Context of digital transformation. econsultancy webinar

The context for digital transformation Neil Perkin, Consultant

We are thought leaders in digital transformation

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As leaders in digital insight, Econsultancy has produced a series of research reports relating to the topic of digital transformation, including: Organisational structures and resourcing Securing board buy-in Insourcing and outsourcing Agility and innovation Skills of the modern marketer These reports tackle the issues that senior digital leaders told us were most important to them. Learn more about the digital transformation journey at econsultancy.com/transformation

Econsultancy econsultancy.com/transformation

The context for digital transformation

Professor Richard Foster, Yale University

3 Econsultancy econsultancy.com/transformation

Only 63% of S&P 500 companies a decade ago are still in the index today - Thomson Reuters


IBM Institute for Business Value Global C-Suite Study based on 4,000 interviews with C-Suite execs worldwide


CEOs consider technology to be the single most important external force shaping their organizations

Is this digital transformation?



FASHIONISTAS DIGIRATI


http://www.capgemini-consulting.com/the-digital-advantage/

These more digitally mature companies (or 'digirati') are able to combine a focus on change through new technology, with a concurrent focus on change management, people, process, and culture. The study found that this group of companies were, on average, 26% more profitable, had a 12% higher market capitalization, and derived 9% more revenue from existing assets.


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Barriers to agility and progress


Legacy technology is our biggest

barrier. Its not just the technology, its the policy, training,

behaviours that surround it.

Which of the following are the most significant challenges or barriers to digital progress for your organisation?

57%

37%

34%

34%

28%

26%

24%

22%

9%

6%

Legacy systems and processes

Finding staff with suitable digital skills

Difficulty joining up data

Focus on short-term revenue targets

Senior management buy-in for investment inresourcing and training

Training / upskilling staff

Identifying correct priorities

Making business cases for investment

Keeping hold of digital staff

Finding suitable agencies

Econsultancy, Organisational structures and resourcing best practice guide

The context for digital transformation Barriers to agility and progress


Accept that if people around the Board table fail to

grasp what it is you are doing or why it is your failing not

theirs.

Our board / senior managers have a good grasp of the potential of digital channels for our organisation

31%

44%

3%

13%

9%

Strongly agree Partially agree Neither agree ordisagree

Partially disagree Disagree

Econsultancy, Securing board buy-in

Digital transformation structures


02 CENTRE OF EXCELLENCE

03 HUB-AND-SPOKE

04 MULTIPLE HUB-AND-SPOKE

DISPERSED 01

FULLY INTEGRATED 05

Digital transformation structures The evolution of team/organisational structures


The most digitally mature companies tend to use the Multiple Hub-and-Spoke model, but the majority of businesses are utilising the Centre of Excellence or Hub-and-Spoke models.

Digital transformation structures A model for the allocation of resource


Ecommerce Digital Marketing

E-Business

Strategy & Planning

SEO PPC

CRM

Affiliates Display

Analytics/data

Content Marketing

Social media UX

Design

Content/UX

Mobile

Operations CMS

Small change request

Tech/Build

Brand

Customer Insight

Brand strategy

Large scale request

Web Build

(Social Media)

Digital transformation structures

Lack of learning outside of Centre of Excellence

Lack of focus on smaller business units

Hindrance to integration

Shared learning within Centre of Excellence

Consistency & control: processes, terminology, standards, measures

Governance & focus - efficiency in resource, prioritisation, unified commercial entity,

senior buy-in

Focal point for the business, Scalability in support & tools

01

02

03

04

ADVANTAGES DISADVANTAGES


The continuing importance of centres of excellence

Digital transformation structures Hub as Strategy, spoke as execution The desire for greater integration and potential devolvement of expertise


I think well see more strategic aspects, like the development

of capability, remain at the centre, but more devolvement of the executional stuff to the

local teams


We used to have a more functionally-

based team but now the lines between

content, SEO, social are less clear so we increasingly need to join things up more.

