Coming from an Agile background it’s hard for me to see being digital as not having parallels with Agile development techniques—but being digital is definitely not centred on software development. It’s useful to look at organisations we see as being digital (Amazon, Netflix, Uber,…) and those we don’t (a typical bank, most publishers, any government department,…) and ask why they differ. If you work in an organisation that’s aspiring to be digital then compare your working practices and culture to that of a digital rival.
Here are three broad areas that I usually find are major differentiators between digital and wanna-be-digital organisations
1. Cross-functional delivery
Non-digital organisations are typically very siloed. They have evolved over decades and in the name of “efficiency” (or maybe it’s managability) have sub-divided into functional departments. But siloing for efficiency inevitably creates inefficiencies (in the same way that demanding speed from your development team slows them down). There are delays as something leaves one department and sits in the inbox of the next. Communication nuances are lost. We end up not just with slow execution, but poor execution due to that poor communication.
Siloed organisations also fail to get the best out of their people. Collaborative solutions and ideas are never discovered. The outputs are generally me-too at best. Cross-team meetings such as brainstorming sessions only scratch at solving this.
By contrast, digital organisations operate cross-functionally all the time, by default. They have seen how productive and innovative differently-skilled people can be working together (perhaps from the cross-functional teams of Agile development) and that is the norm throughout the organisation. This is also about respect: people respecting each others’ areas of expertise. Neither Marketing, nor Development, nor Finance are considered more important.
2. Very tight feedback loops
Agile software development is based heavily on incremental delivery, and in part this about shrinking the feedback loop from build to delivery to the next round of build. This is also a general point about digital organisations, though. Incremental delivery, and the ensuing feedback loop, is founded on the idea that we cannot know all the answers in advance. Therefore incrementing and responding (with replanning) ensures we get to the optimal state sooner. If we don’t do this any rival which does will beat us.
So there is a lot hidden in the idea of tight feedback loops. Delivering incrementally requires new ways of planning, and questioning what is traditionally possible. For example, one executive I know asked how to shrink feedback loops if her product was purchased on annual subscription cycles—that suggests a 12 month feedback loop. We quickly recognised that those subscriptions could be rolling monthly subscriptions instead, which would motivate a continual low-level feedback both from within and without the organsation. That change is not trivial, but it is hugely valuable.
Similarly, moving away from the “we know best” mentality requires a major change in attitude for some people. But real digital companies will have taken a leaf or ten out of the Lean Startup approach, and they will see every idea as a hypothesis that needs testing, not a fait accompli that the market will unquestionably accept.
GDS’s Digital by Default standard talks a lot about incremental delivery and learning from feedback.
3. Customer-centric processes
Tied into collaboration and tight feedback loops is the idea of customer-centric processes, which also means radically simplified processes. Introducing the topic of competing in the digital age, one McKinsey paper tells this story:
The board of a large European insurer was pressing management for answers. A company known mostly for its online channel had begun to undercut premiums in a number of markets and was doing so without agents, building on its dazzling brand reputation online and using new technologies to engage buyers
That idea of stripping back the layers of people and bureacracy to put the customer as close as possible to the product or service is the hallmark of almost every digital operation. I will always remember the lawyer who struggled to understand that using Amazon Web Services was a faceless on-screen transaction, with no possibility of contract negotiation. Netflix brought films right into your home, and destroyed Blockbuster. Uber automates the process of booking a minicab (although they also put themselves between you and a taxi, where ordinarily you would hail one directly from the roadside).
By contrast it’s common for non-digital organisations to present their offerings in a way that’s designed around internal politics rather than meeting customers’ needs. Things the customer sees include: being handed off to different departments to get their needs fulfilled; completing form fields which exist for the company’s benefit; or only being able to buy products in combinations of odd bundles or deals that force the customer to make compromises or pay for things they don’t want.
Customer-centric processes require cross-functional teams, because ensuring smooth, effective end-to-end delivery requires different functions to help each other. Customer-centric processes also come from demanding tighter feedback loops—it forces shorter processes, devoid of wasted time, form-filling, sign-off, and so on.
Being digital isn’t about the technology
Arguably, an organisation can do all of this without being technological. However, it’s digital technologies which have lowered barriers—between countries, of startup costs, of communication, and more—and those organisations which relied on those barriers for survival now have far fewer hiding places.