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Book digital manifesto as a presentation
- 1. DIGITALIZATION AS A BUSINESS When business and IT become one
- 2. ABOUT ME • Deployed in 1974 • Mechanical Engineering and Business Administration • Consultancy • Line Management • Writer
- 3. TODAY’S JOURNEY • A digital tsunami • Surfing the tsunami • Sharing views
- 5. Filtering technology promises to alleviate this burden of choice by giving us more relevant personalized content, requiring marketers to meet the expectation of personalization on the same level. Amazon, Google and Facebook have already paved the way for this level of filtering. MORE THAN A WAVE
- 6. EXPONENTIAL ACCELERATION (Book: Second Machine Age)
- 7. FADING INDUSTRY BORDERS • Rakuten Ichiba (Japan) • largest online retailer • e-money provider • issued > 20 million credit cards • mortgages • security brokerage • travel portal • instant message app (>800 million users) • Amazon (U.S.) • e-commerce • cloud computing • logistics • consumer electronics (e.g. eBook readers) • Tencent (China) • social media • gaming • finance • and many other activities
- 8. HUMAN IMPACT - MCDONALDS e.g. Creator’s transparent burger robot (VCs: Google GV, Root Ventures) The cooks The service staff Improved service (e.g. delivery at table) 40.000 restaurants e.g. AI powered interface by Astound
- 9. CUSTOMER IMPACT • Business-2-Consumer • customer as supplier • “free” • “hooks” • ecosystem • personalization • instant gratification • Business-2-Business • specialization • shifting profit pools • ecosystem • b2c experience
- 10. Filtering technology promises to alleviate this burden of choice by giving us more relevant personalized content, requiring marketers to meet the expectation of personalization on the same level. Amazon, Google and Facebook have already paved the way for this level of filtering. CUSTOMER IMPACT – PERSONALIZATION
- 11. Filtering technology promises to alleviate this burden of choice by giving us more relevant personalized content, requiring marketers to meet the expectation of personalization on the same level. Amazon, Google and Facebook have already paved the way for this level of filtering. CUSTOMER IMPACT – INSTANT GRATIFICATION
- 12. BUSINESS IMPACT – VALUE STEAMS • Shift • Concentrate • revenue Facebook: $1.355.434 per employee • revenue Microsoft: $935,254 per employee • Conversion • user generated content → ad revenue → platform revenue
- 13. February 2016 WINNER TODAY, LOSER TOMORROW • Nokia shipped 468.4 million phones in 2008 • Microsoft introduced last new smartphone in January 2016 • Nokia HDM shipped 8.7 million smartphones in 2017 • Xiaomi announced first phone in 2011 • Xiami shipped 92.4 million phones in 2017 • Xiaomi saw 75% growth in 2017 • Negative growth for Apple, Samsung, Huawei, ZTE, Lenovo, Meizu in 2017 (percentage of total market, units)
- 14. A DIGITAL-FIRST WORLD • Exponential acceleration • Sectors without borders • Hyper-personalization • Instant gratification • Winner-takes-it-all But, • Winner today, loser tomorrow
- 15. SURFING THE TSUNAMI As an (IT) executive
- 16. #1: THE SURFER MATTERS, NOT THE BOARD
- 17. SCARCITY DRIVES STRATEGIC ADVANTAGE • IT doesn’t matter and for the same reason: • Cloud doesn’t matter • IoT doesn’t matter • AI doesn’t matter • Blockchain doesn’t matter • VR/AR don’t matter • 3D printing doesn’t matter “You only gain an edge over rivals by having or doing something that they can’t have or do.”
- 18. SCARCE: ‘WALLED’ DATA • Concentration of customers • Facebook: 2.23 billion • Android: 2.3 billion • iOS: 1+ billion • Amazon: 310 million • (In)visible network • Profit concentration • Bargain power • Any data is valuable only when turned into insights “data is the new oil of the digital economy”
- 19. SCARCE: TALENT • These cannot be automated: • entrepreneurship • creativity • flexibility • applying expertise • But matter and are scarce! In a world where: • everything else is automated • money is superabundant “How can we recruit, deploy, and develop people to deliver greater value to customers—and do so better than the competition?”
- 20. February 2016 LEADING TALENT • Talent knows it is scarce • Talent expects: • a tantalizing vision • clarity of goals and objectives • challenging opportunities that allow them to grow • timely, constructive feedback, trust • ability to share their achievements • Talent expects leaders
- 21. Filtering technology promises to alleviate this burden of choice by giving us more relevant personalized content, requiring marketers to meet the expectation of personalization on the same level. Amazon, Google and Facebook have already paved the way for this level of filtering. LEADERSMANAGERS • Create value • Selling what and why • Tolerate ambiguity, delegate • Vision and goals, effectiveness, long-term • EQ and IQ, cannot be taught • Growing demand: high-end retained team, cannot be automated • Count value • Telling how and when • Seek stability and control • Problem solving, efficiency, short-term • Emphasis on IQ, can be taught • Shrinking demand: automation, self-organization “while there is value in the items on the right, we value the items on the right more”
- 22. Laziness (‘there is always another sprint KEY CHALLENGES – ACCESS TO TALENT Why the difference? Microsoft • $520k net income per employee • $117k average salary Facebook • $752k net income per employee • $155k average total compensation Most popular Employers: • Apple • Amazon • Alphabet (parent of Google)
- 23. #1: THE SURFER MATTERS, NOT THE BOARD • Only talent matters • #curious, #proactive, #creative, #extravert, #business-oriented, #change • Leaders attract and retain talent (plus high margin business models) Key objective: win global war on talent
- 24. #2: IT HAPPENS OUT THERE
- 25. February 2016 SHIFTING ROLE OF I.T.
