The digital transformation is not a one-time project, which solves all challenges that companies in a digital environment are faced with. Required is rather a model approach, that creates a transformation as a continuous process. The "Digital Transformation Ecosystem" does just that. It enables agility by the current situation of the company iteratively evaluated.
Achieving agility and flexibility with a new transformation approach
The days of finding comfort in a set amount of solutions are behind us. To remain competitive, your organization will not only have to look at what works now, but even more important: what may work in the future. Because of that we need to dive deeper into an organization’s core and understand what kind of impact Digital Transformation has on organizations.
Digital transformation will not look the same from one organization to another for the following reasons:
- Each organization has its own unique problems and opportunities that need to be addressed.
- A digital solution that works in one specific industry or even company within the same won’t necessarily work in another.
- Boundaries of industries have become diluted, competition might arise from areas where you least expect it.
However, there are some commodities all organization face more or less.
- Strategic innovation is not a matter of choice anymore and does not automatically guarantee a competitive advantage or even just survival
- Organizations, especially if they are large and complex, face an almost impossible task of keeping pace with opening opportunity spaces that are exploited by new entrants that do not have to carry legacy baggage
- Do Digital technologies enable novel business models and ways of value creation that withstand traditional competitive dynamics? The logic of platforms, marketplaces, or agents favors a winner-takes-it-all paradigm which rewards few and resists conventional regulation. This creates a widening gap between the few owners of the digital space and the many who must give in to less powerful business models.
- The discussion about privacy, cybersecurity, the future of humanity or topics like ‘future work’ are an indication of the kind of societal challenges that need to be addressed during the digital transformation Culture and mindset are a sweet spot for digital transformation and addressing them will unleash a joint process of ongoing strategic and organizational learning - which in itself will quickly become a showcase of how to compete for the digital future.
Why traditional solutions do not work anymore?
Within the last years, the cadence of change has accelerated as much as 10 times. The old product cycle times were matching well with strategic planning, infrastructure planning, recruitment, training, and even the regulatory cadence and in some cases lasted between 2- and 10 years.
However the cadence of change in digital products is much faster and agile, and new entrants and competitors test and refine market offerings faster than incumbents.
This increased pace of change highlights the importance of a strong yet flexible foothold in the market. Today, the increasing market-driven demand for new services requires rapid change and a high level of agility to master the challenges mentioned above.
Falling prices and cost pressure require huge change projects within organizations touching the strategy, business model and culture. Historically, large project teams and 2 - 4-year change programs were backed by substantial protected revenue with companies being the biggest players in their markets.
Additionally, new change challenges stem from new, more agile competitors and entrants which are moving faster and deliver on a lower cost base. Some even have significantly more financial resources than traditional organizations due to the increasing venture capital funding. Some just have the opportunitiy and investor forgiveness to burn money like no established company would be able to do.
Hence, digital transformation has a particular impact on operating models, as new ways of collaboration and leadership have to be applied within companies to stay competitive. This requires the development of flexible organizational structures (e.g. pool organizations) which focus on greater clarity around roles and responsibilities as well as individuals’ motivational preferences. Furthermore, agile collaboration and processes are essential to steer these new organizations through the digital age.
Furthermore, it is obvious that the ongoing changes along with the new demands in terms of technology, people and processes require a more dynamic and flexible instrument to gauge the iterative transformation needs.
As a solution to this, Detecon and its partners developed a Digital Transformation Ecosystem to guide organizations through such reorganizations to create such flexible and digital-ready organizations to support clients during their transformation journey.
Digital Transformation Ecosystem (DTE)
We aimed in our Digital Transformation Ecosystem approach
- to set a baseline to establish an interactive community via different partners,
- to shape the digital transformation actively and
- to describe the innovative concept with an iterative and open ecosystem.
The framework distinguishes itself from other transformation models through the continuous integration of data and its open, flexible and iterative nature.
The Ecosystem contains three core elements (see Figure 2: Dimensions of the Ecosystem):
- Framework, including four incremental layers of an organization, has to be used for the assessment in order to drive a successful transformational change.
- Approach, that is designed in an iterative manner (initiate, realize, sustain and learn) allowing quicker feedback loops to facilitate re-orientation of the transformation.
