Business Model Shift

Successful new businesses generally start with a digital mindset, however established businesses do not have this luxury. Established organisations must shift to a digital model, they must transform what they already have for a digital age. This is no easy feat, established organisations can have years if not decades of business model evolution entrenched in the analogue age. Transitioning a business that was founded in the 1960s to a digital age can seem like a daunting task, but as we say in agile:

Which is the exact approach we take to evolve an existing business model, one step at a time. Digital transformation is more than simply deploying one or several digital solutions and expecting them to work cohesively, resulting in them being adopted by employees and customer alike. We make sound, reasoned, and evidence based decisions for the future digital transformation of an organisation.

There a four high level general steps to help guide a digital transformation of an existing organisation:

1. Focus: Stay focused on the digital model, it is easy to be sold on a technical silver bullet, there are hundreds of companies consulting as well as vender who will tell you, just implement Sharepoint, implement Drupel, Slack, Teams, any number of digital platforms, however they may or may not be part of your digital answer. Before rolling out, or implementing anything, you must first focus on evolving your business model, then once you have a vision of where you want to shift your business model to, only then should an organisation adjust business process to accommodate it. 
   
   As an organisation begins to review their business model, they will rethink their economical model potentially discovering new revenue streams within existing offerings. They can reconsider value propositions at their base level, unbundling and reconfiguring them for a digital age. The business may change its customer relationships, external partners as well as channels.
   
   
2. Prioritise: focus on one component at a time, it may be a product, process, platform or customer experience, it may be difficult to choose just one, however focusing your efforts on one component, will not only let your employees and organisation get use to the change gradually, it
   will keep the transformation manageable and not focused.
   
   There is no universal way of choosing what is right for your organisation, it depends, on a number of variables, it might make sense to start with the lowest hanging fruit, it may make sense to approach the component that will produce the greatest impact to your employees or maybe for your customers, whatever it will be, it will likely be unique to your organisation. The chooses of priority well most likely be based on your organisations most pressing needs, coupled with the proposed evolution of your business model. 
   
   
3. Start with Culture and People: Technology is merely a tool, true organisational transformation begins and ends with people, hence transforming an organisation culture is the responsibility of people. If the people who make up your organisation do not adopt the its transformation, it will fail. This is why change management must be a key player in any digital transformation, large or small.
   
   Digital transformation is an operational process, as technology and our society evolves, a business must keep pace with these changes, as one business component is transformed the marketplace has a way of evolving. To stay relevant and keep up with the constant marketplace shifts an organisation should priorities the following.
   - What customers want: if customers do not get what they want, they'll move on
   - What employees need: just like customers, if employees do not get what they need, they will also move on.
   - A culture that will support the two: an organisation must adopt a culture that provides employees what they need so that they can provide customers with what they want.
   
   
4. Technology: In todays digital age, employees as well as customers must have the technological channels to support what they need and what they want. Employees need to have the technological support to help them provide customers with what they want. Technological assistance should be considered in every aspect of a business model, how can we use technology to help employees do more with less, help them focus on value added creative work.
   
   Technology needs to support employees in:
   - Collaboration: making working together seamless and simple, supporting work from anywhere with the same simplicity as if the entire team was in the same room.
   - Communication
   - Products and services to supply customers with what they want and need  

Companies can use their internal IT department for day-to-day operations and maintenance, but for digital transformation initiatives that require specialized skills or technologies, they may choose to leverage external partnerships. These partnerships can bring in new perspectives and expertise to help drive the company's digital transformation efforts forward, resulting in increased competitiveness and business growth.

Business Model DT

A business model is a representation of the way a company generates revenue and profits by creating and delivering value to its customers. It outlines the products or services the business offers, the target customer segments it serves, the channels through which it reaches customers, the resources and activities required to produce and deliver its offerings, and the sources of revenue and profits. The purpose of a business model is to provide a framework for a company to achieve its strategic and financial goals and to ensure that its operations are sustainable and scalable over time. 

