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Everyones talking Digital and its Dangerous at INSEEC london

Material (that I've presented before) for a guest lecture to INSEEC students down a Masters in Digital Marketing & Social Media. Covers:
- The digital backdrop
- 20 years of a world gone digital
- Why the current business landscape is so disruptive
- The Digital Enterprise Wave
- Mobile is eating the World – slides from Benedict Evans
- Why organisational change is relevant, a look at different models, examples and case studies
- Digital transformation defined
- The management shift that is emerging (and required)
- We’re not in Kansas any more

References Bandit Evans Mobile is Eating the World presentation - find the latest version here on slideshare.

Everyones talking Digital and its Dangerous at INSEEC london

  1. 1. Everyone’s talking Digital and it’s Dangerous INSEEC London| 18 January 2016 David Terrar | Founder & CXO – Agile Elephant | @DT on Twitter innovation | digital transformation | value creation | (r)evolution
  2. 2. “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn. ” Alvin Toffler
  3. 3. Agenda • The digital backdrop - 20 years of a world gone digital • Why the current business landscape is so disruptive and what we call the Digital Enterprise Wave • Mobile is eating the World – extract from Benedict Evans • Why organisational change is relevant, a look at different models, examples and case studies • Digital transformation defined • The management shift that is emerging (and required) • We’re not in Kansas any more
  4. 4. Hang on - can you explain this new digital landscape?
  5. 5. "Move bits, not atoms." January 1995
  6. 6. Forums – Usenet in the 70s, web based forums & bulletin board services start ‘94 – online journals ‘94 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Being Digital – Nicholas Negroponte – moving atoms to bits – published Jan ‘95 Wikis – Ward Cunningham installs first wiki Mar ‘95 Blogging – term “weblog” John Barger Dec ’97, “blog” used as noun and verb Peter Merholz Apr ‘99 Wikipedia – opens Jan ‘01 WordPress – first released May ‘03 LinkedIn – launches May ‘03 Flickr – launches Feb ‘04, acquired by Yahoo Mar ‘05 Facebook – launches Feb ‘04 iPhone – announced Jan ‘07, available Jun ‘07 iPad – launches Apr ‘10 Twitter – 1st tweet Mar ‘06, SXSW Mar ’07, Apr ‘07 Instagram – Oct ‘10 Snapchat – Jul ‘11 Tumblr – Feb ’07 WhatsApp – Feb ‘09 Pinterest – Mar ‘10 20 years of a World Gone Digital The development of social media, social networks and mobile computing YouTube – launches Feb ’05, acquired by Google Oct ‘06 Skype – launches Aug ’03, acquired by eBay ‘05, Microsoft May ‘11
  7. 7. Your business model is under threat!
  8. 8. Necessity is the mother of invention
  9. 9. Reinvention is the mother of necessity
  10. 10. The Digital Enterprise Wave ride it or go under!
  11. 11. Infrastructure Connectivity Internet WiFi 3G & 4G Human Factors Entrepreneurship Crowdsourcing Millennials Economic Outsourcing Offshoring Low cost
  12. 12. The Digital Enterprise Wave
  13. 13. The Big Shift Cloud Social Mobile
  14. 14. The Digital Enterprise Wave
  15. 15. Emerging Technologies Internet of Things Big Data & Analytics 3D Printing Artificial Intelligence
  16. 16. Everything will have an IP address Gartner predicts 25 billion connected devices by 2020
  17. 17. The Digital Enterprise Wave
  18. 18. “Business as Usual” Thinking Point Social Media Solutions Siloed Communities Lack of Integration Legacy Systems of Record Business as Usual
  19. 19. The Digital Enterprise Wave
  20. 20. We need “Digital” Thinking Digital and Social inside and out Business Model Innovation Systems of Engagement Design Thinking
  21. 21. Strategy Skills Staff “Shared Values” Structure Systems Style Hard Systems Soft Systems  Integrates “hard” and “soft” business systems in a structured way  “technology neutral”  Includes employee engagement  Proven approach  Especially useful for lessons in managing major change McKinsey 7 “S” Model
  22. 22. The Digital Enterprise Wave
  23. 23. The shift to Digital (Business) - what are we calling it today? • Enterprise 2.0 → Social Business → Digital Transformation • You need an ESN or social collaboration approach at the heart • Cloud technology drives scale, reduces cost • Mobile technology increases reach, penetration • Analytics increases focus, impact • It’s about much more than technology Nexus of forces3rd Platform Big wheel of Disruption
  24. 24. it’s not digital, it’s business
  25. 25. The Value Chain is being disrupted end to end
  26. 26. Probability of outcomes
  27. 27. “The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.” Peter Drucker
  28. 28. Why organisational change? • The evidence is mounting – to make digital truly work change is necessary • The key is change of Mind-set and Culture • I worry about some current thinking on organisational structure…. • We need “Evolution not Revolution!”
