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Context of digital transformation. econsultancy webinar

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The keys of digital transformation for companies

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Context of digital transformation. econsultancy webinar

  1. 1. The context for digital transformation Neil Perkin, Consultant
  2. 2. We are thought leaders in digital transformation 2 As leaders in digital insight, Econsultancy has produced a series of research reports relating to the topic of digital transformation, including: • Organisational structures and resourcing • Securing board buy-in • Insourcing and outsourcing • Agility and innovation • Skills of the modern marketer These reports tackle the issues that senior digital leaders told us were most important to them. Learn more about the digital transformation journey at econsultancy.com/transformation Econsultancy econsultancy.com/transformation
  3. 3. The context for digital transformation Professor Richard Foster, Yale University 3Econsultancy econsultancy.com/transformation Only 63% of S&P 500 companies a decade ago are still in the index today - Thomson Reuters
  4. 4. The context for digital transformation IBM Institute for Business Value Global C-Suite Study based on 4,000 interviews with C-Suite execs worldwide 4Econsultancy econsultancy.com/transformation CEOs consider technology to be the single most important external force shaping their organizations
  5. 5. Is this digital transformation? 5Econsultancy econsultancy.com/transformation
  6. 6. The context for digital transformation FASHIONISTAS DIGIRATI 6Econsultancy econsultancy.com/transformation http://www.capgemini-consulting.com/the-digital-advantage/ These more digitally mature companies (or 'digirati') are able to combine a focus on change through new technology, with a concurrent focus on change management, people, process, and culture. The study found that this group of companies were, on average, 26% more profitable, had a 12% higher market capitalization, and derived 9% more revenue from existing assets.
  7. 7. The context for digital transformation 61 Barriers to agility and progress 7Econsultancy econsultancy.com/transformation Legacy technology is our biggest barrier. It’s not just the technology, it’s the policy, training, behaviours that surround it. Which of the following are the most significant challenges or barriers to digital progress for your organisation? 57% 37% 34% 34% 28% 26% 24% 22% 9% 6% Legacy systems and processes Finding staff with suitable digital skills Difficulty joining up data Focus on short-term revenue targets Senior management buy-in for investment in resourcing and training Training / upskilling staff Identifying correct priorities Making business cases for investment Keeping hold of digital staff Finding suitable agencies Econsultancy, Organisational structures and resourcing best practice guide
  8. 8. The context for digital transformation Barriers to agility and progress 8Econsultancy econsultancy.com/transformation Accept that if people around the Board table fail to grasp what it is you are doing or why… it is your failing not theirs. Our board / senior managers have a good grasp of the potential of digital channels for our organisation 31% 44% 3% 13% 9% Strongly agree Partially agree Neither agree or disagree Partially disagree Disagree Econsultancy, Securing board buy-in
  9. 9. Digital transformation structures 9Econsultancy econsultancy.com/transformation
  10. 10.     02 CENTRE OF EXCELLENCE 03 HUB-AND-SPOKE 04 MULTIPLE HUB-AND-SPOKE DISPERSED 01 FULLY INTEGRATED 05 Digital transformation structures The evolution of team/organisational structures 10Econsultancy econsultancy.com/transformation The most digitally mature companies tend to use the Multiple Hub-and-Spoke model, but the majority of businesses are utilising the Centre of Excellence or Hub-and-Spoke models.
  11. 11. Digital transformation structures A model for the allocation of resource 11Econsultancy econsultancy.com/transformation Ecommerce Digital Marketing E-Business Strategy & Planning SEO PPC CRM Affiliates Display Analytics/data Content Marketing Social media UX Design Content/UX Mobile Operations CMS Small change request Tech/Build Brand Customer Insight Brand strategy Large scale request Web Build (Social Media)
  12. 12. Digital transformation structures Lack of learning outside of Centre of Excellence Lack of focus on smaller business units Hindrance to integration Shared learning within Centre of Excellence Consistency & control: processes, terminology, standards, measures Governance & focus - efficiency in resource, prioritisation, unified commercial entity, senior buy-in Focal point for the business, Scalability in support & tools 01 02 03 04 ADVANTAGES DISADVANTAGES 12Econsultancy econsultancy.com/transformation The continuing importance of centres of excellence
  13. 13. Digital transformation structures Hub as Strategy, spoke as execution The desire for greater integration and potential devolvement of expertise 13Econsultancy econsultancy.com/transformation “I think we’ll see more strategic aspects, like the development of capability, remain at the centre, but more devolvement of the executional stuff to the local teams”
  14. 14. 14Econsultancy econsultancy.com/transformation We used to have a more functionally- based team but now the lines between content, SEO, social are less clear so we increasingly need to join things up more. Most exciting opportunity 2015 vs ‘5 years time’ Digital transformation structures The importance of customer experience and content Econsultancy Quarterly Digital Intelligence Briefing – Digital Trends 2015 22% 15% 13% 11% 11% 7% 7% 6% 5% 3% 20% 8% 8% 16% 14% 5% 12% 7% 4% 5% Customer experience Content marketing Mobile Personalisation Big data Social Multichannel campaign management Marketing automation Video Location-based services Most exciting opportunity in 2015 Most exciting opportunity in five years' time
  15. 15. Two-pizza teams originate from Amazon and is an organisational structure focused around small teams, typically comprised of 8-10 people ('Two-Pizza' teams - the number of people who can be fed easily with two large pizzas). • Individuals and small teams can have a massive impact • They can experiment, fail, try again, and more easily get their successes to a global market Two-pizza teams 15Econsultancy econsultancy.com/transformation
  16. 16. Digital transformation skills 16Econsultancy econsultancy.com/transformation
  17. 17. Digital transformation skills IBM CMO Study 17Econsultancy econsultancy.com/transformation Marketers are redefining their relationship with technology: Re-invention is required, but most are still feeling their way.