In essence at a high level it defines the following things:

• What the business does: the service, product or offer it provides to its customers
• How it does it do the thing that provides value
• The value proposition for both the company and its customers
• Current organisational priorities and direction
• Revenue streams
• Strategic partners
• target market
• cost structure
• Plans for the future, growth strategies.
• organisational elements

Transforming an existing business model is more than a few technology initiatives strung together, it's a systemic rethinking of how a business functions. A digital transformation of an organisation can sometimes require a significant business model update, a shift in any of the aspects of a business mode, how you reach your customers, how you generate revenue, who your strategic partners are, any and all facets could require a drastic digital overhaul.

Depending on the unique qualities of an organisations business model along with their level of digital maturity, the organisation may need a drastic digital overhaul, or it may require some digital enhancement of what is already there, most likely something in between. A digital enhancement is either adding a digital channel to the existing business model or augmenting an existing channel with further digital capabilities.

A digital enhancement to an existing business model has the lowest barriers of entry, this is because it is adding capabilities rather than transforming existing ones, digital enhancement are also relatively quick to market. Digitally enhancing a business model could be as simple as partnering with and existing digital entity to augment your services, for example a restaurant could partner with a digital delivers service allowing it to leverage a service such as UberEats.

Another facet of digital transforming a business model are information-based services extensions, these are services which which enhance existing products or service, for example; adding sensors to a product line to provide it's customers with up to date metrics and data, web and mobile apps to provide customers with data, services, and analytics. Creating communication channels for better, quicker and contextually aware support. The barriers of entry are higher because it requires organisations to rethink their core competencies and adjust for a digital age. 

Information-based service extensions is adding a service and support as a product line, this added service could be seen as a loss leader, could be priced into existing revenue streams, can be offered as an upsell depending on what the market is doing and how much direct value to customers it can provide, or the data collected could be resold to a third party. Leveraging information based services to collect important data about a product or services lifecycle and usage, then to use that data to provide a insights or service to the customer, this data could also be potentially sold to a third party.

A third element supporting business model transformation and the one with the highest barriers to entry but at the same time the greatest potential to impact revenue in a positive way is Multisided platforms or MSPs for short. MSPs have already disrupted a range of industries, from taxi services, to food delivery, to lodgings. MSPs are neither the seller nor the buyer, they are the middleman.

Multisided platforms (MSPs) are digital marketplaces, the provide a place for buyers and sellers to connect. The most challenging barrier to MSPs is a chicken and egg problem, MSPs will not attract customers without suppliers, and suppliers will not bother with an MSP who does not have customers, this is why first mover advantage in this space is essential for success. A potential strategy could be to partner with an existing MSP first, and to reassess entering the space once an organisation has established a significant following as well as a trusted reputation.

The digital age has opened up many opportunities for small startups to thrive and succeed in the global marketplace. With access to cloud services providing small businesses access to scalable, affordable, and robust technology infrastructure, eliminating the need for large upfront investments in hardware and software; and the ability to reach a global audience through the internet. The digital age has levelled the playing field in many ways between small startups and larger companies. Small start ups which find it easier to move in an agile mindset can directly compete with larger well established companies that may struggle with legacy systems and slow adoption of new technologies. By leveraging these technologies, small businesses can increase their reach, expand their customer base, and ultimately, achieve their goals and ambitions.

A modern approach to business model design should include

• How the organisation will approach digital business: digital first rather than digital afterthought.
• Continuous digital adaption: Digital innovation is a operational necessity, as technology changes, business need to keep up or risk loosing their competitive advantage.
• Leveraging technology to be the first mover in a new digital space, providing an existing product or service in a new way or leveraging an altogether new digital space that previously did not exist.

There are five archetypes of digital business model transformation.

Archetype	Description	Example
Reinvent the industry	An organization develops a business model that reshapes an entire industry	Airbnb’s digital business model that uses digital resources changed the short-term lodging industry
Substitute products and services	An organization changes how they supply products by substituting or replacing physical formats with digital formats	Netflix moved from shipping physical DVDs on-demand to digital downloads and streaming
Create new digital businesses	An organization launches a new product, service, or business line to meet customer needs and wants	Security as a service companies have filled an ever demanding need from companies to protect agaisnt DOS attacks
Reconfigure value delivery	An organization connects products, services, and information to deliver value in a new way	Auto manufacturers offer built-in roadside assistance, connecting cars to support centers using digital technology
Rethink value propositions	An organization uses knowledge of the customer and their pain points to add flexibility and new features to a product	Smartphones have become indispensable tools because they replace physical items like calculators and cameras and enable people to share and connect

As technology evolves, business model will have to adapt and change or risk falling behind into obscurity. 

