If you think you can’t run your legacy monolithic app using Docker, think again. While microservices apps are best-suited for Docker, there’s no reason you can’t benefit from Docker with a monolithic app, too.
It’s a common misconception that Docker only makes sense if the app you want to host is composed of microservices, each of which can be deployed inside a separate container.
In fact, while it’s true that Docker is ideal for hosting distributed, microservices apps, monolithic deployments can benefit from Docker, too.
Even if your app is a monolith, Docker still gives you the following advantages:
Portability – Docker makes it easy to move your app from one host to another by migrating the container image. That portability applies whether your app is monolithic or distributed.
Scalability – Docker allows your app to scale up or down easily in response to fluctuating demand by spinning containers up or down.
Bare-metal access – With Docker containers, your app can access bare-metal hardware. That’s a clear advantage over virtualization platforms that require hypervisors.
Easy distribution – By packaging your app as a Docker container, you make it easy to distribute through an image repository. Anyone to whom you give access can pull the container image and run it. That beats having to install it manually via an installation process that could vary depending on which environment your users have.
Environment consistency – Docker containers provide a consistent environment that you can use for development, testing, staging and deployment of your app. Environment consistency can help you build a continuous delivery pipeline.
All of the above will help you deploy your app more efficiently and with greater agility even if it runs as a monolith.
That matters because it means Docker can help you make the most of your legacy apps even if you don’t have time to refactor or rebuild them.
In an ideal world, you’d have the time and resources to rewrite all of your monolithic apps so that they can be distributed as microservices. But in the real world, you often have to deploy the apps you have, not the apps you wish you had. There’s no reason Docker can’t help you do that, even if your app is a monolith.
It is a journey of adopting innovative technology and methods. Whether you are a startup, a mid-size enterprise or a huge corporate, digital transformation is essential to reshaping your organization.
It is the most structured and effective way to redefine your existing business models and experiment with new ones. And it is only through this journey that you can gradually or simultaneously transform your operations, competencies, employees, and leadership.
Digital Leadership
The top segment of the infographic touches on Digital Leadership.
There are plenty of examples where executives have digitally transformed parts of their businesses. But they are always confined to the boundaries of their own units or departments. Unable to break through silos that so rampantly exist in companies.
The top management has to be in the driving seat for a company-wide digital transformation.
The questions asked in this segment will help you reflect on the state of your company’s leadership.
The transition from leadership todigital leadership can be made if the top management is willing to
Become digitally fluent
Develop new digital capabilities
Experiment and take risks
Understand how technology is transforming society, and translate into business impact
Promote collaborative environments
Use the information, not just the technology
But as a first step, the senior management must agree that digital transformation is necessary and that they need to transform as leaders too.
Digital Transformation Framework
In the next section, you see the six basic building blocks that make digital transformation possible: Strategy, Process & Innovation, Culture, Technology, Customer Engagement, and Data Analytics. Often digital transformation framework is only seen as part of technology and IT. That’s a myth.
Digital Transformation is about adapting to change in every department of a company, starting from its top-most employees to the most low-level ones.
With the help of the given digital transformation framework in the poster, you can create a data-driven iterative strategy for your company.
You can start out by finding which quadrant your company falls into. Here’s a brief overview of the four quadrants:
Advocacy: You grow your business organically and every customer acquisition is done face-to-face. You are trying to get the word out through your own content/blog.
Attention: A large part of your business comes through social media channels and running ads. You seek attention by pushing ads.
Authority: You have created something so innovative/disruptive that it has gone viral. The media is talking about you.
Prime: You grow your business using all the methods available in the market. You are the market leader in your industry and region.
Once you have identified your quadrant at a macro-level, you want to define your path towards where you want to go. The section on the left helps you do so, in addition to diagnosing your company at a micro-level:
Yourself: What is your value proposition? What are your goals?
Market: How much competition do you have? How is your competition doing in the market?
Customer: Who are your existing customers? What customers do you want to target?
Resources: What kind of resources do you have and what more do you require to achieve your goals?
All your answers must be supported with real data evidence. This framework will allow you to create a strategy that will be iterative and will change as you find more data. Your decisions and journey will be data-driven.
After building a strategy, the senior management must decide whether as a company they want to create new business models, re-invent existing business models or do both.
For most companies, it can be challenging to create a new business model with their existing resources and ways of working. We have interviewed over a dozen C-level executives of Fortune 500 companies that complained about transforming their businesses too quickly. They say it seems too overwhelming.
You cannot expect a huge corporation to remodel itself as a startup overnight. It’s too big a risk for them. They cannot put years of their investments and revenue channels online just to follow a new trend or an idea that may or may not be disruptive.
There is too much change happening in too little time. Every day a new tech trend is emerging. And for huge corporations, it can be difficult to cope up with so much disruption without throwing away their legacy of work.
Create new business models
In the next section of the infographic, we show how an established company can create a new business model by bringing about small, innovative changes to their existing way of working.
The company must create a new department that can run like a separate entity outside of the company’s core business. And to run this department, the company must hire an independent team with an innovative mindset or outsource their innovation completely. It should follow the philosophy of Lean Innovation: Don’t let perfection get in the way of your progress.
This department can function as a startup. It can follow the lean startup principle of testing and validating various ideas. It can scale up those ideas that are validated successfully with data as evidence.
Re-invent existing business models
On the left side of this digital transformation framework, you can see how a company can re-invent its existing business model by bringing about innovation in processes, procedures, costs and product management.
In a traditional IT setup, it takes two to three months to get business requirements, another six months or so in the development phase and another two to three months in testing and deployment.
The modern agile setup brings all of these elements together in one cross-functional team, thus making the entire process very seamless. The waiting period between different teams gets reduced, communication becomes more effective and there is more efficiency in the system.
