The ‘term’ digital is bandied around quite a lot, so it is useful to be quite precise about what is meant by it.
I believe a ‘digital’ strategy for a business must formally address all of the following 3 pillars if it is to be considered a true ‘digital’ strategy and to achieve the goals of the business:
- Customer- or client-centricity
- Data is an asset
- Achieve and maintain business agility
Customer- or client-centricity – this is about understanding the client’s needs, and in effect providing the whole capability of the organisation to meet the client’s needs effectively and efficiently. The client is assumed to be the primary source of revenue, and the balance between meeting the firm’s wants (i.e., to get clients and to make as much money as possible from them) and the client’s needs (i.e., to get the service they need) will very much shape any client-centricity programme.
Many ‘digital’ efforts tend to focus exclusively on this space, as this involves big data, social, mobile, etc, etc. It is about building (mobile or traditional desktop) applications to meet client needs, it is about providing clients a richer user experience, it is about clients being able to interact with the firm through a single portal tuned for their needs, and not the firm’s own wants. It is about joining processes and functions which historically have acted as islands.
Client-centricity efforts are usually led by the CEO and/or the COO.
Data is an asset
Data is an asset implies you ‘know what you got’ in terms of knowing what data the firm has and where.
This is becoming a bigger priority for more and more firms, as they realise that key strategic goals such as knowing your client’s needs, meeting demanding regulatory obligations or improving operational excellence are all but impossible to achieve without some stewardship of the vast amounts of data that the organisation captures every day.
Stewardship means putting in place principles, practices and tools to allow data to be discovered and accessed when and where it is needed, and to avoid the creation of redundant or duplicative processes or systems.
Data stewardship needs to be led at the level of COO at least, and potentially CEO.
Achieve and maintain business agility
Business agility is the ability to rapidly and sustainably respond to change. Many businesses have been agile in the past, in the sense that they see market opportunities and do the work needed to take advantage of it, usually within a 1 year timeframe and often much less.
However, as the complexity in an organisation grows, the ability to respond rapidly to change decreases, until eventually sclerotic processes and systems force a massive re-investment in technology with the corresponding high cost and high risk.
So maintaining business agility is a complexity management activity: first to control the complexity and then to manage it.
As with the others, business agility needs to be led at the level of COO at least, and potentially CEO. It should not be the responsibility of the CIO on their own.
At a minimum, all three of the above threads need to be in place to achieve a successful digital transformation effort. The need for first two threads are generally widely understood at the board- and ‘CXO’ level of firms.
But here’s the question: what are they doing about business agility and complexity management? The answer is buried in the murky world of ‘enterprise architecture’, a discipline which has never quite settled down into a steady-state agreement of what it is or what it should focus on, or who should be accountable for doing it.
In a digital context Enterprise Architecture should be first and foremost about complexity management in the context of business agility – especially when viewed in light of the other two executive areas of focus. (This also applies in other non-digital business contexts, such as Mergers & Acquisitions, or Regulatory Compliance.)
Business agility requires agility in its technology. The way to achieve and maintain agility is through managing complexity *continuously* – the complexity of business processes, and complexity of the supporting IT.
A proven way to address complexity is to partition or modularise activities, from the enterprise all the way down, and to establish principles for identifying partitions and for governing change within and across partitions.
This requires new practices and skills which are specifically focused on these principles. These may be skills more mature IT organisations may have, but the practice is a business-technology endeavour: in the end, in the same way the CEO demands focus on customers and data, they must also demand business agility and hold their business and IT to account for achieving that.
An excellent book on this topic is Roger Sessions ‘Simple Architectures for Complex Systems‘, some of which ideas will feature strongly in future posts. A related enabler is the ‘Scaled Agile Framework (SAFe)‘, which drives business agility goals into execution of projects and programs.