Digital Value Creation

In the last few weeks, I was back on the planes meeting with clients and investors in London, New York, and San Francisco. We often talked about how the role of digital is changing for businesses and investors. How the early digital experimentations have all grown up,  real value is created now and many companies are becoming digitally reborn. 
But not all. 
Some struggled to take advantage of the digital revolution during the pandemic and may not be quite ready for the digital-first competition ahead. There were common themes I heard across geographies and industries. 
For example: In past disruptions and uncertainty, leaders could just ”throw people” at those problems. Not anymore. With talent shortage, the great resignation, and great migration - digital tools became to go-to remedy for all problems in business. How is the digital remedy working out? 

If you Google the difference between efficiency and effectiveness you will find over 1.4 billion hits. There are endless opinions from accountants, business strategists, linguistics, and even psychologists on the topic. Clearly, there is confusion out there and my short video won’t clear it up.  Instead of deciding on the debate, let me share a story on how a customer of mine uses these terms to create value for their business.

The ultimate success in business is to be considered a value creator. Whether you and I are employees, executives, consultants or vendors we should think about the 5 ways we can add value to the business. 

- Growth
- Simplicity
- Speed
- New Business Model
- Thinking Big

For the last 20 years there has been one big debate around technology innovation. Should you be a first mover or a fast follower? First movers would take on higher risk experiments expecting higher returns, but also tolerating higher rates of failure. 
Fast followers, on the other hand, would wait for the kinks to be worked out or the market to be validated before investing. So which strategy is better?

I was thinking about the most relevant trends for 2022. Almost everything we know about digital has changed and morphed in the last two years. So I looked at what my peers were predicting about the future. I counted over 500 different trends and predictions and it was hard to find a common theme that resonated with me. In the end, I narrowed them down to 5 major trends that I knew my customers were often talking about. So here is my 2022 prediction list.

1) Hybrid Workforce (People + AI)
2) Decentralized Finance becomes mainstream
3) Business Metaverse emerges
4) Digital Offshoring (Digishoring)
5) Convergence of Employee and Customer Experience
+1)  First Fully Autonomous Businesses

Welcome to 2022. What a year we have had! While it represented a crisis on many fronts, it also created once in a generation across digital from automation to digital supply chains to new digital customer experiences to blockchain and crypto literally everywhere.

I had so many learnings from this unusual year - I chronicled them in 30 episodes in my channel and in several articles in Forbes. Here are my highlights from a year that will go down as the most transformational in a generation.

The majority of the companies nowadays are in some stage of digital transformation. Some are very tactical, improving their website and app maybe or automating basic customer interactions. Others are fundamentally changing how the business operates. Business model innovation and digital transformation are two buzzwords and they are increasingly interlinked. How should you and I think about business model changes as we become more digital?

In the last couple of weeks, I had numerous conversations about what I call the hierarchy of value. A good friend of mine, I call him Jeff, a private equity investor coined this term to me a few years ago. He used this model to decide which improvement projects to invest in and which to pass on in his companies. He wanted simple rules to help his management teams that go beyond hard value and soft value. He even used it in his personal life to decide what to buy and what not to buy. I keep coming back to the simplicity of the model whenever we discuss the value of digital transformation. So what is this hierarchy of value and why does it matter for digital projects?

The massive global talent shortage is driving businesses to automate in even more areas of their operations. Surveys show that more than 60% of the companies already started their automation journey.  

There are always some tradeoffs, of course, when doing any enterprise-wide initiative. It would be cool if you could deploy new automated processes overnight. If you could just start your fully autonomous processes. But that is not possible. At least not quickly. So companies are making various tradeoffs on their way to their automated future.

Here are the 5 biggest tradeoffs I have seen in intelligent automation projects. 

1) Top-down vs Bottom Up
2) Hard vs Soft Benefits
3) Speed vs Perfection
4) Pilot vs Scale
5) Short Term vs Long Term

Those of you following this channel, you know this. I’m obsessed with finding out what makes some companies succeed with digital transformation while others struggle. Companies of the same size, same industry, same access to talent, but very different results. \
One key factor is how the digital project gets initiated. Does the transformation start with the CEO or a line manager? Does it really need to happen for the business to reach its goals? Or is it someone’s science project? 
In my experience, transformation projects seem to take 3 possible paths and the results can be predicted almost on day 1. Here’s why.