Under the Lean UX, the team directly talks to the customer to get requirements. These requirements are promptly turned into a prototype that is validated by the customer. The agile methodology enables small cycles of development thus ensuring continuous customer feedback. DevOps bring about automation in testing, deployment, and integration.
Technology
We kept Technology (IT Digital Transformation)as a horizontal bar at the bottom of the infographic because it is just an enabler of Digital Transformation. As a company, you don’t have to adopt every new technology in the market but only those that are relevant to your business models – both new and existing.
Data Analytics
Data analytics is depicted as a vertical bar in the infographic because it is necessary that data be plugged in every aspect of your business. Data is one of the most important assets of your company. Your customers, employees, and machines create tons of data every day. And you can leverage it to generate important insights into every touch point of your organization. You must replace all your gut-feel or intuitive decisions by data-driven decisions.
Digital Transformation is reshaping every industry. And there is not a single CEO who is not losing sleep over keeping up with this change.
Here’s a simple test devised by Lean Apps to determine a company’s digital maturity. Answer these eight questions to diagnose the gaps that you need to fill to digitally transform yourself. (Note down the options that resonate best with your business. And keep your answers handy to calculate your score in the end.)
Is innovation part of your company culture?
We have dedicated resources to implement structured cycles of innovation.
We have regular meetings to discuss innovation but not enough resources to implement it.
Anyone is free to come up with ideas of innovation and if they are good, we sometimes implement them.
We don’t have time and resources for innovation.
2. Does your business strategy sound something like this?
a) We have a clear vision with a compelling value proposition. We depend on data to make decisions, decipher demands and analyse competition.
b) Every department has its own strategy. And all our strategies include an action plan on how to overcome the challenges we face.
c) Our strategy is to primarily achieve our financial goals.
d) We may not have a written strategy but we know what we want.
3. What kind of company structure do you have?
a) We have small, cross-functional teams dedicated towards achieving strategic goals.
b) We have some teams that are traditional and some that are very entrepreneurial, both in their goals and behaviour.
c) We have standard departments such as IT, HR, Marketing and Finance that operate independently and follow a corporate strategy.
d) We have a hierarchical structure with a top-down decision making process.
4. Are you agile?
a) We anticipate the need for change and adapt quickly.
b) We react when necessary to cope up with change.
c) We find it hard to change our methods.
d) We don’t need to change.
5. How accessible and scalable are your processes?
a) We have iterative processes that can be adapted based on our learnings and existing demands. These processes are managed on a digital platform allowing scalability across the company and external supply chains.
b) Our managers have created dynamic processes that allow them to control high quality delivery.
c) We do have set processes, but they are reviewed once in a while and are usually used to reduce risk.
d) We don’t enforce any processes in our company.
6. How do you hone the skills of your employees?
a) We have the best programs to impart knowledge and education to our employees so that they can excel in their respective fields.
b) We encourage our employees to participate in workshops and trainings, but they may not necessarily help them achieve mastery in their respective fields.
c) We do offer trainings when a person starts a new job.
d) We believe in learning by doing.
7. Do you use any innovation management tools or techniques in your company?
a) We use a data-driven, collaborative approach to meet strategic challenges. Innovation management tools are used rampantly across the company.
b) We have some teams that use innovation management tools, but they are not applicable across the entire company
c) We have an idea jar and whenever someone has a bright idea, he/she puts it in there. It’s not regularly checked.
d) We don’t have any kind of structure to collect new ideas.
8. Do you use data to improve your customer journey?
a) We depend on data to test our assumptions and value propositions. Our decisions are backed by evidence/data that helps us engage with our customers more closely.
b) We engage with customers on a variety of social media platforms, but this data is rarely dissected to drive any strategic actions.
c) We are trying to be more active on digital platforms that touch our customers’ journeys.
d) We don’t use data to make decisions.
Option a) carries 10 points
Option b) carries 6 points
Option c) carries 4 points
Option d) carries 2 points
If your score is a perfect 80, then you are probably already leading change in your industry.
If your score falls anywhere between 48 and 80, then you are on your way to becoming a Digital Master: A winning organisation that attains competitive advantage by building both digital and leadership excellence.
If your score falls between 32 and 48, then you are a Digital Survivor: An organisation that strives to adapt to the transformation happening in its industry, but is unable to lead it. Typically such an organisation leaves its digital transformation in the hands of IT and Marketing departments.
If your score falls between 16 and 32, then you are a Digital Beginner: An organisation that has basic digital capabilities and lags behind its competitors at multiple levels. Shrinking revenues is its first sign of obsolescence.
If your score is a measly 16, then you are a Digital Disaster: An organisation that has no digital capabilities and is accelerating toward obsolescence.
In most companies, business and IT teams work in silos. They often perceive each other as inefficient working units that have poor grasp over their mutual functions. What could ideally take a few weeks to achieve generally takes months in a set-up where there is no IT-business partnership.
The first step towards building technology leadership capabilities in a company is to foster a strong relationship between IT and business leaders. The strength of this relationship determines how fast you can drive change in your company’s digital health.
Both business and IT teams need to work together to bring innovation culture in your company’s processes. If the relationship between the two teams is robust, then you can move much faster in launching new competencies and updating older platforms.
Emulate the model of Digital Masters
One thing common to the journey of Digital Masters is that their IT and business leaders cultivate deep respect and trust for each other. They clearly define their roles to drive digital transformation together.
And once their relationship is rock solid, they are able to align their respective knowledge and skills into one single unit. This allows them to have a shared understanding of their customer needs, products, organizational skills, processes and their own competency.
Break the culture of silos
What usually happens in companies is that IT and business teams work in silos, often communicating in their own jargons. The decision-making process is awfully slow. Getting project approvals and execution can take months.
