Sunday, August 12, 2018

Taking a Portfolio Approach to Going Digital

The challenge for organizations is to manage its portfolio of relevant cross-border strategic synergies and organizational interdependence. 

Digitalization is a radical change. The connectivity in a digital business setting will have more antennae focused on the emergent business trends and foresee what’s going to happen and well prepare for the tide of changes. The successful businesses are the ones that can manage change fluently in a structural way. The purpose to take a portfolio approach to go digital is to “run, grow, and transform business” accordingly.

Setting priority for benefiting the widest possible audience within your organization: Change is not for its own sake or busyness. Understanding the technology is one thing, understanding the impact of the change on the business is another thing entirely. Especially the large scale of changes has to fine-tune the underlying functions and structures, reinvent the business culture, and innovate the business management in order to create a paradigm. Thus, prioritization is critical for leveraging the limited resources and budget to maximize the business benefit. Digital leaders must go out and talk to customers and partners to understand their tastes and current or future needs. Digital transformation is the journey of continuous delivery and improvement, organizations need to do the regular review to ensure that the business has and continue to build a set of digital capabilities to manage change effectively. In the digital dynamic with “VUCA” new normal, the challenge is to prioritize what you know about, but also keep an eye open for things you don’t know about, the business management needs to be good at dynamic planning to keep adjusting, learning, iterating, and working on a rhythm of sustained delivery. Unless something new or unforeseen and game-changing is emerging during the execution, continuously change and improve in a prioritized order as long as it creates a long-term business advantage.

You're accepting risk for potential reward: The abundance of information and faster pace of changes brings unprecedented opportunities and risks to the organization today. Every opportunity has risks in it, and every risk could bring business opportunities as well. Thus, accept risks for the potential reward in the portfolio-based digital management. It’s important to make sound judgments and take the qualitative approach to manage risks. Both risk appetite and risk attitude are important for the business management to shift from risk mitigation to risk intelligence. The organizations are not always the one pay for the risk. Stakeholders ranging from investors to customers to ordinary citizens to business partners might all benefit or suffer from the risk attitude of a company. It’s management ability to communicate the extent to which it wants to take on risk relative to a specific business objective. Regardless of what methods or indicators are used, the key is to express risk in business terms that can really make an impact. From finance management perspective, set the digital management discipline, consider what capital you are prepared to risk in managing changes and transformation. The goal is to help the organization become super innovative and profitable, but also risk-intelligent and resilient.

You aren't sacrificing the long-term viability of the portfolio for short-term rewards: In the digital era with hyper-competition and continuous disruptions, digital leaders today must present that the organization is “playing to win,” not just trying not to lose. Standing still is already lagging behind. The focal point is to build the differentiated business competency and help the organization gain the long-term winning position. The challenge for the business management is that while there are both long-term and short-term goals for the business, far too often these goals are in opposition to each other. Thus, it is important to take a portfolio approach by striking the right balance of taking transformative initiatives for seeking opportunity and operating transactional activities for seeking continuity. Otherwise, the short-sightedness of organizational management for running the business in a transactional mode only can cause digital ineffectiveness in the long run. Since the rewards are highest for the short-term goals being met, the long-term goals tend to suffer. Organizations will become irrelevant sooner or later without long-term planning and capacity development.

The challenge for organizations is to manage its portfolio of relevant cross-border strategic synergies and organizational interdependence. Taking a portfolio approach to go digital needs to laser focus on the most important things and maintaining the delicate digital balance. The ultimate goal of running business either today or future is to achieve the high-performance business result and accelerate the high-level business maturity.


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