  18. 18. 18Econsultancy econsultancy.com/transformation CMOs need to be able to pull together multiple threads and weave product campaigns with customer conversation. This kind of strategic planning outlook once sat with our agencies but is coming increasingly in-house. You can no longer only have a traditional campaign calendar – you need to be more agile, iterative and plan quarterly or even monthly. Digital transformation skills The rise of the marketing technologist Only 18% marketers feel that they currently have the marketing technology they need to succeed. Source: Scott Brinker
  19. 19. The softer skills are what will define the successful digital marketer of the future.  Digital transformation skills The rise in soft skills 19Econsultancy econsultancy.com/transformation How important would you say the following softer skills or behaviours are to being an effective marketer in the modern digital world? 75% 63%61% 45%45% 38% 26% 24% 33% 32% 44%45%58% 57% 1%4% 6%9%10% 3% 14% 1%1%1%1%3% The ability to embrace change Ability to spot opportunities and adapt strategies quickly Being passionate, hungry to learn, curious Being open and collaborative Ability to deal with uncertainty Lateral thinking, and the ability to make connections between disparate ideas or concepts Being comfortable taking risks Not important Neither important or unimportant Important Very important Econsultancy, Skills of the Modern Marketer
  20. 20. ARTICULATION/PRESENTATION Clarity when articulating digital ideas and requirements, persuasive presentation of ideas, ability to talk the same language as non- digital EMPATHY Empathy with the requirements of other functions and stakeholders, empathy with customer needs. DATA/INSIGHT-DRIVEN Extract insight, make digital data actionable, data-driven decision making. COLLABORATION Naturally collaborative way of working, ability to work well with other teams across the business. Digital transformation skills A check-list for soft skills 20Econsultancy econsultancy.com/transformation CREATIVITY/LATERAL THINKING Make connections between diverse ideas, concepts, data, to originate new ideas, fresh thinking, challenging thinking, thinking big. ACTION-ORIENTATED Willing to get stuck in, bias towards action. PASSIONATE Have the hunger and passion for continuous learning and to embrace change. ADAPTABILITY Embracing uncertainty, comfortable with change, know when to compromise and when not. TECHNOPHILES Keen adopters of new technologies, enjoy learning about technology, working with it, seeking out improved ways of doing things using technology. PROJECT/CAMPAIGN MANAGEMENT SKILLS Think holistically, be organised, work well with processes and work well with other team members CURIOSITY Willing to explore new ideas, interesting concepts, to be intellectually curious
  21. 21. Digital transformation skills Digital tools to enable your people 21Econsultancy econsultancy.com/transformation
  22. 22. T-shaped people are defined as those who have a strong vertical expertise but also wider knowledge or empathy for other digital disciplines. This is not to say that vertical expertise is less important, but more that when this is combined with that wider understanding it is increasingly valuable in appreciating the wider context of specialist work, identifying opportunities for greater collaboration or efficiencies, and seeing the bigger picture. T-shaped people 22Econsultancy econsultancy.com/transformation
  23. 23. Digital transformation skills Broad skills in future 23Econsultancy econsultancy.com/transformation Which areas of requirement for digital resourcing / upskilling do you anticipate will grow most over the coming year? 44% 41% 41% 35% 34% 22% 18% 16% 12% 12% 7% 3% 1% Econsultancy, Organisational structures and resourcing best practice guide
  24. 24. Digital transformation skills Vertical skills in future 24Econsultancy econsultancy.com/transformation …and a looming talent time bomb? Over the next few years, of these skill areas, which would you say will grow the most in significance for marketers? 51% 50% 46% 44% 25% 15% 15% 10% 9% 6% 5% 1% 5% Mobile marketing Content marketing Web analytics / data Social media activity Community management Website design and build Search engine optimisation Apps development Email marketing Paid search (PPC) Display advertising Affiliate marketing Other Econsultancy, Skills of the modern marketer