It is therefore not uncommon to see offshoring of IT projects, especially the ones that require short delivery cycles. This creates further hostility in the IT team towards business leaders, leading to a deadlock kind of situation for innovation culture to happen.
This must be resolved at any cost because technology is a key enabler of many a transformations in business.
Create a new lifeline in your IT unit
Creating a solid IT-business relationship might take years, if not months. Most companies cannot wait that long to start their digital transformation. So they resort to usual shortcuts: building digital skills in another department rather working directly into IT.
Such shortcuts can cost the company a lot of money and deteriorate their existing digital platforms by adding more complexities. Security issues can be an additional risk factor.
A more sophisticated approach would be to create a new lifeline within your IT unit. This lifeline will ensure that one part of the IT unit continues to function in the traditional way and the other part meets the more advanced digital needs of the business.
Start at an informal level
In the traditional setup, IT projects have well-structured project plans with monthly milestones. But when it comes to digital activities such as the ones that touch on customer engagements, the traditional setup fails abysmally. For such projects require real time testing, experimenting and learning. And based on these interactions, features are either added or dropped.
With the help of a new lifeline, the digital part of IT can modify processes to suit the urgent needs of a project without compromising the existing projects running under the traditional setup. This could also be a great start to developing business and IT partnership on a more informal level.
But building such a relationship requires the right kind of leadership on both sides. Business leaders need to be well-versed with technology. They need to grow comfortable about being challenged by their IT colleagues. Similarly IT leaders need to broaden their perspective beyond technology to incorporate the needs of business performance.
Do a thorough needs analysis
The team leaders need to be effective communicators so they can have more transparency and share a common vision. It is essential that both IT and business have a shared perspective on the value of speed. Some digital efforts might demand more speed and urgency than others.
Executing big implementations in an experimental or do-and-learn style can turn out to be very expensive for a company, adding security risks and a lot of rework. But the same implementations could be fast and agile if the company has a robust digital platform.
The idea is to do a proper needs analysis: assess what sort of demands a particular project puts on your team and resources; whether your existing capabilities can support it; what sort of speed and delivery cycles are required to fulfill the project.
And for such a judgment, you require the right kind of IT to team up with your business leaders in order to excel.
Use DevOps for speed and accuracy
In this age of digital speed, few businesses can afford to wait for software release cycles at the end of the month for any of their applications. Companies are using DevOps to make better speed possible.
What DevOps does is that it demolishes barriers between development, operations and quality-check teams, thus allowing them to work together cohesively in a more agile environment. This leads to a) improved speed of execution; b) consistent way of application development by standardizing processes.
DevOps is primarily driven by automated tools used to perform tasks generally done manually. For instance testing, configuration control and deployment. When done manually, such tasks can be slow and error prone.
DevOps also requires companies to cultivate a innovation culture in which different IT groups are flexible in their ways of working and are willing to accept/adapt to the changes that make the processes more effective.
At Lean Apps, the use of DevOps has helped us release software applications/features more quickly and with fewer errors. We are able to monitor our performance more closely and resolve issues more effectively than before.
A few key takeaways:
Do not let IT be perceived as an inefficient cost unit in your company
Bring about transparency in all your micro and macro processes such that every unit’s performance, roles and value are clearly measured and defined
Train your IT team to think beyond technical skills. Get them out of the silo-mode. Help them understand the vision of the company and how they are working towards it
Show them how they add value to a particular project and help them assess the gaps that exist in bringing about quality delivery
Change the way IT and business leaders make investment decisions and engage them in the assessment process of what returns each project brings to the company
Encourage IT and business teams to work together to drive innovation culture and speed in their processes
There is no set process to create a digital vision for a company. And there is no guarantee of success either. But as long as you build your vision on your company’s strengths, ensure that your employees are engaged at all levels, and keep evolving over time, you are most likely to be on the right track.
First off, you need to identify what you want to achieve and how you picture yourself on realizing your vision. And in the process of achieving that, you must engage with your workforce, your customers and your investors.
Let’s start with a few fundamental steps that can help you turn your vision into reality:
1) Identity your Assets
You need to analyze your strengths and figure out what sort of assets you possess, which can broadly be divided into four categories:
Physical assets such as shops, retail outlets, manufacturing units, factories etc. can either be imperative or redundant to your new digital vision.
Competency-based assets such as expertise of your employees, effective operations, product design etc. may or may not need to be revisited, depending on the processes they support in forming your new vision.
Intangible assets such as patents, copyrights, brand image, company culture etc can either facilitate or inhibit your pace of transformative process.
Data assets could potentially turn out to be a great competitive advantage or another form of product offering for your company.
However, in order to assess the usefulness of these assets, you must look for four key attributes:
Whether these assets can be used to seize new opportunities or subvert possible threats.
Whether these assets are available to your competitors.
Whether these assets are easily replicable.
Whether these assets are non-substitutable.
There was a time when newspapers considered classified ads to be their strategic assets. But Craigslist proved to be a cheap, easy online alternative, thus taking a giant bite of 5 billion dollars out of their revenues between 2000 and 2007.
2) Pin down your transformative aspirations
Simply having a digital vision is not enough. It also needs to be transformative. Your aspirations must help you partake in the disruption leading to digital future.
Here are three ways to start channeling your digital aspirations:
a) Substitute or replace the old technology with the new one. This may not change the efficiency of the existing process. But it might be a great way to experiment before investing in anything bigger.
If smartphones are only used to send emails or any such function that could also be done on desktops, then they are simply being used as substitutes.
b) Improve the efficiency of the existing process. You may not change the process itself.
