A few short years from now businesses will be operating in a very different way. There won’t be exceptions, businesses that haven’t made the change simply won’t be able to compete and therefore won’t exist. Cisco’s John Chambers advised us that 40% of today’s businesses will have disappeared ten years from now and at the current rate of transformation failure (John Hagel, Co-chairman of Deloit’s Centre for the Edge tells us, 70% of transformations appear to fail to some extent) that looks modest.
However, crystal-ball gazing is an imperfect art and it’s already becoming apparent that our vision of “the business of the future” might be a little naïve. Take for example the supposition that processisation will deliver the efficiencies tomorrow’s businesses need. Sure, most businesses I come across today are hopelessly inefficient, so any improvement is welcome and the introduction of processes is undoubtedly an improvement in most cases. Sadly though the process principle is fraught with problems that contribute to inefficiencies. John Hagel’s own research reveals that as many as 70% of employees today are engaged in “exception management”, that is the management of situations that the business’ process repertoire cannot resolve. However fast digitisation allows us to make them, if businesses of tomorrow rely on prescriptive process the best they can hope for is that they’ll get nowhere a bit faster.
This needn’t be the case though. The difference between success and failure could lie in the interpretation of “process”. While we are by nature creatures of routine and easily slide into transactional mode (perpetuating prescribed practices and routines) real transformation avoids yesterday’s mistake when businesses found their “groove” and became machines that simply milked it to death. This is not the “process” of the new business paradigm. What we need is processes that are less rigid, or even amorphous.
The difference between amorphous process and current process-focussed transformation is the thinking behind the processes. Because process-driven solutions can only work when there are defined processes for every eventuality, realistically, however visionary you might be, you will always end up with significant exceptions. The challenge of providing a comprehensive catalogue of solutions heightens when you consider that the future pace of change will not only be greater than we know now, but will continually quicken. In tomorrow’s business world the specifics of any business and their relationship to their market at any one time will result in a constant, flow of unique challenges, requiring specific solutions.
AI offers us the opportunity to respond to business and customer needs with appropriate real time refinements to a basic process. However, while AI is developing at an incredible rate, businesses tackling transformation right now have no choice, but to continue to build inflexible processes to bridge the gap until AI matures.
The key to anything vaguely long-term is to design processes with a better understanding of their role in the evolution of AI-driven responses. Today’s solutions will certainly be formulaic and they will be slower than future businesses need, but, with the technology already available to us we can generate increasingly responsive disintermediated adaptations of any basic process. This way, we can at least start to make some progress with the exception management problem.
If you are still not convinced about the importance of real-time responses, Daragh Kelly, Data Strategy and Innovations Director at Sky, talked about the subject at this years SAS Forum. Daragh echoed the former MD of Insight and Decision Science at Sky, Tony Mooney when he highlighted the difference between a business “ … operating at the speed of the customer rather than that of the organisation”. All of this is referenced in a great piece by Nick Ismail in last week’s Information Age.
In fact, most businesses tackling transformation today are not transforming at all. Rob Llewellyn at CXO Transform in a recent piece, points out that most businesses who think they are going through transformation are merely streamlining what they always did. He adds a tenth “delusion” to the nine Phil Rosenzweig introduces to us in his “Halo Effect” principle. Rob’s Number ten refers to businesses using technology to create a “slightly improved version of the past”. This is definitely not transformation and it’s simply not going to cut it in the very near future.
If you still don’t appreciate the importance of AI in all this, Nick goes on to reveal that the consensus among decision-makers is real-time responses will facilitate revenue increases of 10%. In fact, one-in-five respondents to the research believe that figure could well rise to 20-40%, so, maybe this will help you focus, but then again you firstly have to buy in to the notion the the only alternative to growth is decline. Standing still isn’t an option!
Just as AI is, in its simplest terms, processing information and creating appropriate responses in real time, we have to create today’s interim processes on the same principle. Sophisticated data capture and analysis is as critical to manual response as it will be those of AI. We can and must add increasingly subtle changes to our fast-growing catalogue of processes to make the essential progress toward real disintermediation. Our capacity to extend our repertoire this way is already, theoretically, infinitesimal, the manual process is just too slow, but when AI kicks in our manual solutions will form the basis of AI’s intuitive responses.
With this thought as your focus you can start to move forward, but you’ll quickly encounter two basic and inter-related challenges.
1 – Choosing the right platforms to build your business on
To get to the point where you segue into the world of AI you have to ensure the platforms you build your solutions on now, measure up to the future AI task. You not only need to be able to follow the process, but capture the responses of those who engage with you, analyse these and deliver reports that enable you to devise often only subtly different processes that respond to their demands. There are many platforms out there that can facilitate this and by-and-large you get what you pay for, but you need to know what you are doing. Digital platforms, content and customer management systems are a snake-oil salesmen’s road to riches and I encounter businesses every day that have invested heavily in platforms that simply aren’t going to work in anything, but the very short term.
2 – The limitations of legacy management
Legacy management is part of both this problem and the problem of identifying the most efficient response to the problems you encounter. If you’ve done something in a particular way for a long time, the human state dictates that your capability for blue-sky thinking is probably confined. Allowing incumbent management to select platforms and define solutions often results in inappropriate investment and outcomes that are rather more fast caterpillars than butterflies.
If you are to have a chance of success you also need to be clear on three key things:
1 – You need help
- There are a number of things you can do to avoid the delays and waste caused by the inappropriate decisions mentioned previously, but the most important is to abandon the delusion that you can tackle transformation with existing personnel. The reasons are many, but top of the list are:
- You can’t afford for the vision and scope of your transformation team to be confined by legacy. You need people who specialise in transformation, not your business sector. In fact it is often an advantage that they are not familiar with your sector. This is partly for the reason above, but a good consultant will pick up what they need to know about your business in the course of their work and it may not be what you think they should know.
- Your existing people will not have the capacity to devote to transformation. If they do, there’s probably more wrong with your business than you think. What you are doing here is building your company again from scratch while business continues as usual. Think of it as a parallel universe.
2 – You need a plan.
- Another thing that will help you avoid becoming a casualty is to remember you can’t build anything without a plan. In the case of a business transformation the plan is your brand model. If you still haven’t restructured your business behind your brand with marketing in the driving seat, now is your last opportunity. Only when you have your brand model can you start your transformation, because this is about building the business that will deliver your brand promise.
3 – You need your employees on-side.
This raises the third of my top three tips for anyone embarking on transformation. Be aware that the new business won’t be created in your boardroom. However great your ideas may be it’s the people on the shop floor who will decide whether they work or not. If you don’t have their understanding and buy-in you will fail. Think how you are going to tackle the in-sell, the tools you’ll need and the approach you’ll take and allow at least a year of internal marketing once you have your brand defined before you launch it in the marketplace.
By now, I hope you will understand that, while transformation is an extremely complex subject, the objective is essentially to create an organisation that satisfies a need in the time it takes the needful to realise what that need is. You will never achieve this without digital capability and especially artificial intelligence and the smoother you can make the transition from analogue and manual the more successful your business is likely to be. It pays therefore to be clear how, among other things, the processes you devise today will be the foundation of your AI future.
First published on LinkedIn September 2017
Phil Darby
August 3, 2018