Monday, December 14, 2015

Digital Master Tuning #117: Three Business Capabilities to DIfferentiate a Digital Leader from Laggards

High mature digital organizations have the high-level digital capabilities to improve organizational performance and drive enterprise-wide transformation.

Digital transformation is a journey, from digital strategy crafting to organizational structure tuning, it has to permeate into business strategy and vision, mindset, and action, culture and communication, process and capability, etc. A business capability is the set of abilities needed by an organization to do things effectively to achieve desired outcomes, measurable benefits and fulfill business demand consistently. In today’s digital paradigm, digital capabilities are also the building blocks to shift an organization from a reactive surviving mode to proactive thriving mode, here is a set of business capabilities to differentiate a digital leader from laggards.

Strategy-Execution Capability: Strategic planning and execution are a continuous cycle of organizational adaptation to a changing world. A strategy is a planned direction to act - without implementation, it is not complete and is probably someone's idea that got lost in the mail. 'Culture' describes the state of growth of the journey on the way to civilization. In itself simply a description of a process rather than the plane of civilization one has reached.  Strategies fail either because of improper execution or more likely because the strategy was flawed. It implies three potential organizational capabilities in order implement strategy effectively:
(1) The organizational capability in assessing the business environment and setting/re-setting of strategic direction.
(2) The organizational capability in the management of projects and multi-project programs that translate strategic direction into real changes within the organization.
(3) The organizational capability in the measurement of projects and programs that is needed to maintain strategic fit - stop individual projects if a change in direction makes them no longer necessary.

Agility: Business agility is the organization’s ability to sense, respond, and take actions to changes. Agility brings speed and flexibility. The strategy needs to be flexible, it is the objectives that drive strategy, so if you need to adopt a new strategy, agility should be your priority because it helps you achieve your objectives - better/quicker/faster- there is your justification. The overall goal of adopting a more "Agile" approach is about "resilience," in essence. The twin goals of an Agile transformation are to increase value received and decrease risk. An organization at any scale that can retain an overall sense of vision and purpose, can communicate effectively, continuously improve, reflect on its own limitations honestly and respond to change dynamically. It is simply more likely to thrive and survive. Being Agile also means to solve business problems more effectively and collaboratively. Problem-solving practices developed over many years shows that breaking big problems into smaller problems is often the better way to solve problems. Break them down until you have small enough problems to solve and then solve those small problems. By solving lots of small problems, you solve big problems. Same with business goals, by breaking big goals into smaller goals, each delivers a part of the big goal, you can more easily identify where the real value is and focus on the high value, cutting out the low-value noise.

Change and Innovation Capability: Corporate change can be a simple modification of strategy, a business process improvement or a more radical digital transformation. Either at the individual or organizational level, in the more static industrial era, change is a one-time project; at digital age, change has to become an ongoing capability and needs to be orchestrated at all levels to go hands-in-hands with strategy management. Innovation is one of the most desired change abilities. Innovation is a unique business capability to reinvent business, but not to reinvent the wheels. Innovation is more about taking something someone created and adding to it, changing it, adapting it; in some sense, to a particular need, whether individual, group or industry. From business perspective, innovation has much broader scope than a new product or service, it means both incremental innovation (product update or process optimization) or breakthrough innovation (the new business model or disruptive invention, etc), it also includes "soft" innovations such as leadership/management innovation, communication or culture innovation, etc.Innovation is about reinventing the business direction and purpose at any time. It defines strategy, profitability and relevance at any given time. If you do not, you become commoditized and just like so many others who offer the same product or service. Innovation allows one to stand out and above the rest.

Digital makes a profound impact from specific function to business as a whole, the purpose of such radical digitalization is to make a significant difference in the overall levels of customer delight, business innovation, organizational agility and achieve high performing business result. High mature digital organizations have the high-level digital capability to improve organizational performance and drive enterprise-wide transformation.

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