Sermo, a social media community, is connecting doctors worldwide to share support, wisdom and insights with their peers. This is enabling pharma companies to learn about issues and opportunities in the field of medicine in real-time.
c) Reinvent or redefine the process through the use of technology.
Apple manufacturer Foxconn is aiming to fully automate its factories and has already deployed 40,000 robots at individual workstations. Ultimately the automation should offer a number of benefits to Foxconn executives, including faster production, cheaper labor expenses, and the ability to outbid the competition. A good example of digital transformation.
By mentioning specific tasks, actions, and behaviors that bring the vision to life, leaders can help employees convert the concept into practice. The trick is to create a solid vision statement that is easily translatable by everyone in the organization into actions on their day-to-day job.
Invisionapp, a design collaboration platform has a clear vision that drives all its employees to achieve a certain quality standard in their daily work. “Question Assumptions. Think Deeply. Iterate as a Lifestyle. Details, Details. Design is Everywhere. Integrity.”
4) Keep evolving
You must create a vision that is focused enough to anchor the employees of your company in the right direction while giving them ample room to be innovative and grow in their fields.
Proctor and Gamble’s vision is to be recognized as the best consumer products and services company in the world. And in aiming to achieve that, the company is also transforming digitally.
“We’ve all been understandably racing to master the new technologies in this ever-changing machine, but I have a little secret for you: we will never master all these technologies. As long as we try, we will forever be on our heels. I try to simplify by taking the mystery out of the new world and telling our people to look beyond the obsession of technology and turn our attention to what really matters – the consumer experience. And, when necessary, it’s my job to take out the friction in the marketing supply chain,” says Marc Pritchard, P&G’s Global Brand Officer.
Focus on business, not technology
No digital vision can make long-term predictions. For it is very fluid in nature. And it must evolve as new technologies replace old ones or new skills open up better opportunities.
So as you set out to create your digital vision, keep your focus on business, not the technology. For technology keeps changing. It is the customer-experience, operations and business models that you need to transform in order to bring about an effective digital transformation in your organization.
True digital transformation starts at the top of a company. It starts with a focused vision. Often created and led by the senior-most employees. And then carried out by the mid and lower-level employees.
This is not to say that mid-level executives cannot bring about transformation. In fact, there are plenty of such examples where executives have digitally transformed parts of their businesses. But they are almost always confined to the boundaries of their own units or departments. Unable to break through silos that so rampantly exist in companies.
So it turns out that the top management has to be in the driving seat for a global company-wide change to happen.
A digital vision can focus on any of the three approaches:
1. Redefining Customer experience
Many companies choose customer experience as their focal point for digital transformation. But there is no one set way to do it. For customer experience itself can be redefined in many different ways:
a) Delivering an integrated customer experience through digital transformation
When Burberry took the digital road to rebuild itself, its aim was to seamlessly blur the lines between physical and digital – create multi-channel coherence. Today Burberry is known as a fully digitized luxury brand. From interactive mirrors that transform into personalized screens to virtual smooches, the company has transformed itself digitally by focusing on creating an integrated customer experience.
b) Improving service to customers through digital transformation
“By observing and looking into customer behaviors and actions online, we are better suited to offer our travelers the best rates and experiences possible. We also use this data to support the evolving relationships with our customers,” said Dan Landson, a company spokesman.
c) Using digital transformtion to understand customers better
LEGO uses its online presence to understand its customers better. One brilliant example is how it allows its members to co-create products that they would like to engage with. For instance, LEGO Ideas is an online community that allows members to create their own design sets and vote on submissions of others. If a proposed set gets 10,000 votes, then LEGO reviews it and picks a winner whose set is created and then sold worldwide. The creator earns a percentage of sales and gets recognition as the creator of all packaging. Thanks to digital transformation, customers are involved from ideation to creation to validation at LEGO.
d) Changing lives through digital transformation
While big pharma companies are still struggling to go fully digital to make an impact on the lives of patients worldwide, there are smaller players that are rapidly changing the health landscape.
Be My Eyes is one such example – a social network that connects blind users with sighted ones. The app provides on-demand help to blind users with simple everyday tasks, such as reading the expiration date on a milk carton or directing to a road sign. It offers a wonderful opportunity for sighted people to help those in need, with a quick swipe on their screens or a few minutes of facetime.
2. Redefining Operations
Companies that lack efficiency in their existing operations usually put their digital focus on redefining operations. For it is in the interest of every executive in a company to have a more transparent supply chain. This allows them to break down silos, form new collaborations and increase the speed of decision-making across the organization.
Boeing has been focusing its digital efforts on achieving operational excellence. And it believes that the future of aviation lies in creating ‘digital airlines’ using advanced analytics and artificial intelligence. Its collaboration with Microsoft is aimed to improve commercial aviation by enhancing factors like predictive aircraft maintenance, fuel optimization, airline systems, and the overall cabin passenger experience.
“There is great potential between the connected traveler, the connected airplane and the connected operation, and their interplay,” said Andrew Gendreau, director of advanced information solutions in Boeing’s Digital Aviation division. “Globally, airlines spend about $700 billion on operating costs, and there’s about $700 billion in revenue. So airlines are a very competitive business with profitable but narrow margins; leveraging data and analytics not only improves performance and experience but will give airlines a chance to sustain profitable growth.”
3. Redefining Business Models
Companies often create new business models by combining ideas around operational processes and customer experience. These newly defined business models can either be an extension of the existing ones or a complete departure from the old ways of working. Such a digital transformation takes one of the three approaches:
a) Defensive: Companies that are under the threat of being rendered obsolete tend to take a defensive approach, often focusing on their long-term survival. The pace of change in their industry is so fast that they must either face death at the hands of new technology or redesign their existing business models.
