Upgrading
your business to a digital operating system
One
element of a successful digital transformation is developing a new way of
operating that relies on the right talent, prioritizing speed, and targeting
milestones.
To switch your business to digital, three
fundamentals are needed: (1) Recruit a team that’s as enthusiastic as it is
technically proficient. (2) Prioritize speed above perfection. (3) Introduce
milestone-based project management in the style of the venture capitalist.
Recruiting
and expanding the team
Data scientist, IoT software developer,
user experience design expert, product owner, scrum master. These are job
titles from the digital world. But do you know what the job titles actually
mean, or what drives these people? Two things are certain: they’re needed and
there aren’t enough suitable candidates. Where can they be found, and how can
they be recruited?
Job fairs have only limited success. Above
all, digital natives need to be lured by exciting and meaningful work through
the channels where these new, mostly young, stars of the future spend most of
their time. Social media, blogs, and start-up conferences are good places to
start. Use the new formats like hackathons and start-up competitions to get to
know digital natives. Be present at the leading digital events and conferences
such as the Consumer Electronics Show (CES), Disrupt SF Hackathon, South by
Southwest (SXSW) Interactive, LAUNCH Festival, or competitions within academic
institutions such as HackMIT and the UC Berkeley start-up competition.
These are all good opportunities for traditional
enterprises. Digital talent isn’t
put off by a big corporate name, but by a dull job profile or the lack of
concrete challenges. Recruiters need to weave
interesting stories and stoke enthusiasm for the new work ahead. Potential
candidates are generally attracted by authentic values and strong corporate
stories. Interviews should be conducted by top-level managers, even as high as
the CEO, people who exude the passion needed to attract talent and build the
fledgling employer brand. Finally, the company must strive at least as hard as
the candidates to present itself as an appealing prospect in order to fend off
the attractive employers who top all the relevant rankings.
Skilled digital natives love ambitious
projects and big ideas. They want to rewrite the future of industrial robotics
and automation rather than simply optimize the logistics processes in a plant.
For recruiters, that’s often only a matter of tone. The recruiters themselves
should also be part of the digital community and not come across as people from
a distant planet. This is a challenge that many HR departments often find
overwhelming. There are specialist agencies and freelancers who can step in to
fill this gap, at least for the early setup phase. An experienced digital
recruiter, then, must be right at the top of the list of recruitment targets.
If, despite all the good advice, companies
still fail to put together a digital team, they can just go ahead and buy one
instead by acquiring a start-up with all the necessary talent. One prominent
example is Walmart. In 2011, the retailer paid $300 million to acquire the
social media company Kosmix.
And since it’s so difficult to find
talent, it’s even more important to retain it. Work must be challenging and
future-focused, and the working environment must be appealing, with open
working areas in attractive locations. Creativity is inversely proportional to
the number of restrictive walls. Training and one-to-one coaching must also be
on the table, as well as intensive mentoring and personal development plans for
each individual.
However, it’s wrong to assume that all
open positions must be filled with experienced digital talent only. Companies
need to learn to develop talent themselves. They need to be open to young
people and, more than ever, to recruit by potential rather than references and
reputation. Companies should be able to give everyone in their organization the
opportunity to experience and learn the new digital technologies, and this
includes providing the space for talent to develop naturally. Google, for
example, gives its employees the freedom to spend up to 20 percent of their time
working on their own chosen tasks, and 3M introduced a similar measure years
ago.
Ability
to establish fast concept iteration
Fast concept iteration is something that
Steve Jobs believed in. When the Apple founder launched the first iPhone in
2007, it still only used the slow Global System for Mobile (GSM) transmission
standard even though his rivals were using the faster Universal Mobile
Telecommunications Service (UMTS). The early iPhone couldn’t even receive GPS
signals for satellite navigation. Digital natives refer to it as the minimum
viable product (MVP), a product that offers only the minimum possible
number of essential features. For the product to be a success, it needs to
address a pain point, a place in the market where customers encounter problems.
With its touch-screen design, Apple displaced number pads and keyboards and hit
on one such pain point. With Apple’s open interface, a rapidly growing range of
apps soon followed that could be downloaded to the device, thus greatly
increasing the appeal of the iPhone. Customers did the rest: the Apple
engineers fed reactions and comments of customers back into development
virtually in real time, and before long they had the most popular smartphone in
the world.
