nem360 2017 setting technology trends into the strategic context v200

Markku Rehberger

Project Manager, GDPR Compliance, Lemminkainen Oyj

Nordic Enterprise Mobility Forum Stockholm, Feb 9th 2017

Setting Technology Trends into the Strategic Context

• Been exposed to IT since 1960’s; grown among computer manuals

• Cleanroom programming at 1978… (Paper, pen, and peer reviews!)

• …from Commodore 64 (1983) and assembly language programming to Master’s degree in IT

• Experience, training and certificates in Project/Portfolio Management, Enterprise Architecture, Process/Quality Management, IT Service Management etc.

• Nokia Networks R&D, Capgemini, Accenture, government, manufacturing, energy, logistics, construction

• Currently leading an international GDPR Program across eight countries

• Currently pursuing a degree in adult/professional education/pedagogy (free time hobby)

• Interested in individual and organisational learning and competence, how to build it

• ’How to create digital winners, services, companies and teams’

• During past year, spent 700 hours studying human history ( free time hobby)– 100 ooo B.C. to present day– Biology, sociology, economics, politics, science, technology

• Looking +30 years into future of society, business, science, technology

About Speaker – Short Bio

• In Olympics (Pierre De Coubertin):– The important thing in life is not the triumph but the

struggle, the essential thing is not to have conquered but to have fought well.

• In Digital Age Business (M. Rehberger)– Essential is not the triumph and fair fight, but the

complete and utter destruction of the competitors, by attracting and stealing all their customers, and, as an inevitable consequence, world dominance.

• Winner takes all

Wake Up Call

A 'Typical' Company, Strategy and Technology?

• 83% of companies do not have a bare minimum of ’strategy’ (differentiation defined)

• Personnel do not know/remember company strategy: Top management 87%, middle management 92%, workers 98%

• 70% of business/IT-projects fail, half of them ’catastrophically’

• 70% of business transformations fail

• 84% of digital transformations fail

• 45% of companies haven’t nominated anyone in executive team responsible for digital development

• 68% of executives do not see digitalisation as an enabler to international competition

• 51% of executives think IT will not affect their business in any significant way

• …and the list goes on…

Research, Statistics HighlightsAll public and available in the Internet

Comparison of Organisations’ Capability to Leverage IT, by 90/10 Rule (by M. Rehberger)

Typical/Average (90%) Best (10%)

Management team understands, in principle and practise, how IT can be used to create competitive advantage

Seriously challenged Totally

Strategy process is continuous No, strategy process is a ceremonial activity repeated in intervals of 1-5 years

Yes, strategic thinking is everyday work, and it is being updated as new information about competitive environment unfolds

Management team includes IT view in strategic analysis

No. IT is considered as an operational aspect, to be addressed in lower levels of organisation

Yes, management team seeks opportunities to improve business performance by orders of magnitude with IT

Management team leads technology investments, ensuring they implement a balanced, high performing asset

No, (design of) technology investments are delegated to unit, departmental, or even personal level, creating a low performing, costly liability (traditional IT legacy)

Yes, strategy defines a framework of development priorities and dependencies, directly from the targeted business capabilities

Experimental development is delivering valuable results

No, experiments are poorly coordinated and managed, they seldom lead to high performing operational processes

Yes, opportunistic experimental R&D is actively pursued and carefully managed, there is a robust process carrying innovations to operational production

Company will benefit from new technological advancements, e.g. AI.