The extinction of street travel agents is a perfect example of how the Internet has forced the travel industry to adapt and embrace new technology. Even the biggest of travel agencies have had to step up their digital efforts to woo customers. Browsing through travel brochures or reading through Lonely Planet guides are no longer sufficient hooks for booking a holiday.
b) Offensive: Companies that actively seek opportunities to create digitally powered business models tend to adopt an offensive approach. In such a case, a company does not have to brave through a crisis. In fact, executives in such companies enjoy the luxury to experiment with new digital approaches.
c) Disruptive: These are companies that do not wait for challenges or opportunities to redefine their business models. These companies create digital visions to drive the industry-wide shift.
The ecommerce software platform Shopify has simplified the shopping experience to a new level. How? By realizing the retail potential in three of the world’s biggest social hubs: Facebook, Twitter and Pinterest. Shopify has introduced buy buttons on social media to empower small-time business owners in boosting their mobile and online sales. Now anyone can post products to Sello, the company’s new app, without first having to maintain a full-blown Shopify store. Pinterest’s Buyable Pins is already getting twice the conversion rate of regular Pins on mobile.
And yet there is no one way to conclude or frame a vision for digital transformation. It is an evolving journey that starts at the top and then engages people at every level in the company.
On a snowy Paris evening in 2008, Travis Kalanick and Garrett Camp had trouble hailing a cab. So they came up with a simple idea—tap a button, get a ride.
What started as an app to request premium black cars in a few metropolitan areas is now changing the logistical fabric of cities around the world. Whether it’s a ride, a sandwich, or a package, we use technology to give people what they want, when they want it.
For the women and men who drive with Uber, our app represents a flexible new way to earn money. For cities, we help strengthen local economies, improve access to transportation, and make streets safer. When you make transportation as reliable as running water, everyone benefits. Especially when it’s snowing outside.
Uber has created an inspiring story. It has redefined the archaic business model of the cab industry. Connecting over billion people across 536 cities worldwide with a tap of a button.
And now it’s perhaps redefining the delivery industry with the launch of UberRUSH in New York City, San Francisco and Manhattan. It’s a service that connects people with a delivery partner at the push of a button, ready to pick up items and deliver them wherever they need to go.
There are five classic ways of transforming business models:
1) Transforming industries through platforms
Transforming an industry is a difficult ball game. It’s risky. It’s complicated. And it throws a company out of its comfort zone.
But thanks to digital technologies, companies are now able to connect every element of their business at a level that never existed before. They no longer need huge infrastructure investments to redefine their value chains. They can simply go shopping on different online platforms for whatever it is they need.
Need three project managers for 90 days? Go to a platform such as Upwork.com. Need to crowdsource your R&D? Go to a platform such as innocentive.com. Need to buy particular IT infrastructure? Go to a platform such asazure.microsoft.com. Need to publish content for a wide audience? Go to a platform such as medium.com. This is what we call the rise of the platform economy.
Airbnb started a sharing revolution
Joe and Brian came up with the idea of Airbnb in 2007 when they were struggling to pay their rent. They decided to set up a website, rent out three airbeds on their living-room floor and cook breakfast for their guests. And in less than a week, they had three guests sleeping on their floor paying $80 each a night.
Soon this idea took shape of the world’s biggest sharing economy platform, connecting people looking to list or book accommodations. Today, Airbnb is present in 34,000 cities and 191 countries and does not own a single property.
This has got many a big dinosaurs in the hotel industry scrounging for new ways to open up revenue streams. Marriott for instance is offering a sharing economy style workspace on demand: Whether you need an office for 3 hours or 3 years, the LiquidSpace network gives you more space, more variety and more flexibility than any other platform. Hands down.
Quite a ‘sharing’ revolution it is. Large hotel chains across the globe are in fact looking for ways to incorporate the sharing economy formula into their business models.
2) Replacing products with substitutes
Sometimes transforming your business model becomes a necessity. Especially if your product or service is being swept away by a new digital wave.
The way Ipods swept away Walkmans or CDs did away cassettes.
If you see your margins shrinking or customers moving away to other substitutes, it’s time to regroup and rethink. And the earlier you do it, the stronger your advantage would be over your competitors.
Fujifilm reacted, regrouped and redefined
When Kodak was beaten to death by the new wave of digital photography and smartphones, Fujifilm survived by diversifying. A calculated move that came after studying the fact that the anti-oxidants used in film were similar to those used in cosmetics.
So the company launched a new line of cosmetics using its stock of anti-oxidants left in film library. And given that it was already an established name in film, it started making optical films for LCD flat screens.
A rather smart way to proactively manage a business transition.
3) Finding new ways to create business
Large firms are often so obsessed with expanding or protecting their existing businesses that they find it hard to open up new streams of revenue with a revised business model.
It’s usually the smaller players or startups that cause disruptions or make way for new digital businesses.
However, there are always exceptions in the industry.
Tesco is like a giant startup
Tesco has traditionally built its business on large retail stores. It has also been equally bold at adapting new technologies. Take for instance Tesco’s innovative move in South Korea. A country where people are adept at using latest technology, working long hours and commuting with public transport.
Tesco created a new way of shopping by setting up virtual displays of grocery aisles at subway stations and bus stops. People waiting for their transport could simply scan items on their smartphone for purchase. And then have them delivered to their doorstep. Since they didn’t have time to visit stores, Tesco brought the stores to them.
That’s what we call innovation.
4) Transforming value chains with technologies
If you are so far away from your customers that you can’t hear their moans or cries, then you need to redefine your value chain.
There are many B2B companies that want to connect with their end-customers but are stuck in a third-party distribution model.
If they approach customers directly, they might hurt their relations with distributors. And if they don’t, they might never find out detailed needs of their customers. It’s a terrible dilemma.