Most exciting opportunity 2015 vs 5 years time

Digital transformation structures The importance of customer experience and content

Econsultancy Quarterly Digital Intelligence Briefing Digital Trends 2015

22%

15%

13%

11%

11%

7%

7%

6%

5%

3%

20%

8%

8%

16%

14%

5%

12%

7%

4%

5%

Customer experience

Content marketing

Mobile

Personalisation

Big data

Social

Multichannel campaign management

Marketing automation

Video

Location-based services

Most exciting opportunity in2015Most exciting opportunity infive years' time

Two-pizza teams originate from Amazon and is an organisational structure focused around small teams, typically comprised of 8-10 people ('Two-Pizza' teams - the number of people who can be fed easily with two large pizzas). Individuals and small

teams can have a massive impact

They can experiment, fail, try again, and more easily get their successes to a global market

Two-pizza teams


Digital transformation skills


Digital transformation skills

IBM CMO Study


Marketers are redefining their relationship with technology: Re-invention is required, but most are still feeling their way.


CMOs need to be able to pull together multiple threads and

weave product campaigns with customer conversation.

This kind of strategic planning outlook once sat with our agencies but is coming

increasingly in-house. You can no longer only have a

traditional campaign calendar you need to be more agile, iterative and plan quarterly or

even monthly.

Digital transformation skills The rise of the marketing technologist

Only 18% marketers feel that they currently have the marketing technology they need to succeed.

Source: Scott Brinker

The softer skills are what will define the successful

digital marketer of the future.

Digital transformation skills The rise in soft skills


How important would you say the following softer skills or behaviours are to being an effective marketer in the modern digital world?

75% 63% 61%

45% 45% 38%

26%

24%

33% 32%

44% 45% 58%

57%

1% 4% 6% 9% 10% 3%

14%

1% 1% 1% 1% 3%

The ability toembracechange

Ability to spotopportunities

and adaptstrategies

quickly

Beingpassionate,

hungry to learn,curious

Being open andcollaborative

Ability to dealwith uncertainty

Lateral thinking,and the ability

to makeconnections

betweendisparate ideas

or concepts

Beingcomfortabletaking risks

Not important

Neither important orunimportant

Important

Very important

Econsultancy, Skills of the Modern Marketer

ARTICULATION/PRESENTATION Clarity when articulating digital ideas and requirements, persuasive presentation of ideas, ability to talk the same language as non- digital

EMPATHY Empathy with the requirements of other functions and stakeholders, empathy with customer needs.

DATA/INSIGHT-DRIVEN Extract insight, make digital data actionable, data-driven decision making.

COLLABORATION Naturally collaborative way of working, ability to work well with other teams across the business.

Digital transformation skills A check-list for soft skills


CREATIVITY/LATERAL THINKING Make connections between diverse ideas, concepts, data, to originate new ideas, fresh thinking, challenging thinking, thinking big.

ACTION-ORIENTATED Willing to get stuck in, bias towards action.

PASSIONATE Have the hunger and passion for continuous learning and to embrace change.

ADAPTABILITY Embracing uncertainty, comfortable with change, know when to compromise and when not.

TECHNOPHILES Keen adopters of new technologies, enjoy learning about technology, working with it, seeking out improved ways of doing things using technology.

PROJECT/CAMPAIGN MANAGEMENT SKILLS Think holistically, be organised, work well with processes and work well with other team members

CURIOSITY Willing to explore new ideas, interesting concepts, to be intellectually curious

Digital transformation skills Digital tools to enable your people


T-shaped people are defined as those who have a strong vertical expertise but also wider knowledge or empathy for other digital disciplines. This is not to say that vertical expertise is less important, but more that when this is combined with that wider understanding it is increasingly valuable in appreciating the wider context of specialist work, identifying opportunities for greater collaboration or efficiencies, and seeing the bigger picture.

T-shaped people


Digital transformation skills Broad skills in future


Which areas of requirement for digital resourcing / upskilling do you anticipate will grow most over the coming year?

44% 41% 41%

35% 34%

22% 18%

16% 12% 12%

7% 3%

1%

Econsultancy, Organisational structures and resourcing best practice guide

Digital transformation skills Vertical skills in future


and a looming talent time bomb?

Over the next few years, of these skill areas, which would you say will grow the most in significance for marketers?

