Any self-respecting company manager these days is working to enable their team to use and make the most of everything modern digital technology has to offer from omnichannel customer platforms through the ecosystem of increasingly close partnerships to other new, customer supporting data cloud solutions.
Digitalisation is also opening up new perspectives in business: think only of very young industries such as streaming services or the mobility sector. The latest technologies have fundamentally revolutionized the world, so companies and their leaders need to redefine their operating strategies accordingly.
A coherent strategy, however, does not entail successful digitalisation!
The larger a company, the more probable that operating weaknesses hinder its competitiveness rather than the lack of strategic thinking. Operational issues are often caused by constant change: where new processes are introduced besides old ways of working in the span of multiple years, the system may become excessively complex, thus unable to adapt fast and efficient digital solutions appropriately.
Digital success and complexity
Change, expansion and the associated complexity only happen to successful players.
Leaders faced with these problems are considered fortunate. The way a business manages these complications may be a potential source of a major competitive advantage or drawback.
Let’s look at Spotify, the digital music service provider. The initial value proposition was simple but great: offer a free option to listen to the radio, and cover operation costs from advertising revenues. Later, however, it became obvious that scores of users would pay just to eliminate ads, and the situation began to escalate.
Spotify’s trick was to add value to change: it clearly distinguished between free and premium user experience. It is, however, easier said than done, particularly for a digital business.
Long-standing enterprises with problems accumulated through years of organisational growth and acquisitions face an even greater challenge.
The road to permanent success
If you want your initial successes to bring further outcomes, the solution is to rationalise increasingly complex processes with no added value, this way you can prevent these complexities from hindering the digital evolution of your company.
Business and tech leaders recognised this problem at least 20 years ago. It is rooted in undisciplined corporate process management and the resulting increasingly difficult data processing.
It is a gruelling job to keep things running when the problem bursts, and implementing new systems will not instantly remedy the surging chaos. Of course, non-intervention naturally exacerbates the problems.
But what is the solution?
Many long-standing companies where digital transformation was successful usually based their entire operation on a single, robust core business process. Lego is such an example where focus was shifted to optimising the supply network instead of stepping up production.
Streamlining is tough, but critical.
Eliminating increasingly complex processes with no added value requires tough decisions. The Dutch company Royal Philips, for example, divested many of its profitable affiliates to be able to focus on their primary unique selling proposition (USP) and the development of healthcare technologies.
The simplification and rationalisation of core business processes is key for offering first class multichannel user experience and smoothly expanding your service range. Once you achieve this, the complexity of your business model turns from a factor hampering development into an evolution driver.
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