In this Point of View Formicio explores the important difference between digital automation and digital disruption, and the digital organisational capabilities needed to successfully shift an organisation’s trajectory to one that leads to a digital future.

1. Digital Strategy – Closing the Gap
between Your Current Digital Reality
and what is Digitally Possible
A Formicio point of view

2. Advances in digital technology are having a profound impact
on all organisations
 The world is becoming more digital
 Digital technologies have changed the way
we work, communicate, travel, manage our
health and are entertained
 Individually and collectively, they enable us
to do things that were simply not possible
– or economically viable – a few years ago
 Advances in digital technologies will
continue to challenge our thinking on how
our organisations could and should operate
© 2016 Copyright Formicio Limited 1
“The future is already
here — it's just not very
evenly distributed.”
William Ford Gibson
American-Canadian writer
1948 -
The question is: not if your organisation needs to become more digital,
but to what extent, and at what pace?

3. Digital technologies are the enabler – real value comes
from bringing what’s digitally possible into your reality
Examples include 5G mobile, big data, wearable devices,
HTML5, Watson, 3D printing, IOT, NFC, digital
currencies, digital robotics, context-aware computing
© 2016 Copyright Formicio Limited 2
Value comes from making sense of the digital
trends and applying them in your organisation
Digital technologies create trends,
eg intelligent processes, omni-channel
customers, data-centric enterprises,
platform-based businesses, cyber-crime

4. For most organisations the challenge is keeping pace with
the possibilities that digital technology brings
 The number of digitally mature organisations
ranges from 38% in High Technology to as
low as 7% in Pharmaceuticals
Source: Capgemini
 ‘Pure-play’ digital organisations like Amazon,
Facebook and Uber have grown up ‘being
digital’ – it’s their normal way of ‘being’
 In most organisations the pace of becoming
digital is characterised by a passive reaction
to market forces rather than strategic intent
 For many organisations the challenge is
knowing where to digitally automate and
where to digitally disrupt
© 2016 Copyright Formicio Limited 3
“This ‘telephone’ has too
many shortcomings to be
seriously considered as a
means of communication.
The device is inherently of
no value to us.”
Western Union internal memo,
1896

5. Advances in digital technology are driving both digital
automation and digital disruption
Digital
Automation
Digital
Disruption
Strategy Focus on efficiencies
Focus on new sources
of value
Business model
Essentially the same,
but more automated
Reinvented and
transformed
IT architecture
Based upon existing IT
platforms
Based upon radically
different IT platforms
Organisational
capabilities
Available, but in short
supply
New, different and
scarce
Delivery
approach
Structured, managed
projects
Agile and adaptive
experiments
Leadership Provide the resources Create the context
Culture
Risk averse and silo
thinking
Inter and intra
organisational
collaboration
© 2016 Copyright Formicio Limited 4
All organisations
need to decide
the degree to
which they
should digitally
automate and the
extent to which
they should
change more
radically in the
face of digital
disruption
The Digital Spectrum

6. For most organisations the gap between their digital reality
and what’s digitally possible is widening
What’s digitally possible
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Capability
Time
Corporate digital strategy
Organisational digital reality
The three digital trajectories:
What’s digitally possible – Advances in
digital technology that have the
potential to automate and/or disrupt
today’s business models
Corporate Digital Strategy – Advances
in strategic thinking that deliver value
through digital automation and digital
disruption
Organisational Digital Reality –
Advances in an organisation’s ability to
successfully operationalise their digital
strategy
Being more digital involves closing the gap between:
 What’s digitally possible and your corporate digital strategy – by developing your
ability to develop digital strategy
 Your corporate digital strategy and your organisational digital reality – by developing
your ability to operationalise digital strategies

7. Many organisations have yet to take action to close the gap
between their digital reality and what’s digitally possible
Calling in the digital consultants
Appointing a Chief Digital Officer (CDO)
Ring-fencing funding for ‘digital’ projects
Re-labelling existing projects as digital projects
Launching a set of ‘digital’ pilots
Creating a digital cell
Partnering with external organisations
Acquiring a ‘pure play’ digital company
Attending conferences
Taking a university short course
Participating in digital technology study tours
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 The question is not whether
these and other actions will
close the gap, but whether they
will do so at the pace needed
 If not, your current digital
reality is unlikely to change and
the gap will widen …
 … and your chances of
competing – and in some cases
surviving – in the increasingly
digital future are limited
digital

8. Closing the digital gap is about taking action to change the
trajectory of your organisation – to one that is more digital
 All organisations are on a trajectory, a path
that takes them from where they are now to a
future state
 This trajectory is a manifestation of strategy –
a strategy that has either been intentionally
and explicitly defined or has evolved over time
 Organisations that want a more digital future
need to make informed choices on the best
actions to put them on a digital trajectory
 A major factor determining an organisation’s
trajectory is its organisational capabilities
© 2016 Copyright Formicio Limited 7
“The secret of change is to
focus all of your energy,
not on fighting the old,
but on building the new.”
Socrates
Classical Greek philosopher
c 470 BC – 399 BC
The challenge is less about the technology and more about having the
strategies and capabilities in place to realise what’s digitally possible