Volvo broke the traditional setup
In an attempt to reach out to its end-customers directly without bypassing the authority of its car dealers, Volvo devised a B2B2C business model. It started by opening up a conversation with its customers on social media to reinforce loyalty and build trust.
Then it launched a Volvo-on-call button in its cars. An emergency and tracking service that enabled its customers to control the car remotely. By using the smartphone app the customer could control the climate in the car or pre-heat engine in parking. Also, the driver could simply push the button and talk to someone directly at the Volvo call center. Whether it was a flat tire, a breakdown, or an accident, Volvo would send assistance anywhere.
This helped Volvo redefine its business model in a way that strengthened both its customers and dealer relations like never before.
5) Rethinking value propositions
Business model transformation can sometimes help you transform your market position. It may not always open doors to new markets. But it can help you re-establish your presence in the existing market.
This can be achieved by using analytics, taking on a new image, revising your pricing etc. Or all of them combined together to redefine your value proposition. In startups, it’s often called pivoting. But for traditional big companies, it’s a tall order to do so.
Dove changed the perception of beauty
Dove started out as a soap brand and dreaded to be rendered as yet another beauty brand. That was the fear grappling a team of sensitive women backing this global brand when they decided to rethink their value proposition.
They clearly did not want to be another voice in the overcrowded space of glossy, photo shopped image of beauty brands. So they redefined their value proposition. Dove made it clear that it saw beauty in imperfections. It discarded all the stereotypes. It made beauty sound very democratic. It recognised the inner beauty of women. Their character, their strength and personality.
Operations have never been sexy. If anything they have been the opposite of what sexy looks like. At best, they conjure up images of dust, grime and heavy machinery. Take mining for example. Codelco, the world’s largest copper producer, created its competitive advantage by focusing solely on operations. It transformed digitally by choosing to focus on operations. Not on customer experience.
Here’s the lowdown: Mining used to be a dirty business. And from what we heard in news, it used to be dangerous too. Men would go underground and lose their connect with the world above for days. There were terrible issues around productivity, environmental hazards and miner safety.
Codelco figured that it needed a fresh approach. Either it had to move from a physical to digital model or risk being irrelevant in future. To innovate its operational processes, it initiated Codelco Digital, a radical way of automating business processes.
And that’s not it. The digital transformation continues. It is changing the fabric of the entire company. Employees are now engaged to look for ways to innovate and speed up execution. They are not leveraged for their physical strength. They are leveraged for their knowledge. They make decisions based on data. Safety is no longer their biggest worry.
Codelco has disrupted the nature of the mining industry.
You can’t just copy-paste!
When you transform your customer experience, your competitors can watch and learn. But when you transform your operations, your competitors can be caught off-guard.
For they can’t see your internal processes, your skills or your information flow behind your successful outcome.
All they can see is your productivity and agility. But it’s hard for them to figure out how you get it. That’s the reason operational advantage is pretty hard to copy. If it were only about adopting a new technology, every other company would be a Digital Master. But it takes much more than simple process improvement to get there.
Digital Masters perceive technology as a springboard to redefine their way of doing business. They abandon their old assumptions stemming from the limits of their older technology and forge ahead with newer ways of digitally optimizing themselves.
Everything comes at a price, even Operational Efficiency
Let’s say you align and automate your processes to such an extent that even a robot can perform all your tasks without sweating or swearing. Result? You gain tremendous financial benefits. But in the process, machines replace your workforce. That is not an ideal situation for any company.
How can you make your workforce more efficient without replacing them?
UPS (United Parcel Service), the world’s largest package delivery company, is an excellent example of operational efficiency and process alignment. It has aligned every step of its logistical web to such an extent that its drivers are even trained how to walk in slick conditions. And guess what? It seems to be working wonders in improving their efficiency and quality.
UPS has built its operations in a way that a) it delivers on time, b) it gives its customers multiple options to meet their needs, and c) it allows the flexibility of changing delivery choices while the shipment is in route. Regardless of the weather, distance or size of the package.
UPS has managed to do all this not merely by hiring analytics talent but by persevering to train its existing engineers and business people in using these key tools to optimize their processes. It’s a company-wide collaboration.
Automating Innovation can be a challenge
Can you expect a robot to come up with new suggestions? Or tell you, “Let’s try it this way dude.” Not really. But it might seem plausible in the wake of artificial intelligence. Let’s face it. Automation has become more intelligent these days. It’s not just about moving heavy stuff or fulfilling an assembly line.
There are sophisticated information systems that are beginning to automate decision-making too.
Credit Suisse is one such organization that has optimized its operations through intelligent automation yet leaving enough room for innovation. The financial giant has automated its report writing with the help of Narrative Science technology that essentially converts data into narratives.
Result? The quality of the reports is definitely better. They are a lot more consistent in structure and language. The outcome does not depend on the experience of the analyst to pick nuances in the given data to make interpretations. And there is massive scope for scalability.
Credit Suisse has been able to triple its volume of reports without hiring any new analysts. In fact, its analysts are rather engaged in strengthening relations with new clients. Such is the power of intelligent automation.
Digitizing means linking your supply chain closer than ever
Digital technologies are creating tremendous opportunities to manage supply chains better.
Every element of the supply chain, from suppliers to intermediaries to third-party service providers to customers, is now digitally linked closer than ever.
In simple language, Zara is changing the fate of the retail industry. What its rivals take nine months to put on their shelves, Zara does it in two weeks. Its unique fast fashion business model is fueled by buyer-driven supply chain capabilities. Store managers use personal digital assistants (PDAs) to capture real-time consumer data on transactions and preferences that are seamlessly transmitted to designers and manufacturers at the backend.
