Featured Items

Digital Transformation Plays: where to start your digital transformation and why (part 1)

With the rise-and-rise of digital communications and exponential technologies, it’s no wonder more-and-more businesses are looking for digital transformation strategies to help them remain relevant amidst an avalanche of change. Particularly facing into the fourth industrial revolution.

The challenge for any business is determining where to start… some will turn to their platforms, aiming to create productivity and scalability improvements and higher customer satisfaction. Others will turn to their marketing, hoping to leverage the latest advances in digital marketing and experience to drive growth and customer engagement. Others (again) will turn to their business model, products and proposition – seeking to leverage new technologies and business models – and hence tap into new markets and blue oceans of new customer value.

All of these approaches are valid, and all can certainly lead towards transformation in their own ways, but which one is right for your business and/or situation?

Digital Transformation should start by elevating the current business constraint

I’ll admit it — I’m a huge fan of Theory of Constraints. If you’ve not heard of it I’d recommend a read of The Goal. The Theory of Constraints suggests that every system’s throughput is limited by its constraint — i.e. the step in the process that can process the least amount over a fixed period of time. If you view your business as a system (which I suggest you should), then we can broadly measure throughput in the following areas and stages.

Now, to be incredibly clear, trying to get these metrics “perfectly” right in many cases is a fool’s errand — we’re not aiming for perfection here — simply a proxy (based on the 80/20 rule).

Many of you will be wondering why to bother to include Design — surely the market will never be the constraint? This is not always true and I would argue that assumption can be one of the most self-limiting assumptions in business. You should always be assessing ways in which you expand the borders of your market — whether it be geographically, through new products, business model/s etc.

So how do we assess where the constraint lies? We’ll go into this in more depth in a separate article (part 2). Let’s assume we’ve “solved” for that and move on to the Digital Transformation Plays.

The Digital Transformation Plays are derived from The Exponential Method(see below). They’re not exhaustive (and certainly don’t replace a solid strategic review) but we find them helpful as a way to start thinking about your digital transformation.

What we’ve found (historically) is that most transformations start broadly in one of the eight following areas.

1. The Start-Up Play

Constraint: Design (i.e. the market — you don’t have one yet!)

As its name implies, a play focused on businesses that are literally in the throes of starting up. The play is relatively linear and starts with defining the vision and purpose and growing from there.

It’s worth noting that while all cycles of The Exponential Method are meant to be iterative and “at pace”, this is most true for startups, where we’d recommend cycling stages 1-3 in no more than a week each time. At least until there are some strong product and customer validation setting in.

  1. Vision & Purpose
  2. Business Model & Proposition
  3. Product & Customer
  4. Team/s
  5. Platforms & Data
  6. Experience & Marketing
  7. Optimisation
  8. Ways of Working

2. The Commercialisation Play

Constraint: Discovery (i.e. you have little-to-no brand awareness)

This play is for businesses that are so focused on their product (craft) that they’ve relied on word-of-mouth for growth and are either a) suffering decline and/or b) are massively missing out on their potential growth due to under-investment into marketing.

The play for this scenario is simple — focus heavily on marketing & experience to drive up volume and conversion — and hence sales growth and commercialisation.

Shortly after this (and somewhat in parallel) get your optimisation practices sorted (to ensure ongoing & incremental growth) and then dive back into platforms to ensure you can handle the increased sales growth. This should get your existing business humming after a number of cycles (let’s say 3–6 monthly cycles to really get this humming). Next move either to a) Journeys (and take a deeper-dive of your existing journeys for increased growth and customer satisfaction) OR b) jump back to Vision & Purpose and re-evaluate your longer-term aspirations and how you might transform your business (over time, and with your new-found profits) to help achieve them.

  1. Experience & Marketing
  2. Optimisation
  3. Platforms
  4. Ways of Working
  5. Vision & Purpose OR Journeys

3. The Differentiation Play

Constraint: Deliberation (i.e. your products aren’t meaningfully differentiated)

In highly commoditised markets businesses can get stuck in a spiral of increasing customer expectations and decreasing profits. This can quickly spiral out of control. This play focuses on first helping businesses differentiate away from the centre with a renewed focus on the vision and purpose, and then exploring new and differentiated products & services (and/or business models) to help better achieve this vision while creating deeper and more profitable relationships with their customers.

It is easy for businesses in this space to feel helpless and try to commit to multiple plans simultaneously. In my experience, I’ve never seen this work well. This isn’t to suggest businesses abandon BAU work, far from it, but try and keep your portfolio of transformation projects limited to those that help accelerate the particular stage you’re in.

If you’re an established business with well-established processes and BAU (as many are in this stage), it may well take you longer to cycle through the below (especially if you’re in a large, 200+ employee company). We’d recommend trying to limit each phase to 90 days to keep focus and sufficient momentum.

Unless it’s abundantly clear and supported, start again with the Vision and Purpose (or at least re-state them) — this will absolutely help make lighter work of the subsequent steps.

Then move towards establishing a number of cross-functional, autonomous teams, and (with appropriate guardrails) get them to start experimenting with new business models, propositions, products & prototypes for validation.

  1. Vision and purpose
  2. Teams
  3. Business Model & proposition
  4. Product & Customer

4. The Sales Play

Constraint: Decision (i.e. you can get the metaphorical horse to water but can’t get it to drink)

Sales are still very much the lifeblood of business. As someone famously once said, “nothing happens until a sale is made!” With so much management focus — and large bodies of theory and training on sales — I’ve personally not found this to be as common a play (in my personal experience).

