Master Digitalisation - Building the Innovation and Transformation Hub
In this is the article in the Mastering Digitalisation Series describes the why and what of the ITOC. In our overview article, we already stated that the ITOC (Innovation – Transformation – Organisational Change) unit is the key to solid managed Innovation. At first, we would like to tackle the why question.
The role of a Digital Transformation Manager and his staff doesn’t imply that an organisation is capable of managing and transforming with these innovations the enterprise. But the missing link, directly into the business organisation. The business department is the place where ideas are created. Innovations must be market by the ITOC to the business departments, as only the business departments decide about the implementation. As these topics are often not taken into account, is why these initiatives will fail in the long run. Bringing innovative ideas, new technologies and the knowledge of the running business together is what transforms your enterprise to a digitally enabled company in a timely and profitable way. ITOC has a direct link to the business departments via the domain experts.
The ITOC is the executive organ of innovation management. The roles bundled under the roof of the ITOC are already present in any enterprise. What the ITOC does is to empower these roles to drive innovation and change management. Keeping the experts from technology, business and change management together in one department will enable the synergies.
Digital Transformation is always bound to overcome the classic siloed structure to be fast, more focused on the topic and not on the organisational silo. The ITOC packs the roles which are bound to the different silos and empowers them to think end-to-end. We show later what benefits each role will bring to the team. Innovations are not created by the crowd. They are a product of individual passion. Growing ideas from seeds to vigorous plants is what only a few people can do. You need personalities in the ITOC who can keep more than three balls mentally in the air. Such characters are rare, but they exist in small numbers in each enterprise to fill the rack of the ITOC. These talents must be actively scouted by HR.
The ITOC is not your blacksmith, who forms ideas to excellent products. ITOC requires the involvement of the business through the innovation management process. The end-to-end focus of the ITOC on technology, processes and organisation is the unique selling point of this approach over the digital lab. The digital lab approach could be one puzzle piece for the implementation of innovation.
The end to end view
Below we have a real-life example from a digital lab approach which pictures the difference the ITOC will make.
A new mobile app was introduced, which had the management goal of a full digital case management. The organisation working on the case clearance is not fully aware of this new digital case handling. The Digital Lab had created the app in record time, but a few bumps are still there. The business side anticipated that it doesn’t change their process because it will add only a new input channel. The expectation from the customer was that they have a fully digital communication about all their cases, questions and responses.
Customer did early complain to case management that the app is not useful. The app remained on the market, but the use of the app was a small fraction of the expected figures. The product owner had the goal to launch and maintain the app. The line manager didn’t follow the acceptance problem with the app. His digital goals were fulfilled with the distribution of the app. The ROI was never reached because of the high maintenance cost by the IT organisation. The support organisation did know about the complains but did see the change of their systems and process as a no-go since they had other priorities.
The example from above illustrates where most Digital Transformation Initiatives fail. Going fast doesn’t mean being successful. Nor does it that the solution has a real transformation aspect in it. The management KPIs will be fulfilled, but the required long-term improvement of such initiatives will never be met. A short term ROI could be possible with luck.
The innovation in the example is not the App itself. The innovation is what the customer expected: A full end-to-end communication realtime communication between customer and service. In the example, the app fails here. Adding only a new input channel attracts only management but not customers.
Would the idea of having an app for case management brought up to the ITOC, the domain experts had anticipated the change to the support organisation. Early involvements of the line managers in the concepts were guaranteed. In the end, the business case would be sustainable.
The role of the ITOC to deliver a holistic picture is the key here. This picture should not be fully drawn. It is more a sketch which shows the message the finished painting will have.
Developing the app first and going to market is not a bad approach and guarantees that you don’t waste resources on backend integration. This is where we slice the picture in eatable chunks. If the app never reaches a critical state, money and resources are saved.
The innovation concept must already anticipate that in later steps, the processes and system integration allows communication back to the app. Keeping the customers informed that this would come in the next version of the app will not slow the adoption rate of the app. Customer expectation will be maintained to a level where confidence in the brand is built.
The ITOC has to market this end-to-end scenario to the business owners of the support processes. Their processes have to be changed to deal with a new back communication channel, which is fast and provides direct feedback. The business owner must understand the transformation of their current organisation and the training requirements for the staff.
In the example, the ITOC is the brace around these two different streams and different timelines:
Developing a well-received app for the customer
Changing the processes, organisation and their support tools to deal with the new communication channel
In defining innovations, ITOC has to describe the required transformation to digital-enabled communication. Innovation must be market to the business owner for the change management aspect. Otherwise, the transformation of the organisation will not keep up with the process and technology evolution. The defined innovation is the Minimum Valuable Product. Adding features to the MVP should be in separate loops afterwards. The MVP couldn’t be reached with the app alone since it didn’t reduce processing costs and time. The primary cost reduction is driven by shorter case duration and fewer communications costs. This will eventually free up resources.
