A new operating model to succeed in the digital world
As digital becomes the way to operate in industry after industry, we need to re-evaluate our operating model. We need to see what this offers and how we can adopt these practices and new ways of working through the necessary changes to not just keep up but thrive in the digital world.
With the digital age, it’s brought with it disruption, digital transformation and industries that are transformed all around us faster than we realise. What does this mean for us? And what does the future hold? If companies are not actively looking at ways to transform, the threat of being disrupted is very real. With the barrier to entry next to nothing, new players are entering the market overnight, these new players might not even be on your radar and can come in and disrupt you overnight. The customers will quite easily move to the new players who have leapfrogged you without you even noticing.
I’ve always taken all my endeavours with passion and creativity. The mediums I’ve most often found for my creativity in design and digital. Be it chance, I’m not sure, all I know is I’ve never looked back and I’m truly fascinated by this industry and what this has meant is that we’re on the cutting edge of what’s new, different ways of thinking and new ways of working by default. Here follow the key areas I believe organizations can learn from design and digital companies to create a new operating model to succeed in the digital world.
Where do we start?
In search of a new operating model for the digital world, there are promises of speed, prospects for optimisation and growth with all the right tools at our disposal to genuinely offer a great customer experience. If we get this right, this is what this new operating model will offer business leaders who take this opportunity to thrive in the digital world.
When exploring a new operating model, we need to consider two key areas:
- Our customers and the way in which they interact with us, also known as your “customer journeys”. We need to evaluate how we can truly offer an individualised experience for each customer as this will become a matter of survival and no longer a competitive edge. How do we tap into self-service to empower consumers while providing the speed of feedback powered by automation and artificial intelligence?
- Secondly, we need to look internally at our back-office processes. How can we optimise and transform internally to gain the advantage? How is our culture transforming to adapt and promote these new ways of working?
Even though executives are aware of digital transformation and trying to take a stab at it, you need to be careful with what outcome you achieve. Despite their best efforts, many companies are destroying the value because of uncoordinated efforts. The activities they are doing are only happening in small pockets, their attempts are restricted to a silo, and their inability to scale them across the institution really holds them back from having a dramatic impact. The other challenge companies have to be frank is they just move too slow in the digital world. We have to think in terms of building a little speedboat that can be agile enough to react to whatever demands are placed on it.
It’s all about our customers
Although it’s always been our best intentions to have great customer service, in the digital world we can no longer ignore the fact that customer experience should be at the heart of what we do. Today’s customers are accustomed to best-in-class user experiences both on- and off-line with companies such as Google, Apple and Amazon. Customers will increasingly expect companies to respond faster, customise products and services to their needs and provide easy access to information when they want it. A customer-centric organisation is becoming a matter of survival, it’s no longer a competitive edge.
The good news is that the closer you get to your customers the less of a guessing game it becomes as customers help to co-create products through open innovation. Rather than guessing what would work before launching a product or service, companies can make adjustments nearly real-time by allowing customers to provide direct feedback. This is already taking place in products from Lego to aircraft engines.
Design as a foundation
For me, the thing that unlocks this has always been design. This is the thing that got me thinking, design is not always just the thing. Design has become so synonymous with the way something looks, perhaps a product like the iPod that Jonathan Ive designed. What people fail to realise is that there is so much more to it. Good design is invisible, something that isn’t a product, but rather this well thought through process that someone really thought through that makes people’s life’s easier, more beautiful and more loving.
Design is trying to make things better every step of the way. Design is doing the same thing over and over 100 times, trying to improve and optimise it every iteration. Getting it closer to fulfil our customer’s unspoken needs each time. We don’t shy away from redoing things. It becomes an opportunity to do it again but different and better each time.
Design is a mindset, it’s a way of life. We all look at things differently but we’re all working toward a common goal of releasing a product or building a service that better serves humans, our customers. From this thought processes, everyone involved is a designer, we are all designers. The way to manage the process is from the start whenever we start something new to understand the intent behind it and clarify the expected outcome. After that, you can put the measurements in place to gauge if you’ve reached your outcomes or not and see what you can learn from it.
“Design is trying to make things better every step of the way.”
The challenge of education
Our industry and the world around us is evolving faster than the education systems can produce new talent. KMPG announced their own degree to raise their own in-house talent with a digital degree apprenticeship programme. In this digital era where I can only assume they don’t trust the outcomes of the educational systems and the speed at which they can adapt, they see the value in raising your own workforce. Richard Branson said it’s wise to employ early in someone’s career and focus on building their skills in your way of working, rather than getting employees further down their career paths but set in their ways, and I believe KPMG is on to something to educate from within.