51%

50%

46%

44%

25%

15%

15%

10%

9%

6%

5%

1%

5%

Mobile marketing

Content marketing

Web analytics / data

Social media activity

Community management

Website design and build

Search engine optimisation

Apps development

Email marketing

Paid search (PPC)

Display advertising

Affiliate marketing

Other

Econsultancy, Skills of the modern marketer

Digital transformation skills Recruitment challenges


Some disciplines that are identified as being challenging to recruit for are also areas of anticipated growth and demand analytics/data, social media

28%

17% 16%

15% 15% 14%

13%

8% 7% 7%

6%

3%

Over the next few years, of these skill areas, which would you say will grow the most in significance for marketers?

Econsultancy, Skills of the modern marketer

Digital transformation board buy-in


01 UNCONVINCED Board are not persuaded of the merits of digital investment

Digital transformation Board buy-in Levels of buy-in


02 CONVINCED, LOW KNOWLEDGE Board are convinced of the importance of digital but effective prioritisation of investment can be an issue

03 GOOD KNOWLEDGE, ENGAGEMENT Board are fully involved, making informed decisions, regularly updated but digital still separate

04 FULLY INTEGRATED Digital is fully integrated a part of wider business decision-making

Digital transformation Insourcing, outsourcing


Digital transformation insourcing, outsourcing A trend towards insourcing?


Which areas of requirement for digital resourcing / upskilling do you anticipate will grow most over the coming year?

45%

32%

23%

More in-houseMore outsourcedSame

Econsultancy, Insourcing and Outsourcing Striking the right balance for digital success

Digital transformation insourcing, outsourcing A trend towards insourcing?


Which areas are you most likely to do more in-house over the next couple of years?

47%

38%

36%

26%

24%

23%

16%

13%

13%

13%

12%

7%

1%

Content marketing

Social media activity

Email marketing

Web analytics / data

Search engine optimisation

Community management

Website design and build

Paid search (PPC)

Apps development

Affiliate marketing

Mobile marketing

Display advertising

Other Econsultancy, Insourcing and Outsourcing: Striking the right balance for digital success

Nuance: There is a greater investment in resource in data, content and social, but also more sophisticated outsourcing.

Digital transformation insourcing, outsourcing A continually shifting dynamic


Opportunity at the centre (automation of core, well-

defined, controlled processes), and at the edges (emergent, set-up, design, understanding value)

http://www.jarche.com/2013/01/the-power-of-pull-and-pkm/

Digital transformation agility


Digital transformation agility Digital maturity model


Emergent Managed Optimised

Change management, KPIs

Digital capability development not central to organisational

strategy/KPIs

Strong digital vision and strategy, organisational priorities/KPIs change

Digital vision lived through leadership and operations,

top-down bottom-up, agile and adaptive strategy

Data and technology

Siloed data sources, basic analysis tools, technology restricts, legacy platforms

Software-as-a-service tech, multichannel, joining up data,

basic modelling

Joined-up data/tech empowered front line staff, customised dashboards, scalability of the cloud, actionable modelling, integrated digital and

online/offline, real-time decisions

People, teams, culture

Isolated knowledge, vertical skillsets, poor training

CoE, specialists and generalists, tech skills, more fluid structures, collaborative

environment

T-shaped, deep knowledge, human layer over tech,

knowledge sharing, highly fluid/collaborative, agile

culture

Working practices, processes, tools

Rigid structure, waterfall project mgt, infrequent release

cycle

Agile development, SCRUM, test and learn, rapid prototyping and build

Interdisciplinary agility, cross-functional, small, nimble teams. Permission to fail.

Entrepreneurial

The model is useful in understanding high level maturity in skills, people and culture, but also the context of that with other critical dependencies such as strategy, processes and use of technology.