  29. 29. Core Building Blocks for Responsive Organisations • Lessons from Human evolution • Dunbar’s Numbers • The rise of Heirarchies • Pressure on today’s Organisation Structures • Responsive Organisation models • Military • Civil • A bit of Organisation theory • Organisational Ossification Organisational Structures
  30. 30. Chimpanzees and Bonobos Chimpanzees and bonobos are two separate species within the same genus. They are 99.6 percent genetically similar to each other, but have different appearances and vastly unique social behaviours. The biggest differences between the two are in how they govern their societies: • Chimps are led by an alpha male and tend to maintain order through aggression • Bonobos are dominated by females and keep the peace through sex. Both strategies have been equally effective at core Responsive abilities: • Act collaboratively • Information diffusion • Tool use Same Primates, Different Cultures & Organisations
  31. 31. Machiavellian Intelligence Hypothesis - primates have large brains because they live in socially complex societies: the larger the group, the larger the brain. Dunbar extrapolated this work to humans to predict limits to various relationship types Close Support Group Close Friend- ship Group Extended Friend- ship Group Casual Friend- ship Group Acquaint- ance Group Can put a name to a face Dunbar’s Numbers
  32. 32. Transaction Costs make companies redundant? Organisations under pressure - Economics
  33. 33. Hierarchies • Flexibility • Lowest Cost • Automate Heterarchies • Holacracy • Wirearchy • Podularity • etc Augmented Humans • AI • “The Singularity” Responses today
  34. 34. Co-ordination, Communication, Flexibility, Fungibility, Modularity and other aspects of Responsiveness are hardly – key issues have always been: • Volume of communication required • Complexity of communication • Time taken • Requirement for knowledge transfer or storage • Setup/teardown cost of each communication • One way or two way, acknowledged or not • Asynchronous or Synchronous? Theory of Organisation Design – what really works?
  35. 35. Tradeoffs in network design Hierarchy Fishnet Mesh Full Mesh Nodes = 6 Links = (N-1) = 5 Max Distance = 4 Mean Distance = 1.6 Ave connections = 1.5 Nodes = 6 Links = 9 Max Distance = 3 Mean Distance = 1.25 Ave connections = 3 Nodes = 6 Links = N(N-1)/2 = 15 Max Distance = 1 Mean Distance = 1 Ave connections = 5 Underlying Mathematics of Organisations
  36. 36. There are tradeoffs in network design…. Hierarchy Fishnet Mesh Full Mesh • Simple, Scalable • Efficient & Economic to operate • Rigid • Fragile • Data can be trapped, errors amplified • Most efficient fully resilient configuration • Increases complexity at far lower rate than highly connected mesh • Complex scaling issues • Fully Resilient • Fully Redundant • Easy to reach anybody • Easy to swamp everybody Plusses and Minuses
  37. 37. taking responsibility individually and collectively rather than relying on traditional hierarchical status Hierarchy - Wirearchy
  38. 38. Increase in links as number of people increases is geometric (n=2) in full mesh, linear for hierarchy 0 1000 2000 3000 4000 5000 6000 7000 10 30 50 70 90 110 Hierarchy Fishnet Full Mesh Links People Heterarchical structures have major scaling problems
  39. 39. For example Sociacracy (Holacracy is a type of this model) architecture is a hierarchy of meshed cells, an attempt to derive benefit of mesh where it is most useful (small task focussed groups) without the scale problems of full meshing This is a type of “small world” architecture where most of any person’s links are very local, with a few long distance (socially speaking) links into other groupsNodes = 36 Links: • Full mesh = N(N-1)/2 = 630 • Hybrid = 6 cells + mesh = 99 Mean Distance = 1.25, up from 1 Ave connections = 5.33 (would be 35 in full mesh) A hybrid hierarchy of heterarchies
  40. 40. Can military tactics be responsive? "No plan survives contact with the enemy." - Field Marshal Helmuth von Moltke (1800–1891) Today's military thinking has to react to asymmetric warfare and very fast moving events, and has moved a long way from traditional command & control: network-centric warfare designed to flatten the hierarchy, reduce the operational pause, enhance precision, and increase speed of command Increasingly the senior people can only describe the desired direction, not the how The commander’s intent describes the desired end state. - 1993 US Army Field Manual (FM) 100-5 Lessons from today’s Military
  41. 41. McRaven’s Theory of Special Operations: 8 historical special operations cases analysed (including the Raid on Entebbe) derived 6 principles: o Simplicity o Security o Repetition o Surprise o Speed o Purpose "a simple plan, carefully concealed, repeatedly and realistically rehearsed, and executed with surprise, speed, and purpose" - in three phases: • Planning (simple) • Preparation (security and repetition) • Execution (surprise, speed, and purpose) Asymmetric Warfare & Special Forces
  42. 42. OODA Loop - USAF Colonel John Boyd OODA Loop – design for a Responsive Organisation
