AGILITY EFFICIENCY INNOVATION
INCREASED AGILITY: The future cannot be predicted, but what’s certain is that disruptions will continue. Rather than trying to forecast the future, companies should invest in developing the agility and resilience that will enable them to adapt to whatever comes next.
“Agility is the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment... Agility needs... a dynamic capability, the ability to move fast—speed, nimbleness, responsiveness. And agility requires stability, a stable foundation—a platform, if you will—of things that don’t change. It’s this stable backbone that becomes a springboard for the company, an anchor point that doesn’t change.”43 Marc Engel, former Chief Supply Chain Officer at Unilever highlights this need in light of current pressures on supply chains: “You’re seeing shortages of everything, volatility in commodities, price hikes, and supply chains having to respond with a lot of agility and resilience much more than before.”
STREAMLINED OPERATIONS: Digitization allows companies to break down internal silos. Mature companies can make the same, real-time data available across the value chain, which now extends past the four walls of their organization. Businesses use an increasing number of suppliers, partners, and other outsourcing companies which add value but also complicate matters. Through strategic technology investments, companies can enable seamless, secure collaboration with co-manufacturers, and increase brand owner confidence that the end product will delight its consumers. In addition to having an end-to-end view of internal processes, suppliers, and other partners, companies are establishing an end-to-end view of customers and the customer journey.
OPERATIONALIZED INNOVATION: Now that many companies have moved through an initial set of transformations focused on customer-facing systems and productivity, they can expand transformation efforts to drive innovation. “Successful digital transformers are upping the ante, and as they leverage their digital skills to innovate faster and better, the gap will widen between winning digital transformers and their laggard competitors.44
Some companies are appointing a Chief Innovation Officer to synchronize business strategy and innovation strategy.45 But innovation cannot be just one person – or team’s – job. The more efficient, agile, and data-driven the organization, the more likely innovation is to emerge from the ground-up rather than being driven by an ivory tower approach.
It’s hard enough when you don’t have a lot of these disruptions because you can’t forecast the weather and you can’t forecast consumer behaviors and promotions of yourself and other people and what that does to demand on a good day... But where we are now, we’re seeing the whole vision of synchronization and agility.”
Companies need to develop more resiliency in anticipating these shocks and being prepared for them. And it’s in this...realm that the digital transformation becomes important: to be proactive and understand how agaile and flexible and what kind of slack can be built into the supply chain.”
The all-encompassing nature of digital transformation requires enterprise-wide involvement. To enact this agile, efficient, and innovative vision requires a focus on:
LEADERSHIP: Senior executive support drives real change. Professor Venkatraman maintains that “digital transformation is not a technology challenge but rather a senior management challenge because they have to figure out how to allocate the resources.” Each member of the C-Suite has a role to play, ensuring critical questions are addressed.
CHIEF EXECUTIVE OFFICER: How will this initiative advance our business strategy?
CHIEF OPERATIONS OFFICER: How will the workstream function?
CHIEF DIGITAL OFFICER: From an operations perspective, do I have the right strategy for continuous improvement? How can I leverage digital to make me more efficient?
CHIEF INNOVATION OFFICER: How does this initiative align with our innovation strategy? How can innovation make it even better?
CHIEF HUMAN RESOURCES OFFICER: Do I have the right skills? Do I need to build a new capability within my organization?
CHIEF FINANCIAL OFFICER: What is this going to do to my bottom line? How much investment will I need?
CHIEF MARKETING OFFICER: How do you take it into the marketplace?
CHIEF SUPPLY CHAIN OFFICER: What new sources of supply will be needed? How will transformation improve my supply chain?
CULTURE: Jeffrey Schaubschlager notes that “The biggest hurdle [to digital transformation] isn’t the software or the process, it’s the people.” Robust change management systems must be in place to drive widespread change and promote a culture of innovation. But cultures don’t change overnight as they are driven by behavior and behaviors are driven by incentives. This means your metrics need to change. Vinod Galani suggests business leaders ask themselves, “Are we measuring what really matters? Are we measuring metrics that will drive the change in behavior we want to see?” If organizations aren’t looking at the whole cycle – KPIs, incentives, behaviors, culture – they won’t be successful.
DATA: Data is every business’ most valuable asset because data- driven, real-time insights are critical to successful decision-making. Data can help organizations evaluate the success of innovating new products and services, understand the short- and long-term implications of business disruptions, and better understand their customers, among many other things. “Most of the problems that we see in companies is not that they don’t have the data but it’s all in different databases” notes Professor Venkatraman. Digitization enables agility by ensuring data is accessible to those that need it, when needed, both at a granular level, and in aggregate.
TECHNOLOGY: Many organizations start with tech, but updated technology means little if the people, processes, data, and metrics aren’t already in place. Technology must be an enabler of digital transformation, not its culmination. However, this is not to say that picking the right technology is unimportant. Transformation efforts can still fail if your selected solutions aren’t right leading to lost investment, frustrated employees, and disappointed leadership. Selecting a technology partner that understands your business and is committed to enabling your success is therefore a critical transformation step.
Furthermore, business leaders’ security concerns can be easily addressed by working with leading cloud providers instead of relying on inhouse solutions. In fact, top cloud platforms, such as Amazon Web Services (AWS), are widely trusted precisely because they offer world class security. They can recruit the best talent to solve the toughest security concerns, well surpassing what individual companies can handle in-house for their on-prem systems.
At the end of the day, modernized operations are often less vulnerable to attack than legacy systems that have been pieced together over many years. The push to digitally transform, therefore, is also a push to improve overall cybersecurity.
Technology should be seen not as a cost center to minimize... but as an investment center and growth center to drive the organization to... a very different future in which they can achieve both profitability and growth.”
AWS’s whole business model is built on being secure, because if they’re not, they [have] no business...”
Companies must ensure they are prepared to weather risks and disruptions to stay competitive. Seizing the opportunities digital transformation presents mean companies will outpace disruptions, drive business outcomes, and strengthen relationships. The future state your organization should be aiming for is characterized by agility, efficiency, and innovation, driven by people and data, enabled by technology.
But how do you get there from where you are now? The next section will show you how.