Digital transformation agility Top down, bottom up approach to achieve maturity


Emergent Managed Optimised

Change management, KPIs

Digital capability development not central to organisational

strategy/KPIs

Strong digital vision and strategy, organisational priorities/KPIs change

Digital vision lived through leadership and operations,

top-down bottom-up, agile and adaptive strategy

Data and technology

Siloed data sources, basic analysis tools, technology restricts, legacy platforms

Software-as-a-service tech, multichannel, joining up data,

basic modelling

Joined-up data/tech empowered front line staff, customised dashboards, scalability of the cloud, actionable modelling, integrated digital and

online/offline, real-time decisions

People, teams, culture

Isolated knowledge, vertical skillsets, poor training

CoE, specialists and generalists, tech skills, more fluid structures, collaborative

environment

T-shaped, deep knowledge, human layer over tech,

knowledge sharing, highly fluid/collaborative, agile

culture

Working practices, processes, tools

Rigid structure, waterfall project mgt, infrequent release

cycle

Agile development, SCRUM, test and learn, rapid prototyping and build

Interdisciplinary agility, cross-functional, small, nimble teams. Permission to fail.

Entrepreneurial

Digital transformation agility Defining digital culture


Commercially minded

Non-hierarchical

Empowered

Innovative and agile

Collaborative

Customer-centric

Open

Growth hacker

Passion/learning

Data driven

01 Clear principles: data driven, open, inclusive, iterative, simplicity, context

02 Policy first, user need secondary 03 Working back from user need

Digital transformation agility GOV.UK case study


Digital transformation agility The end of sustainable competitive advantage


Digital transformation is a multi-faceted opportunity touching many areas of the business The purpose of strategy has changed from trying to secure sustainable competitive advantage to exploiting a series of transient competitive advantages that in themselves combine to form long-term advantage. McGrath based this assertion on research that looked at companies which had a market cap of over $1Bn and that had, over the period 2000-2009, sustained a net income growth of 5% above global GDP.

Digital transformation agility Changing shape of business


The Boston Consulting Group Growth Matrix Revisited Cash cows generated a smaller share of total profits (25% lower than in 1982), and were proportionately fewer, with the life span of this stage declining Greater, more systematic experimentation

Spin-offs Labs Organisational change

Digital transformation agility Approaches to agile


Digital transformation agility 70-20-10 approach to innovation


Budget split Life stage Objective KPIs Team

70% Core/oldest products Small growth Maintain profit Rowing team

20% Young/mid Increase share and profit Profitable growth White water rafters

10% New Prove leap of faith Solving user problems Diving for sunken treasure

Digital transformation agility The key elements of change


Vision

Vision

Vision

Vision

Vision

Action Plan

Action Plan

Action Plan

Action Plan

Action Plan

Resources

Resources

Resources

Resources

Resources

Incentives

Incentives

Incentives

Incentives

Incentives

Skills

Skills

Skills

Skills

Skills

= Success

= Confusion

= False starts

= Frustration

= Resistance

= Anxiety

All respondents in the research recognised the need to align a number of different but essential aspects in order to facilitate the change to more agile approaches, enhance innovation, and drive digital transformation. A suitable model for effective organisational change incorporates five key elements: vision, skills, incentives, resources, and an action plan. Significant challenges arise if one or more of these elements are missing.

Knoster T, Villa R, & Thousand J. (2000). A Framework for Thinking about Systems Change. In R. Villa & J. Thousand

Digital transformation agility Building blocks for leading change

1.

2.

3.

4.

5.

6.

7.

8.

CREATE URGENCY

FORM A POWERFUL COALITION

CREATE A VISION FOR CHANGE

COMMUNICATE THE VISION

EMPOWER ACTION

CREATE QUICK WINS

BUILD ON THE CHANGE

MAKE IT STICK

Creating the climate for change

Engaging & enabling the organisation

Implementing & sustaining for change


Kotter International, John Kotter

Digital transformation agility Pinterest agility case study


Quarterly planning, mission control meetings, company-

wide progress meetings, 2-pizza teams, high/low/no

lights

Shared values, PDRs, Workshops, cultural

interviewers, key principles and strategic anchors

Ownership mindset, beyond the job description,

expectation, autonomy, mastery, purpose

Tight feedback loops. Reflection time, Go,

Reflect, Adapt

Agility = Velocity x Flexibility

Thank you

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Contact us and start your transformation Talk to us about an initial consultation. Well discuss your toughest challenges, outline our methodology and come back with a proposal. [email protected] EMEA: +44 (0)20 7269 1450 US: +1 212 971 0630 APAC: +65 6653 1911

Econsultancy econsultancy.com/transformation

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Date post:	15-Jul-2015
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