Digital Transformation or Digital Destruction?

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Digital Transformation or Digital Destruction?
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The exponential character of change fuelled by technology demands from organizations to reinvent themselves: those who fail to adapt face extinction, while the digital experts reap profits 26% higher than industry average. But how can companies identify their strengths and weaknesses for digital transformation and how can they improve to become digital experts?
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but the thing and dozens of the good afternoon everybody
thanks for being here and decision my 1st dog and that doesn't involve any science fiction unfortunately and but I still have some nice pictures so long and I will talk about digital transformation or maybe digital destruction and I think it's and so and this has been a boss award for a few years right now and so so I would like to tell you what I understand as digital transformation as you know the Internet has
already transformed a number of industries from the ground up from putting travel agents out of the job basically overnight it went to this drop media industry like music newspaper to leave and and currently banking insurance hospitality automotive and logistics eyewitness Singh I'm also competition from new dead from the entrance to the market and
and tech companies like Google Facebook and Apple and also different start ups actually don't give a shit about traditional industry boundaries and they just do all the things that think there should be done so and when you look for example at what which basically has stolen like 30 billion of messaging revenues from the total so within justified peers and with 50 employees then will Facebook and uh and apple that already have and banking licences and to an hour disrupting then the whole financial industry from the ground up will
learn with over 60 billion in valuation just 6 years S. rethinking the whole concept of mobility and car ownership and will that is
focusing on also known as the Eagles
an hour slowly trying to replace human drivers which has again groundbreaking consequences for automotive and intrinsic and
and the insurance industry again is threatened also by will apple Fitbit and so on and all the companies are building platforms for health data with health kits and tracking devices hotels face competition from a
and B and B on the 1 hand on the other hand they're trying to use or have to use this platform had to fill their empty rooms and they're doing it to lower revenue share than are charge by booking of common Expedia and that's just a snapshot of the fundamental changes each industry will be faced in the next 5 to 10 years and and it's estimated that within this time frame within the next 10 years 30 per cent of today's major companies Our will not exist anymore the soul the mastering of the transformation will be and adapt or die moment uh for most businesses and there's pretty interesting
statistical about this and companies which master Digital transformation I will call them digital experts and begin 26 per cent more profit than the industry average and the other hand the company's outpolled digital rookies of which didn't really an adapt yet and they they again have like less than 24 per cent of profit than the industry average and so on Is it possible or how what's what's the way for especially for like big companies like the incumbents to 0 come here instead of there instead of being so basically removed from the market in the next 10 years the um according to Forrester
Research them like 74 per cent of the business executives say that the company has
added digital strategy in which might think that's pretty good but the other hand when you look at the 15 per cent who believe that that their and their companies actually have the skills and capabilities to execute on that strategy for example according to our own research to our the tumor treaty assessment
and only 16 per cent of the companies have that sea level person who was actually responsible forged the digitalization and as like for many years for of this company's digital was kind of In addition and 2 0 to the business as usual and and almost perceive like kind of many of the marketing channels or the existing marketing channels and it's still like a lot of companies it's still
like this that digital is kind of a subordinate of either IT or marketing and depending on which side is winning and you're going in the other way or the other so and what I experience some were working with major companies is and that when you're going to digital it's means of especially tools our we have new the systems that we have newer software and as state of the art in IIT an infrastructure and so on and I experience like kind of a strange situation 2 weeks ago when I was working with a major German company and they had like at the coalface India and in the digital think they got digital innovation that and then I will ask them about the expectation for the keeper face and they
said yeah we have to write requirements I was like with quite what kind of requirements for what I don't even know what they're going to do what our goals and and the then the answer was yeah but that's not that important the important like Beck and then the algorithm because they are the difficult part and then the designer can just as stated yet nicely and then everybody will know how to use it and when I here's something like this actually want to myself and unfortunately if it happens and the but and I don't want to say at that would of like that they perceive technology as not important but the point is that technology is becoming becoming a commodity is like energy it's it's just there and when you look at the major companies like and will
Facebook IBM Microsoft Amazon them they already