Optical readers are used to sort and distribute clothing items at an incredible speed of more than 60,000 items an hour. Cut pieces are tracked with the help of bar codes thus allowing minimal human requirement. Result? Zara is able to control its value chain of designing, producing and delivering in 14 days without the need of stocking in warehouses.
That’s the reason when you walk into a Zara store, you are bound to find something new and something worth buying. Unsold items at Zara account for only 10 per cent in comparison to the industry average of 20 per cent.
Act fast and act now
If you want to gain a distinct competitive advantage, you have to move beyond simple adoption of tools. Connect your processes, your people and your technology in a way that you can outshine all your competitors. And if you need a hand in rethinking your way of doing business, give Lean Apps a nudge.
Burberry would have died a decade ago had it not been for its digital re-birth.
It all began back in 2006 when Angela Ahrendts took over Burberry, a brand that was severely lagging behind its peers in the luxury goods segment. The English fashion house had a slim chance of beating its peers, given their dwindling profits and high customer expectations at the time.
They knew that the competition was targeting the wealthy baby boomers and the classy ladies who met for social luncheons. They also knew that there was no way they could match the advertising budgets of their peers. Ahrendts’ first move was to draw out a solid strategy with the help of the management team.
That’s when they decided to go after millennials: those in their 20s with high net worth especially in emerging countries. And to engage with them, they had to learn to speak and act Digital. This marked the onset of Burberry’s digital transformation.
They brought in a fresh, young team that reflected the needs and aspirations of the millennial customers they were going after. They also shifted a huge chunk of their marketing budget to digital media.
From revamping their website in more than 10 languages to launching the Art of the Trench campaign, Burberry began to create a compelling customer experience. By 2010 Burberry’s customers could order clothes directly from their runway shows that were streamed live online. Whereas their competitors such as Marc Jacobs and Prada had not even dipped their toes in the online world.
Burberry disrupted the market with bold and mostly digital ways of reaching out to customers. In 2011, they launched a body fragrance that could only be sampled through Facebook. They partnered with Google to create Burberry kisses, an innovative lip detection technology that allowed its users to capture and send a digital kiss to anyone in the world.
And today if you walk into a Burberry store, they give you the same personalized experience as you would have on their website. Thanks to customer analytics, this global brand can even keep a tab on what you picked up on your Milan stopover or the guilty Tweet you posted the day after.
Burberry is an exceptional example of how a company can go from being an absolute Newbieto establishing itself as a Digital Masterin an industry where brand loyalty was once written in stone.
Now if you intend to build a perfect customer experience, you need to jump through four burning hoops (irrespective of your industry):
Just give them what they want!
Get to know how your customers interact with you. Your products. Your stores. Your brand. Your channels. And even your doormen.
Understand how they make their decisions. Map their journeys: before buying, during buying and after buying your product. Try walking in your customers’ shoes.
What parts of the journey do they enjoy? What parts of the journey they’d rather give a miss?
How can you improve their journey? How much of it can you digitalize?
Or as my lawyer friend says: you need to figure out why your clients are doing what they are doing, not to forget where and how they are doing.
Mickey Mouse creates a magical experience
Disney is known to be the happiest place on earth for children. And for adults too, including myself. It is also one of the most expensive places on earth for vacationing. And yet families save up for months/years to experience the Disney world at least once in a lifetime, if not more. Why?
Because Disney focuses on customer satisfaction. It knows the pulse of its customers. It connects with them emotionally and delivers value that is worth more than what the guests pay for.
A great example would be how Disney takes care of its overtly excited and hyper guests, who often leave their keys in the car in an attempt to rush to the fun park. For such guests, Disney has an appointed team of locksmiths whose job is to simply identify families in distress in the parking lot and help them unlock their cars for free. That is magical indeed!
Speak their language, don’t fake it!
If you want to cozy up with your customers, existing or potential, you need to speak their lingo. New and social and digital. Whatever it takes.
If they are too busy on their mobile devices to pay heed to you, then you need to be in those devices. If they are rejecting you for your competition, then you need to tap into customer analytics to get them back onboard. If they want recognition on social media, then you give them exactly that.
But don’t forget that you need to invest smartly. And invest for the right reasons. In the right technologies. Not because others are investing and so must you. But because these technologies bring you closer to your customers.
Starbucks sells more than just coffee
When Starbucks could not get enough customers to walk through their doors, they launched myStarbucks app in 2009. It allowed people to locate their nearest Starbucks Cafe, dive into the stories behind their coffees and even create their own drinks. Fast forward to 2011 and Starbucks digitized its loyalty program that allowed customers to pay with their phones.
This is how it worked: App users presented the on-screen version of their prepaid loyalty card to the barista. The barista would read the bar code with their point-of-sale system, which was seamlessly integrated into this innovative approach. And the customer never had to reach out to its wallet.
The program became so successful that Starbucks expanded its mobile payment capabilities even further. Today Starbucks is not just a coffee brand. It’s an experience. Of comfort. Of convenience. Of a pleasant addiction.
Treat your customer data like Holy Grail!
Throw all the guesswork out of the window. Do not get swayed by HIPPOs (Highest Paid Person’s Opinion) in your company.
Test your hypotheses. Remember that your customers are leaving their trails everywhere. With digitization, you can tap into a wealth of structured and unstructured data on your customers and measure customer satisfaction. Mesh it with location-based data and you can kick it up a few hundred notches.
Use this data to draw customer insights. Use it to architect a tremendous customer journey. Use it to achieve 100% customer satisfaction. Use it to make better decisions. Use it to create a more personalized experience. Use it to gain competitive advantage. Just use it, would you?
Amazon is killing it with personalized recommendations
Amazon is the kind of salesman that every e-commerce platform dreams to be. Thanks to its sophisticated data mining techniques and business intelligence, Amazon has been able to pioneer the art of customer satisfaction and giving personalized recommendations to its customers.
