Digital transformation and business bones.
I love that people are focusing attention on “digital transformation.” Every consulting firm has a practice area, every research firm and think tank has a report and every business magazine has a series of stories. Google shows 7.3 million search results.
My entire career has been about transformation. In the early years it took the form of new product development and generating demand with advertising. The transformation was largely formed with persuasion and clever ideas, communicated to people with TV and print, and by making the item available at the local market.
By the 1990’s the transformation started becoming digital with infrastructure things like websites, email, and ecommerce — requirements easily added to any legacy business. This was largely a tactical exercise with marginal impact to the core of a business. Of course many new businesses were created, born of the digital ecosystem and a growing generation of natives.
Having celebrated the 25th anniversary of the World Wide Web, we now see a type and magnitude of new company not previously possible. Facebook, Alibaba, Uber and Airbnb are examples for this new type of company whose existence is grounded in digital technologies and which are highly differentiated from their competition.
Interesting, but what about legacy companies — companies that make and sell things the good old fashion way? Theodore Levitt’s famous marketing myopia mantra — What business are you in? — has little value in the face of this type of competition.
What is needed is a way to think about an existing business in a different way. Just like a building is subject to architecture for the planning, designing, and constructing, so too is a business, especially a business that seeks to transform itself.
With this single blueprint of the business structure, all stakeholders can share an understanding of interconnectedness and how changes in one area will impact other areas. What’s more, this blueprint will provide common vocabulary and a framework with which to discuss transformation. Everyone gets on the same page and shares the same knowledge.
In a building renovation, professionals often refer to the “bones” of a building, the equivalent to our bones and skeleton, being good or bad. Business bones are also a good metaphor for what is good or bad as a subject of transformation.
In a taxi company example (aka, Uber), one bone is a hard assets/cars and another is labor/driver. The taxi company, wanting to remove these bones would need to understand the changes for hiring/re-staffing and vehicle provisioning.
In a general merchandise store example (aka, Alibaba), the marketing and delivery bones would need to be added and the store either discarded or transformed into a warehouse. Staff would be retrained to new positions and hours of operation.
In the context of digital transformation, the critical component involves Information Technology Transformation (ITT). Business Architecture is particularly well suited to mapping and aligning transformations from Business to IT and the current “as-is” to the future “to-be” requirements.
With a clear understanding of the business structure and bones, plus how to align Business and IT transformation, innovation has a solid bedrock from which to build.
More on the topic of Digital Transformation here: Doggone Digital Transformation.
Contact me to continue the conversation.
Larry W. Smith