Are you curious about business disruption? What are the key drivers of change today, and how are businesses repositioning for a better tomorrow by maximizing growth internally?
Hi, I’m Peter Nichol, Data Science CIO.
Today we’re going to talk about business models and business-model disruption.
New designs for business-model disruption
There are five main principles I want to cover that help define how companies today are driving disruption inside and outside their organizations.
As you read about these principles, I want you to keep this question in mind: “Can I identify and document three different examples for each of these principles?” Do you have clear and documented success stories on these topics? If you do, that’s great—your company’s well on the way to not getting disrupted. However, if you don’t, you’re likely doing lip service to some of these concepts, but you don’t necessarily have these five principles mastered:
- Intelligence process automation (IPA)—introduce intelligent automation to reduce human tasks
- Lean process design—streamline processes and minimize waste
- Business process outsourcing (BPO)—drive the next wave of process outsourcing or offshoring
- Advanced analytics—process intelligence to facilitate decisions
- Digitization—digitize customer experience and day-to-day operations
Explaining the disruption models
First, we have IPA or intelligent process automation. Essentially, here we’re trying to take the robot out of the human. The automation workflow sits on top of robotic process automation, similar to a system automation orchestration. When the workflow is automated, you free up employees’ time and start to have significant benefits.
The second principle is about streamlining operations. We’re talking about removing the waste using lean manufacturing. When applying Lean Six Sigma concepts to modernize we begin by documenting our business processes to allow us to automate them. If you’ve ever done anything with robotic process automation or intelligent process automation, you realize you can’t automate a process that isn’t documented. Automating a process that isn’t well documented is extremely difficult.
The third principle is business process outsourcing. This concept reevaluates your core business capabilities and identifies which capabilities are supportive or maybe ancillary to your core operations. The helpdesk is a pretty classic example of a capability that’s essential, and you need to make sure you have those supportive IT structures in place. However, being number one in the world in helpdesk servicing won’t create a competitive advantage; it’s not going to be a differentiator. Focus on your core business capabilities and competencies.
The fourth principle is analytics. Digital analytics uses data and information to make new, intelligent decisions. These decisions generate new insights that initially weren’t visible. By visualizing the latest insights, new growth and opportunities are created.
The fifth principle relates to how you manage and orchestrate your business. How does change get rolled out through the organization? Who’s accountable for that change? Who’s on point? As you answer these questions, it’s apparent how many functional leaders have to be involved for change to stick. It’s no wonder that organizational change is so complex, time-consuming, and costly for organizations.
The drivers of change: why change at all?
As we evaluate how change affects organizations, we discover it has three main aspects. We could identify dozens of reasons for change, but they all can be classified and categorized into these three.
Primary drivers of change
- Disrupt business
- Drive value
- Lower operating costs
This is where the business relationship management (BRM) role comes into play. It doesn’t matter if you’re called a business relationship manager, service manager, account supervisor, relationship coordinator, or director. The title doesn’t matter. What’s important is that your organization has a role that provides support and helps different organizations orchestrate and accelerate business adoption and business change. The disruptive business might describe new ideas, a new process, a new business model, or even a new technology business enabler.
Driving value ensures that the strategy is practical. For example, when introducing a new enabling technology or process, is the outcome defined? Driving value helps measure results so they can be rolled up and shared.
Lowering costs is a never-ending battle between leaders and managers. It’s often blown off as not critical until reducing costs is vital and becomes the single organizational priority. A product that’s priced out of the market won’t be viable or competitive.
The critical success factors for not getting disrupted
What company doesn’t want to be nimble? Is there a company out there that wants to be unexpectedly disrupted? I doubt it.
There are two significant factors that determine how susceptible your organization is to disruption:
- Your organization has siloed organizational functions.
- Your organization focuses on functional accountability, not shared ownership.
Begin by looking at your organizational structure. Is the organizational construct based on the classic functional span of control (operations, development, finance, marketing, etc.)? If you can’t immediately think of the person that owns marketing or finance, it’s a good bet that your organization isn’t positioned well to handle change. Think about cross-functional alignment and designing an accountability model the cuts across the classic functional verticals.
Next, turn your attention to how performance and results are measured. For example, think about the last significant organizational change initiative. How did that roll out through your organization? Were those outcomes shared?
For example, let’s say there’s a new system-modernization initiative. This initiative will require multiple business processes to be remediated and essentially overhauled. How many people would be involved in those discussions? If you’re thinking it will require 20-30 individual leaders, ask yourself, “Is my organization designed to handle change effectively?”
Are individuals involved being measured on the same outcome—e.g., the net adoption of the modernization initiative—or not? If they’re managed based on other metrics related to their function, why are we surprised when their engagement is subpar?
With the removal of silos and the establishment of shared goals, change adoption becomes part of the organizational culture.
How do we hedge against violent and unplanned disruption?
I have a four-step approach to lock in flexibility in your organizational culture. First, make change an essential part of your culture.
- Honestly assess your talent.
- Link business value to operational capabilities.
- Connect customer behavior to value.
- Double down on the BRM role.
By focusing on these four areas, you’ll be prepared when change is right around the corner. As you take an honest inventory of your organization’s ability to ebb and flow with today’s dynamic business conditions, ask yourself the following questions. You’ll discover the answer to whether your organization is ready for disruption.
Honestly assess your talent:
- Do all the roles exist that are required to advance the company to the next level?
- What degree of experience does IT have with our cloud vendors?
- Do we have strong enterprise-architecture talent on board today?
- Is each role clear about how what they do today maps into the future-state operating model?
- Have the costs to acquire talent been recently evaluated?
- Is training suggested to employees to accelerate knowledge uptake?
Link business value to operational capabilities:
- Is there clear accountability for our multi-cloud strategy?
- Is there a defined catalog of standardized IT services?
- Has cost been calculated at the service level?
- How does governance enable and align organizational capabilities?
- Have core capabilities been identified for the department?
Connect customer behavior to value:
- Is there a process to explore and fund emerging technologies?
- Is IT managing capabilities in addition to unique technologies?
- Is technology debt decreasing due to technology modernization?
- Is IT proactively presenting solutions to business partners?
- Has IT been able to anticipate business needs and discuss, design, and build solutions before they’re required for speed to market and competitive advantages?
Double down on the BRM role:
- Do BRMs have a voice in the business strategy?
- Are BRMs at least at the director level or above to solidify organizational impact?
- Has the term “value” been defined organizationally?
- Is the BRM standardized across business units?
- Has the organization received training on how to leverage the BRM role?
- Has an organizational BRM maturity roadmap been defined, and is it leading to positive outcomes?
Evaluating whether your company is well positioned for change can be highly challenging. Understanding where to discover value and how to validate shared goals can become a real struggle. Start with the financials. If your organization is delivering on investments made, that’s a great indicator that you have the type of change outcomes required and desired. On the other hand, if those investments aren’t being realized, it probably warrants reflection to design an organization ready to change.
If you found this article helpful, that’s great! Also, check out my books, Think Lead Disrupt and Leading with Value. They were published in early 2021 and are available on Amazon and at http://www.datsciencecio.com/shop for author-signed copies!
Hi, I’m Peter Nichol, Data Science CIO. Have a great day!