If this is your constraint, and your sales function relies heavily on salespeople, a good friend (and previous employer!) of mine specialises in sales process engineering and has a dedicated approach for helping solve this very problem (in what I’d suggest is an unexpected, yet surprisingly effective, way). It’s all based on the Theory of Constraints. I’d definitely recommend reading his book The Machine and/or visiting his company’s website — Ballistix.

If your sales are more digital in nature then I’d suggest fixing the digital experience (i.e. online conversion), optimising over time and then re-addressing the customer journey more holistically to uncover further opportunities for improvement (over time).

  1. Experience & Marketing (Digital Experience)
  2. Optimisation
  3. Product & Customer (Customer Journey/s)

5. The Scalability Play

Constraint: Delivery (i.e. your operations couldn’t process more orders/projects even if you could sell them)

This play is typically for SMEs who have plateaued in growth and are being held hostage by their very own business. But I’ve equally seen enterprises in this space, hesitant to grow because their systems & processes can’t sustainably scale to support the growth. This play focuses on creating scale and space through platforms and process optimisation, then moving quickly into marketing and experience to drive more growth.

We recommend spending quite some time and focus on the platforms and experience stages before moving on (maybe even 12 weeks in 1–2 week cycles) to ensure sufficient traction is created to generate headspace and investment for the subsequent stages.

If resources suffice, you may split your teams so these can be focused on in parallel.

Once you have created traction in your marketing & operations we recommend cycling back to the start — thoroughly (re-)establishing your Vision & Purpose and transforming your business model (and proposition etc.) from there.

  1. Platforms & Data
  2. Experience & Marketing
  3. Vision & Purpose
  4. Business Model… etc.

6. The Service Play

Constraint: Devotion (i.e. we can generate customers but we can’t keep them coming back)

If customers are coming on-board but not staying it suggests a number of possible issues:

  1. Your product doesn’t live up to the hype;
  2. Your customer experience (service) leaves your customer disenfranchised; or
  3. You’ve given them no compelling reason to return for more.

The play here is to get to the bottom of the above through the appropriate platforms (Voice of Customer, NPS etc.) and then fix either a) the product (so it does meet the hype), b) the experience (so customers remain happy), or c) the marketing (giving your existing members a reason to come back!)

  1. Platforms & Data (Voice of Customer)
  2. Product & Customer (Product design)
  3. Experience & Marketing (probably both!)

7. The Disruptor Play

Constraint: Design (i.e. your industry or business model is rapidly losing relevance — you need a new market)

In many industries, things are even more dire than hyper-competition (although the two are frequently related), where the threat of disruption and/or mass irrelevance are already looming. In these industries, major players (within the industry or in an adjacent one) have made strategic moves that are set to disrupt that industry.

The powerhouse threats of Amazon (as it now relates to retail), Netflix (as it related to video), and iPhone (as it related to older gen mobile phones) come to mind.

In these industries, the best play is to quickly disrupt your own business model (before being disrupted) and/or play an opposing disruption play within that industry.

Depending on how dire the situation is you may well want to go harder and faster at these stages to get the concepts validated and “in-market”. In larger organisations, this will be incredibly difficult from the inside. We recommend splintering off new, cross-functional and fully autonomous teams with an incredibly clear mission to help achieve this at the pace necessary. Aim to run these like Google sprints, with one-week turnaround/s to get prototypes to market and validated.

If things are genuinely this dire we’d recommend skipping step 1 unless you’re in absence of a vision and/or purpose and jump straight into business model exploration.

  1. Business model and proposition
  2. Product and Customer
  3. Etc.

8. The Innovator Play

Constraint: Design (i.e. you can see blue oceans of opportunities by expanding your market or creating new markets)

Similar to the Disruptor, the Innovator play is designed to help shake up the status quo. Unlike the Disruptor it is a) less likely to be doing this under duress, and b) more likely to create new, non-disruptive, value innovation.

The Innovator play really hones back in on the vision and purpose and asks the question “what if?”

“What if we created an entirely new product or service to solve this customer problem?”

“What if we connected the players in this market/problem space in new and interesting ways?”

“What if we orchestrated a particular life event so seamlessly that it was an offer ‘people couldn’t refuse’?”

“What if we could improve the experience or reduce costs by 10x – completing shifting the value proposition?”

This process is very similar to the Competitor Play — however, with much more creativity, and typically time, on their side — we recommend spending more time in each phase to ensure the necessary depth of insights to broaden the opportunity pool for exploration.

  1. Vision and purpose
  2. Teams
  3. Business Model & proposition
  4. Product & Customer
  5. Etc.

Which Play is right for you?

The play that will be right for you will depend on what is constraining your business growth at this point in time. In a healthy business, this constraint will shift as we focus our effort and elevate the current constraint.

What’s most exciting, is that in this-day-and-age we can also start treating Design as a valid constraint, and not continue to optimise our products & services (within a competitive market) within an inch of their lives. By focusing on Design as a constraint we can literally grow existing markets and create new markets (for products, services & business models that never existed before).

In part 2 (coming soon) we’ll dive deeper into business analysis, giving a better sense of how to identify the constrained area of your business so you can focus on the right play.

Originally published in https://medium.com/exponential-thoughts on September 6, 2019.

Back to top Clicking this will return you to the top of the page.

Share This

Copy Link to Clipboard

Copy