- Partners & Tools reflect different roles needed during the transformation and allow flexible adjustments during the transformation based on data-driven, state-of-the-art tools for transformation projects.
The four layers of the Framework according to which a transformation is executed are describing Strategy, Operating Model, Culture and Data. To commence as well as conclude the transformation it is essential to conduct an initial assessment (e.g. TM Forum Digital Maturity Assessment) which puts the ecosystem on a more solid basis than other frameworks, by the assessment of digital organizational capabilities.
The ability to accomplish digital transformation successfully requires a thorough understanding of all interdependencies among all layers. This allows an organization to drive digital changes, to reach digital excellence and to meet the wider strategic needs of the business.
- The strategy layer focuses on the strategic direction for the main areas of the transformation and includes the market environment, business models, products and services, and customer journeys.
- As the binding element between the strategy layer and the cultural layer, the operating model layer considers all operational aspects in a digital transformation. Core elements of this layer can be defined as the organizational structure, processes, governance, and roles as well as capabilities.
- To cope with new competition, new products and a radically new cadence of change cultures is crucial to organizations impacted by digital changes. Cultural challenges and opportunities have to be approached from two sides: Organization-wide and a team internal view.
- All layers are being supported by data analytics and/or the usage of data in order to assess what has been in use throughout the last decades.
The adaptability and flexibility of the Ecosystem is key to survival and, even more, important to be successful and to thrive. Furthermore, the DTE is adaptable and flexible to meet the needs and requirements of different organizational models with their different purposes. The layers chosen for the transformation are not set in stone and layers from other models can be used as well. This modularity is also applied for the assessment as different methodologies such as an adjusted Digital Maturity Model or Balanced Score Card can be used as well.
The Framework by itself is a rough guideline of the impacted dimensions within an organization, however, for successful execution, a flexible and iterative approach is vital.
Transformation projects should be organized as an ongoing effort to continuously adapt and change the strategy, operating model and culture of companies and to cater to environmental and technological changes that affect the business. The Approach within the DTE provides an iterative methodology consisting of the four specific steps Initiate, Realize, Sustain and Learn.
The difference between other transformational frameworks is in how the target picture is perceived. The iterative transformation approach assumes that the first target vision derived from the initial assessment is not necessarily the best and final one and that learning happens continuously throughout the process. It encourages a tight feedback loop to incorporate new knowledge, emerging requirements, and innovative ideas even late in the process that can be accommodated in subsequent iterations. Assessment and transformation can both take place on one or two separate layers as well. This model incorporates the idea that iterating towards a solution drastically increases the chances of transformational success (see Figure 5: Approach).
Consequently, the iterative steps are utilized in the different dimensions for the transformation (e.g. Strategy, Operating Model and Cultural) as well. Thereby, the predefined steps – Initiate, Realize, Sustain and Learn – help the transformation team to plan the transformation cycle, keep up the flexibility, align their tasks and review their progress on a constant basis.
To successfully execute these four transformation steps of the approach within an organization, requires certain Roles. Based on our years of experience in transformation projects all around the world, we derived four key roles that any transformation project need. Those are a business lead, an organization and culture lead, a data scientist and an industry body for benchmarking.
Partners & Tools
In order to keep the flexibility during transformation projects as high as possible, it is essential to bundle the knowledge of several experts and advisors due to the ever-increasing complexity stemming from digitalization in an open ecosystem. Therefore, Detecon leverages its transformation and digitalization experience and combines it with the state-of-the-art tools and capabilities of various partners (e.g. Atlassian, Celonis, Concentra, The GC Index®, TM Forum, Prisma, etc.) in order to deliver tailored solutions for clients that go beyond classical PowerPoint and Excel consulting.
For instance, to develop a digital operating model, it is in today's business not sufficient to rely purely on simple organizational charting and process flows re-design. It is rather beneficial to engage in activity-based organizational modeling and workforce planning combined with process mining to optimized value-creating activities within an organization. Furthermore, digital skills and capabilities are often overlooked and should take a central role in any digital transformation projects to develop an agile and innovative corporate culture.
Through this open ecosystem, Detecon is able to constantly develop its partner network and continue to provide best in class consulting that delivers real results for any digital transformation project.
Co-authors of the article are Kim Gertkemper, David Langer, Tim Vogel and Christopher Wörndle.