Employee DT

Digital transformation has the potential to greatly improve the employee experience by streamlining processes, increasing communication and collaboration, while providing access to relevant information and tools in real-time. These digital advantages can result in more efficient workflows, reduced workloads, and increased job satisfaction. Additionally, digital transformation facilitates remote work options and flexible work arrangements, leading to improved work-life balance and increased employee engagement.

With the use of artificial intelligence and machine learning, manual tasks have been automated, freeing up employees to focus on more strategic and creative tasks. Furthermore, the use of digital tools and platforms has facilitated continuous learning and skill development opportunities, leading to employee growth and career advancement. Overall, digital transformation has positively impacted the employee experience by providing more autonomy, meaningful work, and a supportive work environment.

A digital transformation journey lives or dies by employee adoption, the greatest transformation is meaningless unless the most important stakeholders adopt it, and those are the employee if new ways of working are not adopted, then they may as well not exist. There are three main elements to employee digital transformation:

Augmentation: While it's true that certain traditional jobs may become automated or obsolete, however digital transformation also creates new opportunities.

These new jobs often require a different set of skills and knowledge, which may require employees to upskill in order to adapt. Ultimately, digital transformation shifts the focus of work from manual tasks to higher-value activities such as analysis, decision making, and innovation. In this sense, digital transformation doesn't eliminate jobs, but rather transforms them to meet the demands of the digital age. Employee will generally find more satisfaction with these new digitally augmented roles than the manual repetitive ones of the past.

Future readying: The speed of digital transformation greatly outpaces both academic institutions ability to adapt as well as the number of available candidates on the job market, this is why future readying your workforce is essential for success. It is far more effective to upskill an existing workforce than lose years of experience and bespoke knowledge to hiring new staff. 

This is why it is essential to develop learning programs that are agile, flexible and strategic; ideally in a medium to large transformation, it is essential to have a chief learning officer, someone with a team to ensure that each employee who's role is impacted by the digital transformation has the support they need to embrace the digital change rather than fear it.

Flex forcing: is a combination of providing a work environment along with the training support to broaden the breadth of expertise within a workforce, no longer have T shaped employees with expertise in only one avenue, but rather creating working environments in which employees can work in cross functional teams augmenting their expertise with other related skills. The second factor in flex forcing is to leverage external resources, for non-core, non-operational tasks, leveraging private contractors, the gig economy

Operations DT

Digital transformation can enhance customer experience not just by directly impacting the customer journey, but by enhancing the operational capabilities of the organisation to better service their customers. This is not a new phenomenon, there is not a business on this planet who has not switched from the typewriter to the computer.

These changes are now growing at an exponential rate, too fast for an organisation to adopt each one and to many for any organisation to fully comprehend which ones would maximise value to their operations. A digital transformation team can help an organisation navigate these difficult waters, understand their unique value proposition and leverage new technologies to support and enhance their operational capabilities.

Operational transformation occurs in three elements of digital capability:

Core process automation: This is commonly the starting point for most companies in their digital transformation journey. Historically we can think of factories during the industrialisation period as technology evolved we leveraged robotic arms to perform more and more of the dangerous and carcinogenic work rather than forcing humans to sacrifice their health. 

In the digital age we now leverage technological advances to not only reduce the physical burden on humans, we can now leverage, machine learning and basic AI automation to reduce the cognitive burden on humans as well, freeing employees from the mundane repetitive tasks of low level information work and free their time to focus on value added creative problem solving.

Connected and dynamic operations: Revolves around three main technologies: real-time data collected through IOT devices, retained though the cloud and leveraged by machine learning algorithms to realise concepts such as digital threads or twins, letting businesses leverage realtime data to make informed decisions about their operations.

The term digital thread is also used to describe the traceability of the digital twin back to the requirements, parts and control systems that make up the physical asset.

A digital twin is a virtual representation of a physical object. For example, an elevator would be outfitted with various IOT sensors related to vital areas of functionality. These sensors produce data about various aspects of the physical object’s performance, such as energy output, temperature, humidity, bore of weight and more. This data is then relayed to a processing system and applied to the digital copy. This data can be used to make real time data driven decision on maintenance as well as emergency shutdowns.