provide dear newest technological and development the API for everyone to use so there is basically no advantage for the company over a small 1 in just using this new as technological advantage so what is the advantage like how can you build up this and this competitive advantage so the for me the 1st
step for the company to be coming in digital expert is to recognize that digital is more than x or social media are with Edwards and the newest IT architecture and that that's actually not about having a digital strategy but but instead of having get the whole business strategy which is ready for a for a digital age and
where the products where business operations sales and especially customers are fundamentally digital so as some Steve Jobs once said we have to start with the customer experience and then we can walk back toward the technology and this meeting of needs and expectations of office digital
loop customers and is becoming harder and harder and as did the expectations on the technology have changed and and it's just look again at this examples for example
where an doesn't even have cars and it's like the biggest taxi company currently in the world and they also don't really have like an hour the crazy rocket science technology where they compete is the is where the users are they compete basic on customer experience and the same for our be there
words water largest I couldn't come accommodation provider is the platform they don't have any real estate and that they can compete again on customer experience
yeah number 26 which might not be the biggest bank yet but who knows you don't really have a core banking technology they also based on the LDAP eyes and the com competing on customer experience and by making banking kind of less boring than that you've years and there are more examples and I'm like Whiting scales for example I which which can say
say their space like that the price of 5 times the usual weighting systems are just because they don't make it about a weight they might get about fitness and the same for 90
would actually doesn't sell shoes of course they so shows but it also shows they say they sell fitness and so on so they all compete on customer experience and
I I didn't use examples because they have like particularly nice interfaces yeah it's not about nice interfaces and it's because the whole expectations store technology have changed the technology is everywhere this is images from the Pope election 2005 in 2013 and you pretty much can't see the difference there there's someone early mover uh in the corner was trying to make a picture with this form so as now and knowledge
different like artificial intelligence is making machines smarter and more useful and increasing memory and processor composability that a patent composability 3 and enables processing more data faster and faster and this happened impact on customer experience because technology is so
cheap that it can be actually in every product and
it every product can be equipped with sensor and with internet connection and from toothbrush toothbrush for example 2 K chains shoes shirts thermostats traffic lights and so on and it's pretty obvious that in this case the decline of the technology is not the experience it is a normal
experience and I don't even as a user and think about it as containing technology them and customer experience now go way beyond the ease of use and is expected to be a more by social functional companion in our daily life so we expected to kind of seamlessly integrate into our daily routines and not only do what we expected to do but to do even more to at it dissipates that is a bit or actions to provide like more and more convenience and proactive experiences and 89 per cent of the company's seemed to see it this way and they said let 2016 they plan to compete mainly on the customer experience but what's interesting about this is that only 24 per cent of the company's say that they develop their digital products in the customer-centric way the so I don't know how this metrics actually fit to better the I and 32 per cent say that they
actually don't really involved customers or just 10 short between before lounge which me actually means the same as not involving that at all but what what was most interesting for
me that actually 40 a 34 per cent both their customers by conducting focus groups and we focus groups I mean that's basically the perfect way all of our inventing faster horses when someone else is inventing the car or to say it like in a more plicative way to invent you in the light of thinks new innovative called printer solutions and innovative for the paper when someone else's inventing go pro so Adams
and 10 years later you know what happens and call went bankrupt and ends a GoPro was preparing for a 4 billion dollar IPO
and so the group of people sitting around the table and talking is not the way over of developing innovative ideas because innovation comes from recognizing the unmet needs an end is underway to fill it but most people don't know what they're missing and the only thing they can tell you is OK we need a more innovative in and we need a faster printer
but nobody in a focus group would tell you that I here she wants to use a GoPro because they didn't know all that something like this even existed and also like when you
conducting focus groups around you're actually making like very risky assumptions it is yes and that people are rational and that basically the the shopping decisions are not based on emotions but purely approve rationality and that they don't lie ends that they don't tell of things that they're not influenced by peer pressure and all these things actually are happening in the focus groups so and just the
please don't do it every time someone is doing for was groups 1 design advice I think