  43. 43. Peter Principle In any organisational structure, an employee will rise until they get to their level of incompetence. • Promotion is driven by ability to do current role not next role • Over time, all organisations fill up with incompetent people • Some form of forced culling required e.g. “up or out” Parkinson’s Law Work expands so as to fill the time available for its completion. • An official wants to multiply subordinates, not rivals • Officials make work for each other. E.g: increase in the number of employees at the Colonial Office while Great Britain's overseas empire declined – it was at its largest when the UK had no colonies left Pournelle’s Law In any organisation, the people devoted to the benefit of the organisation itself always get in control Those dedicated to the goals the organisation is supposed to accomplish have less and less influence, and sometimes are eliminated entirely. 3 P’s of Organisational Ossification
  44. 44. • Fairness to each other and everyone with whom we come in contact • Freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility • The ability to make one's own commitments and keep them • Consultation with other associates before undertaking actions that could impact the reputation of the company A Team-Based, Flat Lattice Organization
  45. 45. checks and balances to ensure accountability, transparency and honesty
  46. 46. Organisational Change • It’s not about changing the org chart – many structures will work • It is about mind-set and values: – accountability, transparency and honesty – checks and balances – fairness – freedom to encourage, help, collaborate – taking responsibility individually and collectively – empowering employees
  47. 47. Total Value Created Increase Revenue Average Sale £ Sales Volume Reduce Costs Churn Operating Cost • Deeper understanding of customer needs • Conversation with customers increases attachment to business • Increased marketing penetration at lower cost • Faster lead generation & customer onboarding • Faster understanding of product and customer problems • Pro-active customer retention • Fast information movement and higher levels of collaboration drives efficiency • Higher employee engagement drives effectiveness Close link Digital Business Value Creation Depending on the business, the impact of digital transformation will vary – but will drive significant value Bottom line = value creation
  48. 48. “At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has become Instagram. When Instagram was sold to Facebook for $1 billion, it employed only 13 people. Where did all those jobs disappear? And what happened to the wealth that all those middle-class jobs created?” Jaron Lanier
  49. 49. Digital Transformation – a definition Digital transformation is the process of shifting your organisation from a legacy approach to new ways of working and thinking using digital, social, mobile and emerging technologies. It involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of your organisation's employees, customers, suppliers, partners and stakeholders.
  50. 50. Leading Digital
  51. 51. What is your level of Digital Mastery? - generate 9% more revenue - create 26% more profit - 12% higher market valuation
  52. 52. “Digital Darwinism is unkind to those who wait” Lesson 1 – Transform Business Models And Engagement Lesson 2 – Keep The Brand Promise Lesson 3 – Sell The Smallest Unit You Can Lesson 4 – Know That Data Is The Foundation Of Digital Business Lesson 5 – Build For Insight Streams Lesson 6 – Win With Network Economies Lesson 7 – Humanize Digital With Digital Artisans Lesson 8 – Democratize Distribution With P2P Networks Lesson 9 – Deliver Intention Driven, Mass Personalization At Scale Lesson 10 – Segment by Digital Proficiency Not Age
  53. 53. • One of the largest bookmakers in the UK • 80 year old company undergoing a major culture shift • Adopting a lean start up model • Product teams include people who used to be in marketing, IT, product management • 4-6 week new product cycles • Touch the customer within weeks – used to be 2 years
  54. 54. with • 76,000 employees now collaborating • Sharing knowledge and expertise through 7,500 purpose built communities • 30% active users posting 10 collaborative notes per week/per user • Better knowledge sharing leads to faster response times and more wins • Reducing response time in some cases from 2 days to 45 minutes • Operational efficiency gains by reducing internal e-mail overload by an average of 60% • Saving an average of 2 hours a day per employee Atos "Journey to Collaboration" / Zero emailTM program Winners Of The 2014 Groundswell Awards (Business-To-Employee Division)
  55. 55. We’re not in Kansas any more
  56. 56. References Not for reading – just for reference 1&keywords=leading+digital
  57. 57. David Terrar Agile Elephant | techUK | EuroCloud UK p: +44 (0)1727 866309 m: +44 (0)7715 159423 e: w: skype: david_terrar twitter: @DT linkedin: blog: & innovation | digital transformation | value creation | (r)evolution