Once an organisation is informed with such data, the virtual model can be used to run simulations, study performance issues and generate possible improvements, all with the goal of generating valuable insights — which can then be applied back to the original physical object.

Data driven decision making: Leveraging realtime information for up to the second analytics, providing data to decision makers the most up to date information for their decision making.

Digitally transforming a company's operations involves the integration of technology into all aspects of the business, from data driven decision making to customer service and supply chain management. This transformation helps companies streamline processes, increase efficiency, improve customer satisfaction and gain a competitive advantage. It also enables organisations to collect and analyse data, automate repetitive tasks, and enhance decision-making capabilities. A successful digital transformation requires a clear strategy, strong leadership, investment in technology, and a commitment to change management and continuous improvement. The end goal is to create a more agile, customer-focused and data-driven organisation that can quickly adapt to changing market conditions and customer demands.

Customer DT

In digital transformation there are four primary pillars of value:

• Customer expectations
• Operations
• Employee experience
• Business models

The fundamental pillar of any business is the customer, without them, it is impossible to operate, for they exchange their money for an organizations product and/or service. Without customers any organization large or small, this is why generally the greatest opportunity to add value through a digital transformation is through the customer experience.

Attracting and retaining customers is at the heart of any business and hence at the heart of any digital transformation. Customers are expecting more digital offerings with each year, customers no longer expect a business to have website, and a social media presence, customers now expect virtual agents to answer simple queries, customers expect contactless payment and delivery of their purchase within the same business day if not the next.

Businesses in the coming years will either embrace digital, or be eclipsed by those who do. To remain relative, organizations must apply the principles of customer experience design, similar in principle to user experience design but much broader in scope. Where user experience design focuses on user experience of a particular service or product, Customer experience design focuses on the customers experience with the organization as a whole, each touchpoint, each product, each service must have a consistent and delightful experience, with continuality, if a customer begins a journey with one product as the move between channels their identity and progress must move with them.

To map a customer journey a customer experience designer needs to leverage the same soft skills that a UX designer needs, empathy and creativity to map out the customers journey. The customer journey map is a complex representation of how a potential customer transitions to a loyal customer, it is far too complex and unique to each organisation to create a generic one-size fits all solution. However at macro level, there are five main stages, Awareness, consideration, acquisition, service, loyalty.

These stages are unique to each individual channel, however each channels experience must be as consistent between channels as possible. Each potential and loyal customer must feel that regardless of channel their journey is familiar, simple, and most importantly delightful. Acquiring new customers is valuable, however retaining customers is priceless. 

Each channel touches multiple departments sometimes differently per leg of the customer journey, per channel, understanding these touch points and which department is responsible per channel per leg is essential to providing the maximum customer care, satisfaction and conversion from potential to loyal customer.

Before an organisation can convert a potential customer to a loyal one, it must fist identify the potentials ones, not every person or business is a potential customer. Expending resources on unlikely customers, is a waste which could be better utilised on potential customers. Customer experience designers leverage various experience research techniques to identify and model potential customers to best understand, who they are? where they are? what they want? and any potential pain points that the customer journey needs to address and relieve to successfully acquire a loyal customer.

Digital disruption

Digital disruption happens when one organisation leverages technology to fundamentally change the way an industry works while gaining a competitive advantage, often times resulting in taking a industry or market lead, leaving the competition struggling for survival. Digital disruptors accomplish this by providing more value to customer at a lower capital and labour costs, generally by leveraging technology. 

The past twenty years is rife with such examples:

• Netflix went from a small niche DVD mail service to the market leader.
• Apple went from a failing computer hardware producer to leading the smartphone revolution.
• Amazon went from a small online book retailer to completely revolutionizing the way customers purchase everything from books to toothbrush's to timbre.
  
  

Netflix vs Blockbuster

Netflix was founded in 1997, originally, the company offered a direct DVD-by-mail rental service where customers would order DVDs online, and the company would mail the DVD's to the customers' homes. In 1999, Netflix introduced a monthly subscription service where customers could rent an unlimited number of DVDs for a flat fee. This was a significant disruption to the traditional video rental industry, which relied on physical storefronts.