and here again Steve Jobs not because I'm such a sample federal but it just he happens to have some of no pull quotes and people just don't know what they want until you show them to this show it to them and that's why it that the digital
experts involved the customers very early in the process the and not by asking what they want but by showing them something by testing their by identifying the needs 1st and then and letting them actually test the prototypes and products regularly and not only because but also capturing and about waiting queues usage and satisfaction data and making this is decisions based on them the but it's also may be pretty
obvious that it's not that easy to implement and typically hierarchical organization the it's very hot in here sorry so in terms what's except Gordon
once said I think he pretty and hit the hit it on the nail and he said that that great
projects or big projects I start feeling like buildings there architects materials staff rigid timelines permits engineers and structure so
it's pretty sounds like the walls of the corporate companies but in fact the what how we should see digital products as that their gardens that they are attended the shift and the grow and they endure over time they gain personality and to reflect the environments the and most of incumbent
companies look very much like building so the question is is there a possibility for them to somehow transform into gardens according to our research almost 80 per
cent of the companies rely on traditional corporate here a and even if there are some small interdisciplinary independent teams in this companies they are working on topics beyond the core business and they basically have no decision-making power and this year cocondensation that's works pretty well in the 20th century but it doesn't really go hand in hand and with the characteristic of digital business and because because of tool things particularly
on heretical organization and doesn't really and the struggle that kind of struggle with the 2 main things which are risk-taking and velocity so the 1st the
velocity Digital Transformation requires very quick adjustments and close cooperation with an interdisciplinary team because there is no time you don't have 2 years to what actually lounge every change you want to lounge and so the people who work with this product projects on a daily basis they have to have the possibility of actually really making decisions beyond where are we going to go to lunch today but actually have real ownership of the product or a project and uh including the decision on how and when and what actually to lounge because an otherwise it goes through a dozen of steering
committees probably some of you know it and like it becomes really difficult to achieve progress because while management is too busy and so are not involved enough to and to take this decision people were actually working on the project are waiting and they're losing the precious time and also other things happen on that that there is like that the green light actually never comes because on the management or the people have to take the decision and don't actually understand the implications L 2 decision because they're not deepen and and not involved deeply enough into this process and and the other
reason why the green light doesn't call more well whether it's a while it takes so long and for for the green light to come and it is because of the other challenge of the risk-taking no
did corporate organization or most of the corporate organizations don't really support restacking which is actually very fundamental to learning and to innovation and and this risk of
residues is is quite obvious the when you look at the numbers and so about 85 per cent of the company's I about 85 per cent of the company's failure is actually not an option and it demonstrates in 2 ways and when I 1st looked at the statistics and I so OK 15 per cent of the made in 15 % just of the major companies value and risk-taking are not well come out and have a negative impact on the career but the order number and the other 70 per cent are even worse because 70 per cent of the respondents
say that the official policy that encourages failure interest taking because more so the management and management understood that it's actually pretty cool to say this but are they're not measure it and still have negative consequences for the risk taker and so why many companies and try to increase the f for itself creating environments for creative creativity and so on and so doing design thinking in order stuff uh which I don't say it's not necessary but I think it doesn't help when you miss this 1 point and just to demonstrate that there's a quadrant interesting example I like free much from the book The Art and Fear an which was pretty much wider speed and risk-taking are integral for innovation and in this in this book there is a parameter professor what the beginning of the class of the semester divides the class into 2 groups and the 1
group and is called the quantity group and their goal is to create as many parts as possible they will be judged only on on the quantity so if you have 50 kilograms of policy will get an a 40 b and so on and the other world the quality group this have to prepare 1 port but it has to be that perfect pulled to get an a the so this is what happens at the end of this semester and then the best quality polyps came from the quantity group as they started working just from the beginning and they learn from the mistakes of the past became better and better and better and you got a group was busy like almost all this semester was busy talking about the theory of perfection and and how to create a perfect polyp and the philosophy of a perfect pot and that's what they thought at the end and don't tell me it doesn't look like
