Making technology investments in digitizing processes, products and services isn’t enough to drive so-called digital transformation, according to a new report from Kaleido Insights.
Becoming a truly “fluid organization” like Google, Tesla, Amazon or GE involves a three-phase “metamorphosis,” according to the report. Companies must unite siloed digital initiatives to drive cross-organizational value, as well as begin to think about the value that connecting these companywide innovation efforts with the broader ecosystem can bring, and engage in efforts to that end.
“Digital transformation is about bringing analog products and processes and services into the digital realm,” said Jessica Groopman, founding partner at Kaleido Insights and a specialist in IoT, AI and blockchain. (Groopman’s work has been featured on The IoT Institute.) “That doesn’t have to be a connected appliance. It could be offering a sales rep an augmented reality headset as a rich way to show a product. It’s about enabling every business function to better do their job.”
It’s one of three macro-trends affecting today’s businesses that Kaleido Insights identified in its first report, “Three Macrotrends Impacting the Journey to 2030.” With the aim of providing advice and insight that extends across industries, the team explored technology’s impact on the evolving relationships among humans, businesses and their ecosystems.
“We kept hearing this great struggle to keep up,” Groopman said, noting that while there’s much discussion about the enabling technologies, businesses are struggling with broad business problems – such as social media or mobile strategy – related to how to apply those technologies. “Our approach is thinking about use cases and actual problems, and impact from the customer experience.”
According to the report, technology is enabling people to evolve into “super humans,” rendering individuals more powerful than ever before. As such, nimble, fluid organizations – characterized by agility and adaptability across systems, internal culture and within innovation programs themselves – will survive, with those not adapting set to “die off” within the next five to 10 years. Fluid organizations in it for the long haul will turn outward to continue to drive disruption by creating, driving and connecting with “enlightened ecosystems.”
Data strategy is the technology foundation for fluid organizations, and integrating systems across departments is a first step, according to the report. But true fluidity in data strategy is marked by “the ability to design products and architectures that automatically learn, triage, self-optimize, self-heal, even self-update,” according to the report.
“Whether at the product level, functional level or organizational level, a fluid data strategy effectively automates innovation,” the report’s authors wrote.
While this process usually starts on a use-case-by-use-case basis, value will be limited if the insights aren’t connected to drive value across the organizations. As such, fluid organizations have “corporate innovation programs” that span multiple business units and typically focus on larger programs, experiences and products for the company to champion instead of single initiatives or pilots, according to the report.
“Bridging extensive technology knowledge and infrastructure with subject matter expertise becomes really critical,” Groopman said.
Leading fluid organizations set up cross-functional centers of excellence that work with various business units, dedicated teams that experiment with technologies in a lab setting, or intrapreneurship programs that enable all employees to contribute new product ideas, according to the report. Groopman pointed to Adobe Kickbox as an example of the latter, a program that gives employees $1,000 to come up with new ideas.
Finally, the most mature innovation programs look to connect and create enlightened ecosystems, allowing them to crowdsource ideas and drive true innovation with internal products through a pipeline of outside startups, partners and developers. The reports’ authors pointed to Johnson & Johnson JLabs, which offer startups access to high-end equipment, year-round curriculum and resources to conduct scientific research at a fixed monthly cost.
“This common goal extends benefits across the ecosystem: Young companies access world-class resources while maintaining entrepreneurial freedom, economic benefit for nearby communities, JNJ gains inspiration, and better pharmaceutical product and techniques benefit us all,” the report’s authors wrote.