In 2000, Netflix proposed a partnership with Blockbuster, the largest video rental chain in the world at the time, to handle its online operations. Blockbuster declined the offer, believing that the online rental market was too small to be of any value. This decision would prove to be a critical mistake, as Netflix grew rapidly in the following years and would ultimately put Blockbuster out of business.

In 2007 Netflix introduced its streaming service, allowing customers to watch movies and TV shows instantly on their computers. This revolutionized the entertainment industry, it provided customers with a convenient and affordable way to access an enormous library of content without ever leaving their homes. As the streaming industry continued to grow, Netflix invested heavily in producing original content, such as the critically acclaimed series House of Cards and Stranger Things. This move cemented Netflix's position as the leading streaming service and further accelerated its growth, while Blockbuster continued to struggle with declining revenue and increasing debt. In 2010, Blockbuster filed for bankruptcy, and its remaining stores were eventually sold off to other companies.

Apple vs Research in motion 

In the early 2000s, Research In Motion (RIM) was the dominant player in the smartphone industry, thanks to their Blackberry line of devices. Blackberry's unique selling point was its secure email and messaging system, which made it a favorite among business professionals. At the time, Blackberry had a large and loyal customer base, and it was widely believed that RIM had a stranglehold on the smartphone market. However, the emergence of Apple's iPhone in 2007 quickly disrupted the industry and began to dethrone RIM.

When Apple introduced the iPhone, it was unlike anything the world had seen before. It had a large, high-resolution touchscreen display, a sleek design, and a user-friendly interface that was easy to use. The iPhone quickly gained a following, and soon it was clear that it was a game-changer in the smartphone industry. Apple's App Store also gave developers a platform to create innovative apps that enhanced the user experience, and this was a major factor in the iPhone's success.

RIM failed to adapt to the changing market, and its products quickly became outdated. The Blackberry's design remained largely unchanged for years, and the company was slow to adopt touchscreens and other new technologies. In addition, RIM's focus on enterprise customers meant that it missed out on the growing consumer market for smartphones. As a result, RIM's market share began to decline rapidly, and by 2013, it was clear that the company was no longer the dominant player in the smartphone industry.

Amazon vs the world

Amazon started in 1994 as a small online bookstore founded by Jeff Bezos in his garage. His goal was to create an online store that could offer more books than traditional brick-and-mortar stores could. Bezos saw the potential of the internet and the convenience it could bring to the shopping experience. With a focus on customer service and efficiency, Amazon quickly expanded its offerings beyond books, adding CDs, DVDs, and other items. The company was profitable within its first two years and went public in 1997.

Over the years, Amazon has continued to innovate and disrupt the retail industry. The company has expanded its offerings to include nearly everything under the sun, from electronics to groceries, and has become one of the most valuable companies in the world. Its success is due in part to its focus on customer experience and convenience, such as its Prime membership program which offers free shipping, streaming of movies and TV shows, and other benefits. Amazon has also invested heavily in technology, such as artificial intelligence and robotics, to streamline its operations and improve efficiency.

Today, Amazon is one of the largest retailers in the world, with a market capitalization of over $1.5 trillion. It has transformed the retail industry, forcing brick-and-mortar stores to adapt or risk becoming obsolete. Amazon's success has inspired countless entrepreneurs and startups, and has forever changed the way people shop. Despite criticisms of its impact on small businesses and concerns over its dominance in the market, there is no denying that Amazon has revolutionized retail and set a new standard for customer experience and convenience.

Digital Transformation

Digital transformation is the integration of digital technology into business models and processes, resulting in changes to how an organisation operates and delivers value to employees and customers alike. It enables organisations to take advantage of new opportunities created by digital technologies, leading to improved processes, enhanced customer experiences and increased competitiveness. In essence digital transformation leverages technology to optimise and often times redefine business models to provide more value to customers as well as employees.

Some of the benefits of a successful digital transformation can include:

• Shorter process times
• Faster time to market
• Cost reduction
• Increased revenue
• Customer loyalty 
• Employee retention
• Reputation gain
• Competitor advantage

Sound's great right? If it was only that easy, Digital transformation is not a simple or straightforward process. It involves a significant shift in organisational culture, processes, and technology. It requires a deep understanding of technology, data, and customer needs, as well as the ability to adapt to changes in the market. Additionally, implementing digital solutions often involves a large investment of time, resources, and money. It also requires overcoming resistance to change from employees, stakeholders, and customers. Overall, digital transformation is a complex journey that requires careful planning, execution, and continuous improvement.