Companies pursuing a digital transformation
should adopt the MVP approach even if it means their engineers and designers
will need to rein in their quests for perfection. It prevents expensive and
protracted product development based purely on assumption. US innovation guru
Steve Blank even goes so far as to encourage businesses to see the customer as
a partner in the product development process. Early adopters in particular
should be seen as kindred visionaries and should be utilized. However,
companies still have to identify a particular pain point for the first version
of the product, which is no easy task.
Even Lufthansa followed the MVP route when
it digitized its check-in process. This critical core process was adapted to
the technological possibilities and customer needs over several stages,
following a continuous and iterative method. Time and time again, a crucial
question had to be answered: How much change are passengers willing to accept?
Nonetheless, the airline had identified a real pain point—standing in line in
front of a check-in counter has always been one of the downsides of flying.
As a first step, Lufthansa installed
check-in machines, where friendly employees were on hand to help passengers
with any problems. Customers welcomed the service. In the next stage, the
airline offered customers the option of checking in at home on a PC and
printing out the boarding card themselves. The move promised more convenience
and was only one step removed from using the check-in machines. Again,
customers welcomed it. It also meant that Lufthansa was able to significantly
reduce costs since the customer now provided the necessary hardware. And as the
process went mobile with the spread of smartphones and apps, the digitally
attuned Lufthansa customers could now free themselves of the PC and printer
altogether and simply scan the boarding passes on their smartphones.
The process is far from over, however.
Just as with lean production in the past, continuous improvement is the order
of the day. Lufthansa rival KLM, for example, as one of the first partners of
Facebook, uses a chatbot on Facebook Messenger as a new channel for
communication and interaction. KLM customers can now call up their digital
boarding cards on Messenger. The service also means that KLM can provide its
passengers a far more personalized offering via Facebook. Just like WhatsApp,
travelers receive a push notification telling them they can now check in or
notifying them of any changes. The development has personalized the check-in
process.
A key component of the digital operating
system is its specific ways of resolving problems. If digital companies want to
redevelop or improve products or processes, they tend to rely on design
thinking. This is where cross-disciplinary teams tackle problems by using the
classic methods of designers: observe, understand, develop ideas, translate
quickly into prototypes (rapid prototyping), test on the market, and
immediately feed customer reactions back into product improvements. The aim is
to produce a simple solution that is also simple from the point of view of the
customer. After all, the solution is ultimately being developed from the
customer’s perspective and for the customer’s benefit.
Above all, the customer interfaces must be
as simple and intuitive as possible. The mobile apps of today will likely
become the voice-based interfaces of tomorrow. Voice assistants like Alexa from
Amazon, Google Home, or Apple’s Siri provide simple and intuitive input options
that are much easier than screens and keyboards. Online retailers are
developing checkout processes that enable the customer to complete purchases in
a single click rather than through multiple steps. Digital natives like PayPal
and Amazon already offer this. There are other examples of innovative design
concepts that are focused on the needs of the customer and that radically
simplify the buying process. One of these is Amazon’s Dash Button, which allows
customers to order replenishments for frequently used items like laundry
detergent with just the push of a button.
To anchor design thinking in the
innovation and product development process, management itself must understand
these technologies, and ideally have experience with them. Participating in
hackathons—team events geared toward the shared improvement of a digital
process—is a good starting point. An effective exercise is for a team member,
for example the manager, to play the role of the customer and always argue from
the customer’s point of view. Although all companies claim to focus on the
customer, too often the customer’s voice is overlooked or taken into
consideration only at the end of the process.
Establish
steering by milestones
What marks a digital enterprise? The fact
that it forms fact-based hypotheses and takes data-driven decisions. To come by
these facts, new data needs to be collected, whether self-generated or acquired
from third parties. Companies should therefore ensure they always follow
measurable targets—for example, reducing process costs or increasing customer
acceptance, conversion rates, or process speed. Naturally, multiple targets can
be pursued at the same time. These targets must be anchored with KPIs with
meaningful metrics defined for each process to be digitized. The targets for
the milestones to be achieved can be derived either from the company’s business
targets or from benchmarking. The targets and the actual results on the given
dates are then reconciled to determine whether the milestones have been hit.
By Anand Swaminathan and Jürgen Meffert
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