some projects with in the companies and so as a basically while digital rookies of thought was the energy on you know working on the theories of perfection and trying to launch finish perfect mature product and the 1 with the whole set of features with digital experts are doing they're focusing on prototypes and product and they can test like from the very minimal product through all this iterations and they can improve and to learn from and I know I know myself and especially as I'm looking at some new company you know it's very difficult to show to the people something which is not really perfect in your opinion uh it's very hard to go to large an entropy is very hard to say like OK if good enough just logit don't waste any more time on on perfection
and but I think it's a it's it's the right way to do this because otherwise how can he decides if you don't have any opinion from the market but it's not like the most of the companies are doing this there are just 11 per cent of the big and companies who actually regulatory lounge and evaluate and the police and what I heard from 60 per cent of the company's they don't large MDPs because the products are not suitable for this approach it so I would say that better make this approach suitable and
because great innovation is not born it doesn't come out of their needs and beautiful business plan it's rather result of trial and error and especially when we
innovating we're always dealing with fundamentally uncertain topic and and orientation as so initial assumptions of very very likely to be wrong so and the best way to do is to find it out very early so and so we can learn from this failure and yet creating prototypes and the peace and and testing it with you there is actually a perfect way to do this so for for
mean like that the digital transformation requires closer than ever ties between all these aspects Alec customer experience processes business Model technology and I think would I puts it all together and this is the
corporate culture I don't think that you can really achieve Digital Transformation without have focused on on the corporate culture meals to master digital transformation we need those lean iterative customer centric approach especially in an environment that encourages risk-taking and enables real product ownership and while different skunkworks and idea lamps and incubators and so on I which point to start pounds I think for fleet work it needs to be consequently demanded and from the top level management and he operated through so the whole company for holier urbanization thank you
thank you thank you thank you very much we have 5 minutes left so if you have some question you my so I could have spoken little floor area the center who has some questions on the topic yeah this effects hi I'm my members porous I think I used to be a in early adopter of of while today I hate MVPs a
lot because so that constant trial and error experience for me as a consumer in maybe not to trust any company anymore that says we have recalled the cost of a on tried and give us your feedback so I think of the companies really value the customer they should stop and throwing in BP's in the market or that's a
1 way of saying it and it depends how on how we how you see an MDP you know I do you see it like I would rather see like and minimum level experience so to say it on because it
you can do mn keeping a very very different way you know you know there there's like this typical
example of an offer of elution often MDP and from an on to the to the car and you know and I don't know I don't know how to describe it with words whatever and so so basically and I can understand the frustration and especially if you consider yourself an early adopters consent and but the question is what kind of what kind of needs you can fall fulfill they that's for the question of an MDP and it's not like throwing something unprepared on someone it's rather like focusing on the 1 facing can meet you can fulfill and uh doing good slides but and and and it doesn't need to usually doesn't it 2 years to build this in all but and maybe the 1st iterations still doesn't have like all that 27 features and you would meet at some point of time maybe
you just at the beginning can eat something which is simply a but I think in in my opinion is very much depends on and on how you do this MDP and I can understand you put you use press the best perspective of frustration of course things and some more questions if not I think you and I
think the audience out pardon days 1 I am Christian due have any experience with digital transformation in institutions public administration and what would your what would your
recommendation the whole and I I
don't like to be like you know recommendation without knowing anything about the situation because like every organization is so much different but in my experience is that this even will usually even wars that all offer me it was even more difficult to warp of public organizations then and then with the company's
because I'm especially I hours on public government organizations something like this you know
that the that the their companies which are actually not earning money so I they are not making a business decisions so to say so the risk-taking culture I think it's it's even less exist and and with which also conflict with the type of people usually walking they're working as organizations and but I think like for for such organizations there are the same important aspects and ask for a company's I will still
still say like if for a government organization especially the customer experience is extremely important and especially you know
from the accessibility point of view and so on there so many different customers actually add the the our government is serving soul and that's still upon and and also like velocity and still kind of have to be an in place there but I I can imagine that it's even more difficult than than in than usual company OK time is over and I think you in amounts and we tioners whether
afternoon from the we the town looms uh