Tag Archives: Digital race

Is it Time for a 2-Speed Business?

Shortly before my summer break – a lovely holiday in Northern France – I gave a keynote at a data science event that highlighted the importance of a bimodal IT for digital innovation.

The key idea behind bimodal IT is that IT needs to offer a second mode in addition to traditional IT that is more risk taking, agile and customer-centric in order to drive digital & analytics innovation more effectively.

Mode 1 is characterized by Gartner as the traditional mode of IT, which has a focus on reliability, is plan and approval-driven, uses large enterprise IT suppliers and typically follows a waterfall approach for implementations.

Mode 2 emphasizes agility and, hence, uses agile implementation approaches, it utilizes often small, new innovative vendors and works closely with the business to drive fast and frequent customer-centric business innovations.

There are many organizations that have started to establish a second, more agile, mode of IT (e.g. in form of a data science lab, a digital factory, or an agile development and DevOps department) and they usually run into two major challenges which impede them to reap the expected benefits:

(1) The two modes of IT are not synchronized well enough

(2) Business is not able to engage effectively with agile IT

I will explain these issues in more depth in the following and some lessons learned how to resolve them.

(1) The two modes of IT are not synchronized well enough

What many organizations get wrong is that they focus to much on creating the new agile Mode 2 of IT.  However, this is only one component of implementing a bimodal IT. The real challenge is how to synchronize both modes so they can play as a team. Having them in silos will not only create conflicts, but also will limit the success of any projects that need both Mode 1 and Mode 2 resources to succeed – which is rather the usual. So, what organizations need to establish is a bridge between the two modes.

Practically speaking, it all starts with mutual understanding and respect between the two modes. If Mode 1 resources have the feeling the they are a second class of IT, they will stop supporting Mode 2 and hinder them wherever possible. Leadership needs to communicate that no mode is better than the other, and both modes of IT are equally needed for success. Mode 2 resources need to understand that Mode 1 is crucial to renovate the core of IT, which enables innovative digital apps to be built on top of a healthy infrastructure efficiently and securely.

Moreover, there are touchpoints between Mode 1 and Mode 2 that require bimodal synchronization through explicit governance:

~ When a new application is planned to be developed, selection criteria have to be defined that outline which implementation should be done in which mode of IT.

~ When a new Mode 2 implementation project is starting, it has to be examined if interfaces to Mode 1 applications are needed and/or if other Mode 1 resources are required.

~ In particular, when the Mode 2 product is supposed to be released in a Mode 1 production environment, traditional release management needs to be involved already in the beginning of an agile project.

~ Finally, when a Mode 2 product is released, there might be a decision to further manage it in Mode 1 in the future.

(2) Business is not able to engage effectively with agile IT

Today´s businesses are not ready yet to engage with Mode 2 IT in a productive manner. This has two main reasons.

First, the second mode of IT is all about experimentation. Trying out new features, new approaches to analyze data and new ways to interact with customers, and taking into account that many of the experiments will not turn into viable products after all. Today, most traditional organizations have not developed a mindset for experimentation yet.

Second, using agile IT methods requires a much more intense participation of business during IT projects. Business is used to “throw business requirements over the fence” and IT would take them, take a few months or even years to implement them, and would come back eventually for testing. In the meanwhile, business does not need to spend much time for the  IT project. This is not the case for agile projects. In each sprint, the business needs to closely work with the developers and defines the business requirements on the run during the project.

These two points highlight some of the obstacles that come up, when there is a two speed organization on the IT side, but only a one speed organization on the business side. The solution is simple, but substantial: Many large organizations that I work with have recognized the need to establish also a second mode of business, which is more experimental, fast paced and enables real digital innovation.

The consequences are visible: There are more and more business labs and business innovation centers of large enterprises popping up around the world in addition to data labs that have the role to work with agile IT to come up and test new innovative ideas in a fast mode. They aim to imitate a startup environment  where creativity, experimentation  and disruptive innovation is in the focus. The results are impressive so far. Mode 2 IT can be much better utilized and the collaboration between business and a bimodal IT becomes significantly better when a two speed business has been established.

This is only the beginning, but one new imperative clearly emerges: It is time for a two speed business for any organization. The pace of change will become faster and volatility will increase in the future. So, let´s get business ready for it.

 

Dr. Alexander Borek advises Forbes 500 companies in multiple industries with regards to their digital transformation, data governance and Big Data Analytics innovation strategy.

All opinions in this blog are written in private capacity and do not express or reflect the opinions of his employer.

The Pressure for Traditional Companies

Characteristics of a new digital world

The world is changing rapidly and becoming digital. Digital technologies fundamentally change how we live, work and interact and will also transform the basis of competition in most industry. This can make “the physical world better, worse, or just different”, as Eric Schmidt and Jared Cohen describe it. What are the characteristics of this new digital world? We can observe three major trends which will be laid out in more detail during the next paragraphs. The physical world is becoming rapidly more instrumented and interwoven with the physical world. Having all the information about the world digitized allows computers to analyze this data with speed, precision and context-awareness, providing a new source of intelligence and automation. MIT researchers Eric Brynjolfsson and Andrew McAfee have announced the second machine age: “Now comes the second machine age. Computers and other digital advances are doing for mental power – the ability to use our brains to understand and shape our environments – what the steam engine and its descendants did for muscle power”. As a large proportion of the whole planet will be equipped and interconnected with smartphones and integrated mobile computing devices at home and everywhere else in the not too far off future, this new intelligence will be fully integrated into our lives.

When I talked to top executives of incumbent leaders in traditional industries such as banking, insurance, consumer products and manufacturing, they all admitted that their biggest threat for their companies future they see are digital savvy companies like Google, Facebook, Amazon and Apple and new technology startups from Silicon Valley and other innovation hubs.  CEOs have carefully observed how new digital players have exiled established players in the retail, music and TV industry and they fear that the same will happen to them. The new wave of digitization does not stop at the online channel. It includes every part of our lives through the new mobile channel, social media and the Internet of Things (sensors and chips hidden in traditional products).

Companies have entered the digital race

Data and digital technologies are becoming the new major source for productivity, competition and innovation. Collecting, combining, analyzing and using the large volumes of data available to us can provide companies with such valuable insights that it can be a true game changer in nearly any industry. But real change comes only, when the new data and insights are fully integrated into the business processes of the company, and when customer experiences and the underlying business models are redesigned. So, if you take away only one thing about the digital world that is evolving, this should be it:

The most important imperative for business leaders is that data will be the basis of competitive advantage across all industries and that companies need to digitally transform to reap the benefits

Naturally, data driven innovation and digital transformation get a lot of C-level executive attention today. Many companies are embarking on a journey to transform their core business processes with data and digitization. It is not enough to simply set up a single project that looks at disruptive technologies to compete in this brave new world. Leading companies have started to re-think their entire business.