I see myself as a life-long learner and enjoy pushing my own boundaries continuously with what’s new and what’s changed. Since Google introduced “daylighting” where companies allow employees to spend up to 20% of their time working on their side projects. Seeing how that, in turn, can be introduced back into the business, we’ve seen a plethora of companies follow suit. I believe we’ll get to this point where companies have programs and internal courses run to not only educate employees on their ways of working but further to build knowledge and expand exposure to the team. If you find your true passion area then work not only becomes easier. You have the feeling of wanting to go to work, and ultimately it brings more business value as someone that has passion in their area will outperform any other employee.
Think in systems
One thing designers learn early on is to think in systems, even though not a lot of them realise it. When you are creating something it hardly happens in isolation, you have to consider the bigger picture and keep asking yourself how what you are doing now integrates with the whole. This is how a systems thinker has to operate.
In today’s business landscape there is a high-level of interconnectivity and interdependency among the various elements we work with forming ecosystems of information. Thus we cannot work on one aspect without affecting another. Companies are becoming more and more interconnected and a lot of the time the relationship between various elements are more important than the independent function of a specific element in a company.
We need to learn to zoom out and move beyond the cause and effect of certain elements. Nothing happens on a linear journey anymore. Even traditional linear television is being disrupted by non-linear VOD (Video On Demand) services such as Netflix. As humans, we’re becoming more and more adjusted to this way of living. Learning to think in systems and ecosystems of interconnected elements is definitely a definitive skill in the new operating model of business.
An appetite for risk
Building a company that innovates, tries new things and look at ways of disrupting themselves before they get disrupted cannot come with an appetite for risk. The idea of failing fast is to celebrate learning from failure. Each failure is just that — a learning opportunity, and as long as we treat it that way it’s healthy to have an appetite for risk.
When the outcome of any initiative or project does not yield the desired outcome, we must take this as a learning opportunity and ask ourselves what lessons can be learned? We can look at what external factors could be identified that could have had an influence on the failure. Further, we can look internally as to what internal factors could have compromised our judgement? There is almost always something we could have done differently along the way, learn from that. Lastly, are there any gems that were uncovered through this process? Francis Ford Coppola once stated: “Art is partially being available to accidents that fall into your lap”. Rather than dwell on what went wrong, consider what you might have inadvertently discovered.
You don’t have to share your findings with others, but you should challenge yourself to have an answer. These are all lessons that could be learned to help us better steward future projects.
Challenge yourself to ask questions before making statements. When you’re not talking you should be listening with intent. Our jobs as designers are to listen to what people are saying and then bring our skills and expertise in to try and solve the problem. This has taught me a lot about asking the right questions. I wrote an article about how asking the right questions is the starting point of innovation. This discovery lead me to learn the importance of forgetting what we know, leaving our assumptions at the door, and asking the right questions to put ourselves in our user’s shoes first and foremost. What questions help us do is to organise the way in which we attack a problem, and ultimately it helps us to deal with the unknown.
It comes down to the better questions you can ask, the better problem solver you will be. If you are anything like me and find it difficult to talk to people, questions have this way of stripping away fear and building confidence because as you ask questions you learn along the way.
Experiment with an Iterative Model
What worked in the past won’t necessarily work in the future — we simply cannot rely on those assumptions. The best way to understand how the new world is working is by testing, iterating and learning. Experimentation is a key part of our business and should be engrained into our culture going forward as the world will continue changing at pace.
Clients are coming to us admitting that they do not know what will work and how their users will respond, and neither can we say for certain. If we keep our combined assumptions in check, we can approach the situation in a very different way. Rather than trying to only build one prototype and test that with users, we can build an array of experiments that we test on sub-groups of users in parallel, learning a lot faster and crafting the final solution based on actual outcomes from user testing along the way.
A powerful part of an experimental culture is knowing that great ideas can come from anywhere. A culture that allows the best idea to win is a core part of the operational model of the future.
Get feedback early and often
When building in an iterative model we use the concept of an MVP (Minimum Viable Product) coined by Eric Reis in the Lean Startup — I’m not going to go into detail on this, but the general idea is to build just enough to be able to put something in front of customers to measure their experience and to learn from that. This is called the Build → Measure → Learn feedback loop, which once you’ve reached the end, repeats to build any new learnings into the next iteration. The key part to me is to get feedback early. It depends on what you are making but nothing should be in a building state for longer than 100 days. If you sit on it too long you’re already failing.
99% is good enough
We live in a world where people are in search of perfection. As a designer, there’s a fine line between what is art, which is something made for myself, and design which should be a solution made for a client. Design is filled with grey areas and not many black and white processes, we need to learn when to step back and say that’s good enough. You don’t need perfect all the time. A skilful designer develops this relentless bias towards action that pushes ideas forward, rather than chasing perfection. Seth Godin is someone that makes a clear case to the extent that we need to learn to “ship” early and often. “Shipping” is the final act of execution. It is when something is done, it’s out of the door. Godin makes the case that shipping is an active mindset rather than a passive circumstance.
