A Guide to Digital Transformation | Part 3
Great businesses maximise the value they create for their customers, optimising the time and effort they spend delivering it.
There are some very smart people out there who can scribble an idea on the back of a beer mat and know 99% of the component parts needed to make it happen. For the rest of us, we often work best with a framework to help systematically guide our thought process.
So far, Adrian Wake of 28Connect has presented key success factors of transformation. This week he presents a framework and methodology to guide you through those leadership and planning challenges to create your road map of digital initiatives.
A VALUE-FOCUSED FRAMEWORK
It’s now about the technology! At least the approach to create an aligned and cohesive set of digital initiatives to transform, or optimise, your business.
The Activity Value Model, illustrated below, provides a systematic approach to create common and deeper understanding of the Purpose of the business (customer and business value and vision), align the key Operational Capabilities which create or detract from that purpose and measure the Outcomes and value drivers.
By assessing process and people activities and their ability to drive value, the framework uncovers opportunities to improve the quality of products and services (customer experience) at the same time reducing the time effort to deliver them (efficiency/cost). Disconnects between activities, metrics and value soon become apparent, but a disconnect is simply an opportunity to improve.
Another key attribute of the Activity Value Model is to expose and guide you through some of the leadership challenges (see Leaders Transformation Checklist). Verifying your Purpose is a large part of shaping a Clearly Defined Vision. Evaluating your process and people activities also helps determine the maturity of your Digital & Process Culture. Every disconnect, improvement opportunity or new revenue stream becomes an item on your Roadmap of Initiatives to deliver greater value.
5 Steps to Plan your Digital Future
There are 5 Steps to take you through the model and produce clear learnings, common understanding and practical outputs. Each step can be facilitated through workshops and a set of simple tools. More emphasis can be given to different components depending on the challenges faced by the business today.
Regardless of your situation, it’s important to firstly unite around a common Purpose at the overall business level. This anchors all other discussions and decisions. If you were only to take functional views of customer and business value, most functions would focus on internal downstream customers, leaving customer value the responsibility of sales and marketing. This reinforces traditional thinking and a narrow field of vision when problem solving and seeking innovative ideas.
In the illustration below, the 5 Steps are aligned to the section(s) of the model where they develop the why, what and how of your transformation.
Let’s take a heavy equipment service company as an example. They validate their Purpose to minimise their customers’ equipment downtime, with their key business value as optimal resource utilisation (service vehicles, technicians, parts inventory, etc.). Reliable and consistent service is first base in minimising equipment downtime requiring standardised and robust Operational Capability in technician scheduling, response management, inventory management and job completion (process and people activities). Process management software (technology) is a necessity to better control processes and capture accurate data for measuring and managing the Outcomes and value drivers. The company then streamlines job despatch and job completion processes by improving field services connectivity using tablets, which in turn reduces a technicians administrative tasks, increasing their availability. However, it’s still a break-fix service model whereas predictive servicing is known to be more cost effective, reducing equipment downtime and servicing costs. A vehicle diagnostic/condition-monitoring device gathering real-time data is proposed (available today but with varying degrees of sophistication depending on vehicle type) and would move the company up the value chain to predictive servicing with the potential to create a new revenue stream. With rich diagnostic data and predictive modelling, the company should be able to achieve better utilisation of their parts inventory, providing a win-win for customer and service company.
Over time, the framework becomes a business discipline. When new and significant customer insights are uncovered, do the value creating activities remain the same? A vendor spruiks some new software, which key activities, decision making capability and value will it positively impact?
It’s a lot to take in, but if a Clearly Defined Vision is the North Star for why you need to transform, the Activity Value Model is your North Star for how.