Besides developing the end to end innovation concept, the ITOC has a strategic role. In managing the innovation process, they detect discrepancies in the execution of the strategy and contradictory management KPIs. We illustrate this in a little real-world example:
Customer Department had the initiative to support the customer in their Digital Transformation initiatives. Through this discussion, raw data of service usage were provided at no cost to the customer. The customer is now able to monitor and modify his service usage. In the end, they optimised their service costs. The department manager of service operation allowed the use of this data by the customer department. He expected a small impact on his department. Inside the service operation department, they tried to achieve better utilisation of their infrastructure and reducing the service cost. This effort was based on the same data as the customer department has offered to the customer. Now we had a counteracting double optimisation, where the goals for infrastructure cost reduction couldn’t be reached.
In the case of a working ITOC, these counteracting strategic initiatives would have brought up to the management and consequences were shown. Booth ideas came up from the business departments. If the ITOC had picked up the ideas from the two business departments, it could lead to the following scenario:
The customer could get the raw data in return for more information about his service use ecosystem. With the information about the ecosystem, the infrastructure could be optimised before the customer would be able to draw conclusions from the given data. This would keep the commercial edge on the provider side. The customer had the feeling that they are in control of their service usage. A win-win scenario is created for both departments.
Both department leaders tried to fulfil their KPI’s, but the implications were not obviously visible. The scenario provided within the ITOC approach let booth departments leaders into the green-zone of their management goals.
The required overview about strategy and the implication on business initiatives is not achievable with da digital lab approach. The domain experts bring back this departmental knowledge to the ITOC, where the conflict is matched with the knowledge about the digital strategy.
The example illustrates how important it is that ITOC is directly involved in strategic planning and how management KPI’s will affect by strategies execution. The ITOC can prevent the optimisation within silos and will lift innovation to a new level for global enterprise ROI.
To achieve this, a clear commitment from top management for the ITOC as the steering department for innovation is mandatory. As already said in the overview article, the feedback loop from ITOC to the steering board for the business strategy is vital. ITOC shouldn’t be used as a clearinghouse for counteracting management goals.
Manage technology marketing
The last example is about picking up new technology:
The top management has given the strategy of open data. Any data available should be usable across departments if not restricted by law. Department leaders started initiatives to get the most out of the available data. The assumption was that the companies AI platform should detect unknown correlations, which would then be commercially usable. Projects were started to fulfil this strategy, but all failed because of the following reasons:
Legal constrained where interpret much broader to keep data within the business unit
Data stewardship to identify the owner of data was only rudimental implemented
AI platform didn’t work with a well-formulated problem description
These three points address the core reasons why many initiatives fail. The ITOC has to link each initiative with Data Governance and IT Security. The ITOC pushes these governmental roles to keep up with the technology progress. Governance roles have to change their approval concept from check for conformity to allow what is not forbidden. The safe harbour of rules has to be left to innovate. Management must be aware that they take more risks, with the approach but in return, get faster innovation.
Digitalisation is about data. If no effective data stewardship on the business side is implemented, it will end with wasted money and resources. Projects will fail late instead of dealing with the subject early. The ITOC must check with the Data Stewards about the usage scenarios in the proposed innovations. Active support of data stewardship in the use of data is required to innovate with data.
The last point where ITOC excels is in this example to manage the expectation of technology usage. Vendor marketing tells a hell what is possible but misses the context of the company. Only the IT architects with excellent common knowledge about technology can raise the right questions to the technology vendor. They have to translate the vendor enthusiasm to a suitable company internal marketing for the business departments. In the example, the business departments must understand that a generic approach to AI will deliver generic answers. Therefore they must narrow there approach to AI if they look for usable results. The business owners have to define in the example some questions they would like to have answered and can be answered by the existing data and the given data quality.
A most prominent fail, which illustrates the last paragraph, was the attempt to know more about customers and prospects. A vendor provides the solution to gather the data on an infrastructure layer. For each customer, an abundance of data was now available. Neither service nor sales could do anything useful with data, because it missed what is relevant and active and what was in the past and did no longer fit in the context of the customer. The initiative failed because of no clear Minimum Valuable Product. It was a simple technology-driven approach where the marketing of the vendor did appeal the business line managers.
The examples above have shown where the ITOC provides added value beyond their costs. ITOC is an active governance and strategy implementation instrument. ITOC live with the people who fulfil their roles. HR has to scout the right types of personalities, which are generalists with knowledge and communication capabilities above the common knowledge worker.
Give ITOC the power to transform organisations, business processes and technology, is key to success. This removes responsibilities from other departments. Enterprise Architecture with the focus on business will move to ITOC, whereas IT keeps only the capabilities for service fulfilment. The domain experts get out of their departmental silo to work across business units within the same domain. This is essential for larger enterprises to consolidate, where it makes sense and be different where it will add to the unique selling point.
Each example above have shown that organisational change is always touched. Therefore it is integral to the ITOC. The benefit of this integral approach is to detect early change management requirements, which take much longer to implement than implementing the technical solution.
ITOC is required to lift the average innovation potential. As known form the psychologic science a bigger crowd does always mean a lower average. But picking those personalities which can contribute most to fostering innovations will raise this average innovation potential substantially. Looking at successful companies it is never the crowd that makes the difference. Only a few people with a dedication way above average are making the difference.