We will always be designing solutions for clients, customers or both and the fact that humans are never stagnant, never fully content over time means we will never achieve perfection. It is just right for that time with the resources we had at our disposal. When we change our perspective and learn to ship early and often, we’ll see that our 99% effort is good enough, and we don’t have to always strive for 100%.
With the circular ecosystem, it brings with it the fact that nothing is ever fully complete or done. When working in an iterative fashion the same applies where we are never really done with anything and everything will have to go full circle and come back to the spotlight at some stage. We are seeing the same with digital work, where there were a lot of one-off projects a couple of years back, we now need to build operating expenditure into the budgets as things are never quite done. What is done today is only starting to age from tomorrow. We need to plan for maintenance and continuously relook at solutions to keep them up to date. As part of a lot of solutions, we build a healthy backlog and roadmap to ensure we already think ahead of whats to come.
We see this all the time with how we consume services as well. Where I used to buy a software package once-off, I now make use of a SaaS (Software as a Service) model. Where for as long as I pay I get the latest versions all included. We’ve started selling hardware in our IoT solutions on a HaaS (Hardware as a service) model. We soon realised that after just 10 months the custom hardware we developed was already dating and there are new solutions on the market daily. When we stood back and re-evaluated, we saw that we can shrink the size 10x and cut the costs 10x all in just 10 months. Trying to compete in this market is just not feasible. What it has enabled is selling the hardware as a service. If we look at the next 12 months and there is a better solution on the market we just plug-and-play it to give the client the benefit of having a never ageing system in place.
Underlying the new customer-centric operating model are a diverse set of tools and data. Connecting the right data to the right decisions can help build a common understanding of customer needs into an organisations operating model. We started seeing this when Amazon would show you related products based on your previous purchases and later combining this data with peer reviews and peer’s purchase history to place something new in front of you that you most likely will want to buy. This was just the beginning of data-driven decision making, companies embracing advanced analytics will start to combine all sorts of internal and external data to create a hyper-focused market segment of one for customers.
Analytics will see a huge shift from showing what happened in the past, to a tool that can predict the future. When we combine the right data at the right time, we can start seeing trends and show what is likely to happen with increasing accuracy. In the new operating model, we will use machine learning to build cognitive systems with neural networks and models aligned to our business processes to crunch all the data and shorten the time from raw data to data-driven decision making being at everyone’s fingertips.
“The new business operating model combines a bunch of tools and methodologies in a tailored solution, integrated into new ways of working for companies that help them keep ahead of the continuous change in the digital world.”
We always hear the saying that culture eats strategy for breakfast. Nothing is more important in the new operating model than culture. Our customer experience and the success thereof starts without employee experience. When Tony Hsieh built Zappos, an online shoe retailer, from 1999 — a time when online retail was not that big yet, he focussed on customer experience. Everyone at the company’s number one KPI is customer experience. He himself handles customer experience when he gets the chance. The one story that’s always stuck with me is that during your 3 months of training at Zappos if at any time you feel this is not for you, you are offered a bonus to leave. This is profound as Hsieh grips the importance of shared responsibility and having the entire team follow the shared vision.
We need to get the entire team onboard with the company’s north start metric and what drives us forward. The only way these types of transformations are successful and sustainable in the long term is with frontline adoption, ownership and a shared responsibility from all.
“Digital Transformation is about people first and technology second.”
Where do we start with transformation?
Transformation cannot happen in silos and it has to come from the top. We need to establish what are the most important customer journeys, and what are the pain points that we need to consider and build around. You need to figure out how to pull on the right teams at the right time. For example, if we’re building a house, we cannot get electrical contractors in before we finish the walls, and we definitely cannot paint until all of that is done. In the same way, we need to identify the teams and their order in the customer journeys and how it will all fit together in the end. Get all the right stakeholders in the room. At the end of the day it is a new way of working, so we need a new culture across the organisation. Getting front-line adoption is absolutely crucial! For no one is it more part of their day to day function than for them, they need the right metrics to guide them in the right direction. We need to think of up-skilling them and they need to feel ownership and that shared responsibility.
Where to from here?
You need to think of the long-term impact, and how do you become a digital-first company. Chinese food in China is just called food, when will we get to that point where digital is just called business? There are no one-size-fits-all operating model, but what I set out to achieve is to broaden your thinking and expose some of the new ways of working companies are already applying today. Hopefully this has given you a taste of what we could expect in the future. You might only use some of the techniques, tools and methodologies mentioned above to craft your own unique operating model to thrive in the digital world.