Due to its complexity, digital transformation requires expertise to successfully implement. Experienced professionals must analyse and understand the current state of the organisation, where it needs to be in the future, conduct a gap analysis between the two states, and develop a plan for bridging that gap. This includes not only implementing new technology and processes, but also managing the change to ensure adoption and buy-in from customers, stakeholders, and employees. The digital transformation team must also be able to identify and manage any potential roadblocks, risks, and challenges that may arise during the transformation process. Without this level of expertise, the digital transformation process is likely to stall or fail, resulting in missed opportunities and wasted resources. Hence, having the right expertise is crucial in ensuring the success of digital transformation.

To help guide an organisation, we can follow the digital transformation compass, a twelve step representation of an organisational digital transformation journey. These twelve steps will minimise risk and cost during a transform while maximising engagement and chances of success.

There are four main phases to a digital transformation journey, they are:

• Framing the digital challenge: In the first leg of our Digital Transformation journey the champions: 
• 'Build awareness' throughout their organisation that change is possible, they raise awareness of digital opportunities as well as threats to their business. A classic example of an organisation ignoring digital threats and opportunities is Blockbuster.
• 'Know your starting point', organisation must take an honest look in the mirror, they must understand there own digital level of digital majority. Before an organisation can properly prepare and have realistic goals in mind, they must first assess where they are. This understanding is crucial in forecasting budgetary as well a time requirements for a successful digital transformation.
• 'Craft a vision and align a top team', before an organisation can begin their journey, they need to have a clear vision of their destination and the right team to get the organisation there. The transformation team should be a cross-functional team with representatives form every impacted group within the organisation working with transformation experts who can ensure a successful journey. The transformation team along with the cross-functional representatives form the vision that will drive and guide the digital transformation.
  
  
• Focusing investment: In the previous leg, the organisation assessed if they needed a digital transformation, where they are in their journey, where they want to go and who's going to get them there. Now it's time to plan the journey and acquire the the resources and governance needed to successfully compete the digital transformation.
• 'Translate your vision into action': Now that you have an understanding of where your organisation is and where it wants to go it's time to build a roadmap of how to get there. 
• 'Build your governance': Establish a clear framework for decision-making while ensuring accountability for the results. Effective governance will help to ensure the transformation aligns with the overall business strategy, stays within budget, and meets regulatory requirements. 
• 'Fund the transformation': With a digital transformation team, goal, governance and plan ready to move forward, it's time to allocate an appropriate amount of resources to see the transformation through to a successful end.
  
  
• Mobilising the organisation: While the the transformation team executes the transformation plan, it is up to the 'Change management team' along with the support of the initial transformation champions and the management of the organisation to clearly communicate the transformation progress and impact to the organisation to lead by example and be the early adopters of the digital change.
• 'Signal your ambitions': Leadership should communicate early and often with the organisation, how the transformation is going, howe each individual and their role will be enhanced by the change, how their role will improve.
• 'Earn the right to engage': Leadership along with change need to walk the talk, they need to demonstrate that they are adopting the change in their day-to-day, that it is a positive thing for the organisation as well as the individual.
• 'Set new behaviours & evolve culture': Leadership must identify key stakeholder and support them into becoming early adopters within their organisation and support them in their transition, these early adopters will lead the charge and show their colleagues the benefits of the transformation.
  
  
• Sustaining the digital transition: Once the transformation is implemented, it is not yet complete, the organisation, must now foster an environment of adoption, to ensure that all of the effort put into the transformation is not wasted.
• 'Build foundation skills': The organisation, must support the individuals with the training required to leverage the new ways of working to maximise their investment.
• 'Align incentives & rewards': Individuals as well as groups should have incentives to adopt the new ways of working, change is difficult and without value to the individual will not be adopted. Incentivise and reward change.
• 'Measure, monitor & iterate': track KPIs to ensure that the organisation is benefiting from the transformation, and iterate when and where appropriate.