- 26. Customer segments: • few, all internal • internal IT supply monopoly Channels • single (e.g. server-client) Value proposition • homogeneous, stable • functionality-driven Value streams • increase business efficiency PRE-INTERNET I.T. POST-INTERNET I.T. Customer segments: • multiple, internal and external • business has abundance of choice Channels • multiple (e.g. apps, web, legacy) Value proposition • diverse, dynamic • value and experience driven Value streams • increase business effectiveness • increase business efficiency
- 27. February 2016 POST-INTERNET I.T. - EXAMPLE
- 28. February 2016 POST-INTERNET I.T. - EXAMPLE
- 29. Focus on efficiency (doing the things right) PRE-INTERNET I.T. POST-INTERNET I.T. Focus on effectiveness (doing the right things) and efficiency • Lower cost • Introduce a new value proposition • Increase customer retention • Enter new markets • Strengthen USP’s • Seamless value chain integration • Lower cost
- 30. #2: IT HAPPENS OUT THERE • As business models digitalize • customer of business is customer of I.T. • key partner of business is customer of I.T. Key objective: think outside in
- 31. #3: MORE THAN ONE
- 32. APPLEGOOGLE • Generic strategy: differentiation • Product portfolio • narrow (20+) • stable (iOS 11 supports iPhone 5S) • Strong vertical integration • Mandate: consolidated at the top • Design-centric • Lean: think before doing • Generic strategy: differentiation • Product portfolio • broad (250+) • dynamic (20+ discontinued 2014-2017) • Horizontal orientation (e.g. Android), some vertical integration (e.g. acquisition Motorola) • Mandate: delegated to teams • Engineering-centric • Agile: do, check, adapt
- 33. February 2016 DIFFERENTIATION – OUTSIDE IN Market Network Company Individual Individual • Specialist versus generalist • IQ versus EQ • Knowledge versus soft skills • Extravert versus introvert • Leader versus manager Market • Stable or dynamic customer demand • Few versus many competitors • Low versus high technology density • Short versus long lifecycles • Limited versus extensive regulations Network • Narrow versus broad partner network • Homogeneous versus heterogeneous capabilities • Close versus loosely coupled collaboration Company: • Long-term strategy versus short- term tactics • One versus multiple business models • Narrow versus broad product portfolio • Decentralized versus centralized decision-making • Uniform versus differentiated governance framework Team • Homogeneous versus heterogeneous composition • Small versus large in size • Domestic versus internationally dispersed • Foundation IT versus Entrepreneurial IT Team
- 34. DIFFERENTIATION 101 • The business needs: • more than ‘Agile’ • coherent and aligned IT operating model • flow • The IT continuum • from Entrepreneurial IT (or ‘enabling IT’) • to Foundation IT (or ‘factory IT’)
- 35. February 2016 DIFFERENTIATION AT DIFFERENT LEVELS
- 36. #3: MORE THAN ONE • IT has to sense change at • market / company level • business line / portfolio • customer segment • IT has to differentiate (e.g. think and act fast and slow) Key objective: ‘peel the union’
- 37. BREAK
- 38. Laziness (‘there is always another sprint THE STORY SO FAR
- 39. #4: NOTHING CAN STOP TIME
- 40. February 2016 EVERYTING FLOWS Time + Valuestreams + 0 e.g. hyped game, fashion e.g. shared HR Solution, bread Effect of enhancements
- 41. February 2016 EVERYTING FLOWS (2)
- 42. February 2016 ORGANIZING FLOW IT perspective • Business-IT cooperation • Innovation orientation • Leadership & Management • Talent management • Sourcing orientation Business perspective Business lifecycle phase Introduction Growth Mature Decline Market growth Low to high High Low to steady Decline Level of uncertainty High Medium Low Low Price point High Steady to decline Decline Low (recover variable cost plus margin) Number of customers Small (early adaptors) Growing quickly, break through Large, mass market Declining Investment in fixed assets Low (Very) high High, moving to low Asset recovery Profit Negative Average High Medium to nil Analogue business model Digital business model
- 43. February 2016 ORGANIZING FLOW (2) Digital business model Analogue business model IT also optimized for effectiveness and agility IT optimized for efficiency and robustness Fusion business and IT capabilities Business and IT in discreet silos Business paradigms Business IT Alignment paradigm Banking
- 44. February 2016 In car production, we’ve got… • Everything is beautifully integrated car production lines, not these disconnected tool chains. • Everything is managed as products, not as projects. • Everything is architected around flow, not technology layers, front-ends, back-ends, and so on. • Everything is architected around these product lines. • Everything is optimized end-to-end, not optimized in silos. • Everything of course is managed by business result and not these proxy metrics of one aspect of the silo. ORGANIZING FLOW (3) Mik Kersten
