs that challenge traditional business models can be a great way to bring in digital talent.
Once the new digital business model is created and implement the organisation is ready for the second phase. In the second stage the organisation's aim is to transition to the new model, this can be accomplished by:
- Divestment from traditional businesses: If current assets do not support the goal of digitisation, it’s time to get liquify them.
- Absorb digital acquisitions into the core: Integrate the separate digital business unit into the core business. Forcing new learning which will drive changes to the company’s internal business strategy and organisational structure.
- Digital thinking at the core: prioritising relationships, who to ally with to create products and services that bring value to consumers in new ways is the key to using digital technologies most effectively.
At both stages within the collision phase, leverage your team to decide which strategy best fits your organisation, again identify if it's appropriate, feasible and value added, before integration.
Reinvention
Reinvention is a two-step process, the organisation must ask:
a) What problems are we trying to solve for whom in the world?
b) How are we uniquely solving them by taking advantage of digital technologies?
a) What problems are we trying to solve for whom in the world?
b) How are we uniquely solving them by taking advantage of digital technologies?
- Frame the problem. Think like a consumer. Look at the gaps in product lines, the pain points in processes, the frustrations in coordinating tasks. Then, define these possible problems as deeply and widely as possible. Finally, pick the problem that matches your passion.
- Solve the problem. Think outside traditional industry boundaries and disciplines. Use crowdsourcing and artificial intelligence. Assemble a network of partners who are passionate about solving the same problem.