  25. 25. Digital transformation skills Recruitment challenges 25Econsultancy econsultancy.com/transformation Some disciplines that are identified as being challenging to recruit for are also areas of anticipated growth and demand – analytics/data, social media 28% 17% 16% 15% 15% 14% 13% 8% 7% 7% 6% 3% Over the next few years, of these skill areas, which would you say will grow the most in significance for marketers? Econsultancy, Skills of the modern marketer
  26. 26. Digital transformation board buy-in 26Econsultancy econsultancy.com/transformation
  27. 27. 01 UNCONVINCED Board are not persuaded of the merits of digital investment Digital transformation Board buy-in Levels of buy-in 27Econsultancy econsultancy.com/transformation 02 CONVINCED, LOW KNOWLEDGE Board are convinced of the importance of digital but effective prioritisation of investment can be an issue 03 GOOD KNOWLEDGE, ENGAGEMENT Board are fully involved, making informed decisions, regularly updated but digital still separate 04 FULLY INTEGRATED Digital is fully integrated a part of wider business decision-making
  28. 28. Digital transformation Insourcing, outsourcing 28Econsultancy econsultancy.com/transformation
  29. 29. Digital transformation insourcing, outsourcing A trend towards insourcing? 29Econsultancy econsultancy.com/transformation Which areas of requirement for digital resourcing / upskilling do you anticipate will grow most over the coming year? 45% 32% 23% More in-house More outsourced Same Econsultancy, Insourcing and Outsourcing Striking the right balance for digital success
  30. 30. Digital transformation insourcing, outsourcing A trend towards insourcing? 30Econsultancy econsultancy.com/transformation Which areas are you most likely to do more in-house over the next couple of years? 47% 38% 36% 26% 24% 23% 16% 13% 13% 13% 12% 7% 1% Content marketing Social media activity Email marketing Web analytics / data Search engine optimisation Community management Website design and build Paid search (PPC) Apps development Affiliate marketing Mobile marketing Display advertising Other Econsultancy, Insourcing and Outsourcing: Striking the right balance for digital success Nuance: There is a greater investment in resource in data, content and social, but also more sophisticated outsourcing.
  31. 31. Digital transformation insourcing, outsourcing A continually shifting dynamic 31Econsultancy econsultancy.com/transformation Opportunity at the centre (automation of core, well- defined, controlled processes), and at the edges (emergent, set- up, design, understanding value) http://www.jarche.com/2013/01/the-power-of-pull-and-pkm/
  32. 32. Digital transformation agility 32Econsultancy econsultancy.com/transformation
  33. 33. Digital transformation agility Digital maturity model 33Econsultancy econsultancy.com/transformation Emergent Managed Optimised Change management, KPIs Digital capability development not central to organisational strategy/KPIs Strong digital vision and strategy, organisational priorities/KPIs change Digital vision lived through leadership and operations, top-down bottom-up, agile and adaptive strategy Data and technology Siloed data sources, basic analysis tools, technology restricts, legacy platforms Software-as-a-service tech, multichannel, joining up data, basic modelling Joined-up data/tech empowered front line staff, customised dashboards, scalability of the cloud, actionable modelling, integrated digital and online/offline, real-time decisions People, teams, culture Isolated knowledge, vertical skillsets, poor training CoE, specialists and generalists, tech skills, more fluid structures, collaborative environment T-shaped, deep knowledge, human layer over tech, knowledge sharing, highly fluid/collaborative, agile culture Working practices, processes, tools Rigid structure, waterfall project mgt, infrequent release cycle Agile development, SCRUM, test and learn, rapid prototyping and build Interdisciplinary agility, cross- functional, small, nimble teams. Permission to fail. Entrepreneurial The model is useful in understanding high level maturity in skills, people and culture, but also the context of that with other critical dependencies such as strategy, processes and use of technology.