- 45. #4: NOTHING CAN STOP TIME • Business continuously reshapes IT (and vice versa!) • Multiple lifecycles • business – technology - value proposition • loosely - tightly coupled Key objective: facilitate frictionless flow
- 46. #5: BUILDING TO LAST
- 47. Laziness (‘there is always another sprint BEFORE ANYTHING ELSE (Nassim Taleb) ‘The turkey's feeling of safety was at its highest point just as its risk was at the maximum’ ‘ Large’ and ‘robust’ are overrated → • Love small mistakes (fail cheap, fail fast, fail often) • More functional redundancy (less optimized for short-term) • Adjust based on events (instead of analyzing history)
- 48. Laziness (‘there is always another sprint SECOND PLACE
- 49. THE BUILDING BLOCKS • Team (consisting of Talent) • common purpose • ‘divine discontent’ • ‘psychological safety’ • aligned (e.g. current situation) • clear roles and responsibilities • Leaders make or brake teams • unambiguous • compensate • diversity • trust
- 50. February 2016 THE BUILDING BLOCKS – BUSINESS MODEL
- 51. February 2016 THE BUILDING BLOCKS – BUSINESS MODEL (2) Business Domain IT DomainEnvironment Cost StructureValue Streams Customer Relationships Value Propositions Key Activities Key Resources & Architecture Key Partners Channels Customer Segments Business Domain IT DomainEnvironment Customer Relationships Value Propositions Key Activities Key Resources & Architecture Key Partners Channels Customer Segments Cost StructureValue Streams
- 52. February 2016 ORGANIZING THE TEAMS e.g. DevOps, Scaled Agile e.g. Crowd sourcing R&D, design thinking, instant feedback, prototyping
- 53. February 2016 ORGANIZING THE TEAMS (2) Organic structure, multidisciplinary teams, delegation, self-organization Extensive forecasting and planning Few departments, much boundary spanning Tinker, fail fast Leaders, talent, diversity mechanistic structure, formal, centralized, control from the top Many departments, much boundary spanning Managers, qualified workers Manage the flow
- 54. February 2016 THIRD PLACE – ENTROPY OR DISORDER Fading Industry Borders Exponential Accelleration Cobol or Fortran to hundredths of development languages 15 new Azure releases per month Thousands of different devices using Android Internet of Things ……
- 55. APPLEGOOGLE Devices using Android in 2015 24.000 according to Quartz Devices using iOS in 2015. Something like this: • iPad 2, iPad 3, iPad 4, iPad Air, iPad Air 2. • iPad mini, iPad mini 2, iPad mini 3. • iPhone 4s, iPhone 5, iPhone 5c, iPhone 5s, iPhone 6, iPhone 6 Plus. • iPod touch (fifth generation)
- 56. Laziness (‘there is always another sprint FOURTH PLACE – TECHNOLOGY DEBT Speed-to-market (Facebook: “Move fast and break things” (2004 – 2014 ) Emphasis on functional features “Faitful Servant” behavior towards business Unbalanced Dev team (e.g. autocratic lead developer) Laziness (‘there is always another sprint”)
- 57. #5: BUILDING TO LAST • Encourage ‘divine discontent’ • Reduce friction • business paradigms • business language • More than one business / operating model!? Key Objective: run IT as a business (don’t forget: talent first!)
- 58. #6: SUCCESS!?
- 59. UNDERSTAND SUCCESS • A high performance development team does not equal success • Effectiveness: “the degree to which something is successful in producing a desired result” • Efficiency (e.g. hours / story point) is a dissatisfier
- 60. UNDERSTAND SUCCESS (2) • Success is not binary • Business executive • Business user • IT executive • Ops team, other stakeholders • Success ≠ realized backlog • Who is the helicopter pilot?
- 61. February 2016 SUCCESS IS FLUID Time + Relativevalue + 0 Time + Relativevalue + 0
- 62. February 2016 SUCCESS IS INTERDEPENDENT Successes, ‘cash cows’, low risk profile Funding, brand, markets, generic capabilities
- 63. February 2016 SUCCESS IS INTERDEPENDENT (2) Business Domain IT Domain Joint Business IT Benefits IT Benefits Joint Business IT Risk Environment IT Risk Business Benefits Business Risk
- 64. #6: SUCCESS!? • Value streams • shift • concentrate • convert • eye of the beholder • change • joint effort • outcome Key objective: prepare today for tomorrow’s success
- 65. THE STORY
- 66. February 2016 THE STORY (2) Talent and Leaders matter It happens out there More than one Nothing can stop time Building to last Success!? Teams Customers Needs Time Organization Wealth serve that have that change overrequiring to deliver that can be invested in Multiplier: high margin business model
- 67. SHARING VIEWS
- 68. THANK YOU