No, organisation may not have competence to even try, let alone succeed leveraging new technologies; the gap to the best companies will grow

Yes, new technologies will open new unseen possibilities to completely level the competition

Inverted: Setting Strategy into the Context of Technology Trends

• IT is developing rapidly: Ever stronger tools (e.g. cognitive computing) are becoming affordable

• IT, when intelligently applied, can radically improve business performance May change supply/value chains, ecosystems - ’Disruption’, ’Domino effect’

• IT enables scalable growth and expansion , even globally

• Investments to automation drive businesses to seek growth and expansion, even globally

Premises

Brace for impact

• The question is not if, but how, when, and by whom a market will be disrupted; thru whichever causal chain

• Every company should plan their strategies beyond the future disruptions

Technological development provides critical input for strategy

• Technology must be considered as a major external strategic force

• Strategy must recognise disruptions, and be defined on a level above them

Conclusions

• For the purposes of this presentation, let’s define:

– ’Strategy’: • The key idea and logic on how to preserve and grow

assets• Recognises the life cycle of an ’opportunity space’

and the corresponding business operation• Defines the relevant Business Portfolio at any point of

time

’Strategy’: Definition

Dynamic Environmental Analysis ( ’War Games’)

Opportunity Space(s) Strategy Strategic Portfolio/Program (s)

Most likely scenarios across industries, ecosystems; considering impacts of technology, among other forces

What kind of services/productsTo what kind of customers

Points out key business capabilities and performance needed

Develop targeted capabilities

• It is impossible to define strategy when everything is changing so fast

– Simply not true! Those with the required competence, are doing it

– It is only a matter of competence, not resources

• You should replace strategy work with experiments

– Absolutely no. Experimenting is a tactical measure where losses need to be controlled. Strategy is needed to give direction to experiments.

– What is the other name for strategic experimenting…?

Common Arguments – And Counterarguments

Strategic Context – Which Journey Are You on?

Strategic Context – When Disruption Anticipated

Current Business Operation

Current Opportunity Space

NewBusiness Operation

Future Opportunity Space

Develop from scratch, ’Industry Grade Startup’

Milking strategy; Run down

Terminate

Gradual (Digital)

Transformation

Disruption

Some Key Factors in Defining Strategic Context

B2C Bulk Strong brand

Develop new business capability to new opportunity space, beyond disruption

Milk & run down legacy business until and thru disruption (end)

Assume no disruption, carry on

B2B Unique product

Weak brand

No brand

Gradual transformation of legacy business until and thru disruption

Physical product

Pure online service

Time/place bound service

Design Directives for New Competitive Capabilities

…with any of these options:

• (1) Excellent selection, excellent online experience, but…– high prices, unreliable and slow delivery

• (2) Excellent online experience, excellent delivery options, but…– poor selection

• (3) Excellent selection, excellent onsite customer service, but…– no online access

• How are you going to compete with an ’amazon’ in your own industry?

Would You Challenge Amazon

• Design your future operation directly to be best-in-class in every perspective, exploiting all available technology supporting that goal – that’s the new baseline

Design Directives for New Business Capabilities

The Fundamental Principles of Business/IT by M. Rehberger

Principle Adoption#1: All existing information, and any information derived from it, can be shared, with anyone, anywhere, anytime, real time

Already successfully exploited by best companies for decades - completely missed by most

#2: The significant, even disruptive impact of IT to business is delivered thru the standardisation and automation of efficient and seamless end-to-end processes thru companies, extended supply chains and ecosystems

Already successfully exploited by best companies for decades – completely missed by most

#3: Cognitive computing outperforms humans in most tasks

Already successfully exploited by a handful of best companies; becoming a critically dividing capability - will cause major casualties

Summary

• Ensure the necessary competence in management team, invest continuous effort into maintaining 24/7 up-to-date strategy

• Define strategy beyond disruption - Winner takes all

• Design your future operation directly to be best-in-class in every perspective, exploiting all available technology supporting that goal

• Beware gradual, continuous ’digital transformation’ if your target is revolutional – Consider setting up another path, completely free from legacy systems, processes, organisation and culture

• Control your investments into the ’dying cow’ - Focus on technologies that support minimising cost structure and managed run down of the operation towards end of life cycle

• Catch up with the basics, and keep an eye on cognitive computing

How to Prevail in The Digital Age Competition

World Peace!Thank You!