9. Transitioning to a digital trajectory requires different
organisational capabilities to those of the past
Organisational capabilities:
 ... are formed from shared mental
models; established practices;
common language; mindsets and
beliefs; and shared experiences
 ... are embedded in the organisation
and not lost when key individuals leave
 ... determine how the organisation
operates and behaves
 ... are different from the skills and
competencies of individuals
© 2016 Copyright Formicio Limited 8
Organisational capabilities are
like muscles – the more they
are used the stronger they
become
The stronger they become, the
more they shape culture and
establish organisational habits
Ultimately, organisational capabilities define an organisation’s trajectory

10. Some organisational capabilities can ‘pull’ the organisation
to a digital future, while others anchor it to the present
Some organisational
capabilities can shift an
organisation’s trajectory by
‘pulling’ it to a digital future
Other – more established –
organisational capabilities can
‘anchor’ an organisation to its
current trajectory
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Changing an organisation’s trajectory requires some organisational
capabilities to be introduced, others strengthened and some weakened

11. Transitioning your organisation to a digital trajectory
requires strong ‘strategic’ organisational capabilities
Strategic organisational capabilities include
the ability to:
 Confront your digital future – by
understanding where your current
trajectory will take you: your default future
 Develop a digital strategy – by defining
the actions needed to change your current
trajectory to one of digital automation and
digital disruption
 Operationalise your digital strategy – by
creating the conditions that ‘pull’ your
organisation to its digital future
© 2016 Copyright Formicio Limited 10
“The difficulty lies not so much
in developing new ideas as in
escaping old ones.”
John Maynard Keynes
British economist
1883 - 1946
Additional capabilities will be required depending on your chosen digital
strategy, eg SOA management, data analytics, managing service platforms

12. Five questions to ask if you are serious about being more
digital
1. Do you understand your current digital reality; the
future that your current trajectory is taking you to?
2. Do you understand the organisational capabilities
you lack and those that are keeping your
organisation on its current trajectory?
3. Does your digital strategy distinguish between
digital automation and digital disruption, and
where each should apply across the organisation?
4. Have you identified the organisational capabilities
needed to change the trajectory of your
organisation to one that leads to a digital future?
5. What actions are you taking to put these digital
organisational capabilities in place?
© 2016 Copyright Formicio Limited 11
“The important thing is
not to stop questioning.
Curiosity has its own
reason for existing.”
Albert Einstein
1879-1955

13. Key points revisited
© 2016 Copyright Formicio Limited 12

14. This Formicio point of view was prepared by …
© 2016 Copyright Formicio Limited 13
Dr David Trafford
david.trafford@formicio.com
David is passionate about helping organisations develop
the capabilities needed realise the full potential of current
and emerging digital technology. His expertise is in
developing and operationalising strategy.
Peter Boggis
peter.boggis@formicio.com
Peter believes that all organisations need to be innovative,
and that innovation is an organisational capability that
can be developed. His expertise is in developing insight
through experiential learning.
Frank Dannenhauer
frank.dannenhauer@formicio.com
Frank’s passion is in helping senior leaders deliver major
transformation change. His expertise is in building
organisational capabilities for the future, especially in
international and complex organisations.
Formicio was founded in
2010 by a group of highly
experienced consultants
and executives who want
to help organisations
improve their futures.
We chose the name
Formicio from two Latin
words, FORMO (to form or
shape) and PROFICIO (to
advance, make progress,
benefit, contribute) as we
thought this aptly
describes the value that we
aim to bring to our clients.

15. We hope you found this point of view on closing the gap
between digital reality and what’s digitally possible of value
© 2016 Copyright Formicio Limited 14
Our point of view is based
upon insights and experience
that we have gained over time
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The aim is to inform and
inspire
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More points of view are
available at:
www.formicio.com/Insights
Having a shared point of view is a
powerful tool for achieving collective
leadership as it can bring shared
insight and understanding.
It can establish a context where
everything makes sense, people know
exactly who they are, what is needed
and why they are here. Effectiveness
is maximal, yet effort is minimal.
Everything flows as it should.
Developing a point of view takes time
and effort, but the outcome will be
worth it.
The Formicio Team

16. © 2016 Copyright Formicio Limited 15
We work with people who want to improve their organisation’s
future. Specifically we can help you:
 Assess your Strategy by understanding your organisation’s
current trajectory and the factors driving it.
 Develop your New Strategy by defining an organisational
trajectory that leads to an improved future.
 Operationalise your Strategy by creating the conditions that
enable the organisation to pull itself to its target future.
Our approach is to help our clients find solutions that work best for
them, while keeping them to their strategic intent
Tel: +44 (0)20 7917 2993
About Formicio