The result? Amazon is able to create innovative opportunities to cross-sell its products. To bundle relevant products together. To dramatically increase the average order value. And to accelerate its sales.
Tear down the wall between physical and virtual
Customers are expecting an integrated experience. No matter how many channels you have, you need to engage your customers to the same degree at every touchpoint. Customers do not separate the physical from online experience.
You need to give them what they want and when they want at their convenience. So whether they are stepping into your bohemian boutique store or clicking on your online outlet, the experience must be seamless for customer satisfaction.
Watch this video to get a glimpse into how Burberry has creatively meshed the digital and the physical worlds to create a fantastic customer experience.
Here’s my last crude piece of advice: Fast track your Digital TransformationNOW. Or else watch your competition eat into your profits, your market share, your brand value and just about anything that makes your business alive.
Consumers are like brats these days. They know what they want and they know how to get it. And if you don’t deliver as promised, they will shame you in public. For they speak and understand only one language: Digital.
A few years back, I was asked in a job interview to name an innovative company. I immediately responded: Nike. My reason back then was that I had invested in the first ever Nike Fuelband, a fitness tracker that looked super chic on my wrist with its colored LED lights. Serena Williams was wearing it on the court. And so was LeBron.
The product spoke to me at a level that felt personal. It gave me Fuel Points for even lifting myself off the couch to fetch beer from the fridge. I thought it was revolutionary. Besides, I was very desperate for a job and Nike was the only company that asked for a sense of humor in candidate profiles.
Of course I never got the job. But Nike did build its business on innovation. It disrupted the industry by breaking out of its shell of just manufacturing shoes and T-shirts. It started focusing beyond selling. Beyond its own products. It became a part of its customers’ lives around the world.
Now you might think that it’s easy for a cool company like Nike to take an innovative path and create a digital ecosystem. But that seems totally unfounded when we look at Asian Paints, Asia’s second largest paint company with a turnover of $2.3 billion. It has been able to expand into 19 countries, achieve remarkable annual growth whilst improving efficiency and transforming customer experience. Without a glimmer of glamour.
Nike and Asian Paints are two very different companies in very different industries. Yet they have both achieved digital mastery.
What does it take to become a Digital Master?
For starters, Digital Masters get two things right:
Digital Skills: They seize the right kind of digital opportunities. And for the right reasons. When Nike started having conversations with its customers on social media, it was not about pushing its products. It was about building a community of sports enthusiasts and having discussions around global events. But all these activities/data gave Nike a rich insight into the minds of its consumers. And this eventually helped the company in getting closer to its customers’ needs and tailoring its internal business processes accordingly.
Leadership Skills: If people on the top don’t know how to execute and play with new technology, then don’t expect any transformation in your company. You need to have a vision of sorts and a hell lot of coordination to bring about any change in your firm. And if you have a company that has more than a single unit, then get this: most people wear blinkers and work in their own units. In silos. So it is very difficult to get everyone to work in the right direction and at the right speed. Besides, most of us hate change. Asian Paints gave the reins of Strategy and IT in the hands of its Chief Information Officer (CIO). An odd decision. But it helped the company in engaging its employees and linking the different digital activities.
That’s not just it.
There are four stages to Digital Mastery:
Take a peek at the graph below and process it.
Newbies are the ones that are standing at the starting line wondering if they are valid participants in the race. They have very rudimentary digital and leadership skills.
A perfect example would be the giant pharmaceutical companies.
So far they have gotten by pretty well without taking to any significant digital means. But the old ways of patients blindly trusting their doctor’s judgment is quickly disappearing. Let’s face it. We have all done online self-diagnosis. Last month while perusing for my extreme laziness symptoms, I diagnosed that I was “hangry”, a term used to describe people who snap at others when they get hungry. So true!
Now it’s not just the patients, about 50 percent of physicians in the US also turn to Wikipedia for health-related info. WebMD Health Network alone averages about 199 million unique users per month. To put it brutally, patients are leading the way to digital transformation. And if pharmaceutical companies want to stay relevant, they must do more than just dipping their toes in digital waters.
Wannabes are the ones that scoot the moment the referee blows the whistle, flaunting their speed and style without completely putting their heart into the race.
They do deserve a pat on their back for embracing a part of being digital. For they have played a pivotal role in the path ofdigital transformation of other sectors such as Retail and Finance. But internally their business is still as old-fashioned as the 80s bell-bottoms.
They have access to immense data: they know exactly when you are taking off for a vacation, when you are shopping online, when you are talking to someone overseas or any information that your device is party to. This kind of intimacy with customers gives them amazing power to leverage and retool themselves as digital companies. They can enable enterprises to shape better, cutting-edge apps/experiences for consumers based on this goldmine of data. And yet they are best known as providers of phone services.
Cautionaries are the ones that plan, project, plan a bit more and then defer before making a single stride forward.
Utilities industry is one such example.
If you’ve ever met a Utility Manager you’ll know that they plan 5 to 10 years in advance. They are so scared of making mistakes that they cease to make progress in adapting new technologies. They have the leadership skills but it is the excess caution that holds them back.
Digital Masters are the ones that ace the game. They enjoy leadership and digital advantage over their peers.
And perhaps you are heaving a sigh of relief thinking that your whole industry is lagging behind in the digital race. True, but don’t forget that there are always one or two players in every industry that have already achieved digital transformation. And they are already reaping the benefits of it. So no matter which quadrant you fall into, you need to buckle up and take action.
Nike was a Wannabe before it became a Digital master. Asian Paints was a Cautionary before it became a Digital master. And they are still striving to stay ahead of the game.
It’s high time you started laying down your digital strategy. Or if you are still unsure, get in touch with Lean Apps experts to get you going.
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