No business wants to end up as the next Blockbuster or Kodak by not reacting quickly enough to technological change
Refining business models for the digital age can require a leap of faith - but there's things that can be done to make it less risky (Credit: Flickr/Gerd Leonhard)
In an age of digital disruption, many leaders are looking at business model transformation. Kamal Bhadada, president of communications, media and information services at Tata Consultancy Services, gives his advice on how to best implement changes.
We’re living through strange times – large enterprises are going through the exact same set of problems as small and medium businesses.
Whether it is digital disruption, the ever-evolving mobile technology or cloud communications, all businesses are having to adapt and change in a fast-moving technology landscape.
What’s more, they’re having to navigate these challenges while also facing traditional business pressures to increase revenues, reduce costs and provide excellent customer experience.
In such scenarios, the leadership must ensure the organisation is in the best possible shape to respond rapidly.
The risks are clear – no business wants to end up as the next Blockbuster, Kodak or Toys ‘R’ Us, unable or unwilling to react to how technology was changing their industries.
The hard truth is that, for many businesses, traditional operating models are simply not equipped to keep up with today’s rapid rate of change.
I am an advocate of “operating model transformation”, or OMT, which looks at new ways of building products and organising the business to unlock the potential value that technology can bring.
It means optimising IT to deliver real value through enhanced agility, transformed cost structures and improved customer experience.
Of course, this sounds great in theory, but in practice such transformations are notoriously difficult to pull off. For any successful OMT implementation, these four steps are the bedrock.
How to succeed in business model transformation
Step 1: Ensure your technology is fit for purpose
Your technology needs to deliver against business needs.
Consider changing how you measure the IT function in your organisation, moving it towards KPIs that track how the team, and the technology, is supporting the business.
In my experience, many companies hold their own teams and the partners maintaining their technology structures to service level agreements (SLAs) that don’t really have a business impact.
Seek out any areas that are getting disproportionate amounts of business resources but aren’t delivering on results.
Those are the areas you’ll want to focus on first and foremost.
Step 2: Creating an agile enterprise
Streamline the flow of information, requests and service delivery throughout the business.
Adopt agile working practices like Kanban or Scrum at first, perhaps within a small incubator team, and measure the effects.
Increased agility will help you become more responsive to changes across the organisation, introduce flexibility and drive better alignment between business and technology operations.
There’s no denying it – creating an agile enterprise involves a certain degree of risk.
For start-ups, the culture of building a minimum viable product and observing it in the wild may come as second nature, but for an enterprise it will often seem like there is more to lose.
However, the real risk for larger businesses is failing to act and failing to become more agile in preparation for future technological change. An agile enterprise is a future-proofed one.
Step 3: Adopting a machine-first delivery model
Machine-first doesn’t mean machine-only.
Artificial intelligence and machine learning make fantastic first-line-of-service tools, for tasks such as remote monitoring and early warning systems.
These technologies aren’t replacing jobs – rather, they’re freeing up people to be assigned in the areas that make the most sense for the skillsets available.
When this happens, the business will in turn have more capital to move into growth areas that matter most. Smart machines enable smarter people.
One of the sharpest tools you may have at your disposal here is machine learning and analytics.
Opting for a machine-first approach to handling basic information processing or dealing with simple queries can free up resources while improving service levels – a rare and genuine win-win.
Step 4: Move towards a product-centric technology approach
Always keep an eye on the end-to-end experience you’re offering your customers.
That journey will keep changing, so you need to identify the most valuable touchpoints and ensure your products and services are always tailor-made to deliver value to your customers in the way they expect.
Having completed step three, you’ll have machine-first analytics systems to alert you to when consumer behaviours are changing, and be able to adapt accordingly and in a timely manner.
Business model transformation involves continuous improvement
At every stage of the journey towards OMT, you need to be constantly iterating, improving and innovating.
This is quite the reversal from years of supposed IT wisdom, built up around rigorous, standardised processes.
But today’s environment requires a different way of thinking. Lengthy project timescales are no longer fit for purpose.
Enterprises can become trapped by IT processes rather than enabled by them.
All too easily, a business can find it is held hostage to doing things in a certain way, because that is the way the system is designed.
The result is reflected in a poorer customer experience, friction between business and technology and misaligned IT spend.
A business that is not able to develop new services and get them into customers’ hands rapidly risks looking off-the-pace and out-of-touch.
Even the most successful and profitable businesses of today would do well to remember the example of those companies past, that fell from grace when consumer habits changed. Spotting the change is only half the battle.
OMT is needed to ensure that businesses can actually execute on these trends and provide their customers with the stand-out products and experiences they have come to expect.