  34. 34. Digital transformation agility Top down, bottom up approach to achieve maturity 34Econsultancy econsultancy.com/transformation Emergent Managed Optimised Change management, KPIs Digital capability development not central to organisational strategy/KPIs Strong digital vision and strategy, organisational priorities/KPIs change Digital vision lived through leadership and operations, top-down bottom-up, agile and adaptive strategy Data and technology Siloed data sources, basic analysis tools, technology restricts, legacy platforms Software-as-a-service tech, multichannel, joining up data, basic modelling Joined-up data/tech empowered front line staff, customised dashboards, scalability of the cloud, actionable modelling, integrated digital and online/offline, real-time decisions People, teams, culture Isolated knowledge, vertical skillsets, poor training CoE, specialists and generalists, tech skills, more fluid structures, collaborative environment T-shaped, deep knowledge, human layer over tech, knowledge sharing, highly fluid/collaborative, agile culture Working practices, processes, tools Rigid structure, waterfall project mgt, infrequent release cycle Agile development, SCRUM, test and learn, rapid prototyping and build Interdisciplinary agility, cross- functional, small, nimble teams. Permission to fail. Entrepreneurial
  35. 35. Digital transformation agility Defining digital culture 35Econsultancy econsultancy.com/transformation Commercially minded Non-hierarchical Empowered Innovative and agile Collaborative Customer-centric Open Growth hacker Passion/learning Data driven
  36. 36. 01 Clear principles: data driven, open, inclusive, iterative, simplicity, context 02 Policy first, user need secondary 03 Working back from user need Digital transformation agility GOV.UK case study 36Econsultancy econsultancy.com/transformation
  37. 37. Digital transformation agility The end of sustainable competitive advantage 37Econsultancy econsultancy.com/transformation Digital transformation is a multi-faceted opportunity touching many areas of the business The purpose of strategy has changed from trying to secure sustainable competitive advantage to exploiting a series of transient competitive advantages that in themselves combine to form long-term advantage. McGrath based this assertion on research that looked at companies which had a market cap of over $1Bn and that had, over the period 2000-2009, sustained a net income growth of 5% above global GDP.
  38. 38. Digital transformation agility Changing shape of business 38Econsultancy econsultancy.com/transformation The Boston Consulting Group ‘Growth Matrix’ Revisited Cash cows generated a smaller share of total profits (25% lower than in 1982), and were proportionately fewer, with the life span of this stage declining Greater, more systematic experimentation
  39. 39. Spin-offs Labs Organisational change Digital transformation agility Approaches to agile 39Econsultancy econsultancy.com/transformation
  40. 40. Digital transformation agility 70-20-10 approach to innovation 40Econsultancy econsultancy.com/transformation Budget split Life stage Objective KPIs Team 70% Core/oldest products Small growth Maintain profit ‘Rowing team’ 20% Young/mid Increase share and profit Profitable growth ‘White water rafters’ 10% New Prove leap of faith Solving user problems ‘Diving for sunken treasure’
  41. 41. Digital transformation agility The key elements of change 41Econsultancy econsultancy.com/transformation Vision Vision Vision Vision Vision Action Plan Action Plan Action Plan Action Plan Action Plan Resources Resources Resources Resources Resources Incentives Incentives Incentives Incentives Incentives Skills Skills Skills Skills Skills = Success = Confusion = False starts = Frustration = Resistance = Anxiety All respondents in the research recognised the need to align a number of different but essential aspects in order to facilitate the change to more agile approaches, enhance innovation, and drive digital transformation. A suitable model for effective organisational change incorporates five key elements: vision, skills, incentives, resources, and an action plan. Significant challenges arise if one or more of these elements are missing. Knoster T, Villa R, & Thousand J. (2000). A Framework for Thinking about Systems Change. In R. Villa & J. Thousand
  42. 42. Digital transformation agility Building blocks for leading change 1. 2. 3. 4. 5. 6. 7. 8. CREATE URGENCY FORM A POWERFUL COALITION CREATE A VISION FOR CHANGE COMMUNICATE THE VISION EMPOWER ACTION CREATE QUICK WINS BUILD ON THE CHANGE MAKE IT STICK Creating the climate for change Engaging & enabling the organisation Implementing & sustaining for change 42Econsultancy econsultancy.com/transformation Kotter International, John Kotter
  43. 43. Digital transformation agility Pinterest agility case study 43Econsultancy econsultancy.com/transformation Quarterly planning, mission control meetings, company- wide progress meetings, 2-pizza teams, high/low/no lights Shared values, PDRs, Workshops, cultural interviewers, key principles and strategic anchors Ownership mindset, beyond the job description, expectation, autonomy, mastery, purpose Tight feedback loops. Reflection time, Go, Reflect, Adapt Agility = Velocity x Flexibility
  44. 44. Thank you 44 Contact us and start your transformation Talk to us about an initial consultation. We’ll discuss your toughest challenges, outline our methodology and come back with a proposal. transformation@econsultancy.com EMEA: +44 (0)20 7269 1450 US: +1 212 971 0630 APAC: +65 6653 1911 Econsultancy econsultancy.com/transformation

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