Digital disruption is alarming, powerful and unsettling said Dr. Jeanne W. Ross, Principal Research Scientist at the MIT Center for Information Systems Research. Three years ago she explained how digital disruption is changing the competitive landscape across most (if not all) industries in two primary ways – relationship with and products offered to customers. This is certainly true within financial services as the emergence of new challenger banks is changing the relationship between traditional financial institutions and their customers by providing new interfaces that limit direct interaction. Disruption is also altering the value proposition of the products financial institutions offer their customers. Today products can be wrapped in information and services and customers expect innovative and easy-to-use solutions.
How do we deal with this? How should we evolve our business and customer offering? For Dr. Ross it’s all about integration. Take everything your business does and deliver it as a whole to provide a more viable product and a richer customer experience. Her advice highlights five ways in which we can successfully face digital disruption:
- Don’t hire a cheap digital officer (e.g. don’t rush out and hire one until you’re ready). People need to understand that digital is everyone’s job.
- Organisation surgery is mandatory. We have to completely rethink how we do business. No more silos.
- Value chains are becoming irrelevant. Think of the confluence of things you need to do and then think of synchronising those activities.
- Get a digitised platform. Wire in the end to end processes that simply do not need to be handled by humans.
- Focus on solutions not products. Identify problems that your customers do not even know they have.
In her new book, Designed for Digital, Dr. Ross offers advice on how to redesign “big, old” companies for digital success. Whilst the book examines a range of industries, there are some very relevant examples from the financial industry.
Most established banks around the world have or are implementing mobile apps, migrating to the cloud and leveraging artificial intelligence, amongst other digital technologies. Few, however, are truly designed for digital. To stay ahead of the curve business must be agile and business strategy needs to be more fluid.
Dr. Ross and her co-authors explain that business design is a critical management responsibility that enables firms to quickly pivot in response to new competitive threats and opportunities. Firms that are “designed for digital” have their people, processes, data and technology synchronised to identify and deliver innovative customer solutions.
In another ‘five list’, the book lays out the five building blocks that drive digital success:
- Shared customer insight (e.g. knowledge about changing customer desire)
- An operational backbone (e.g. using digital technology to improve core operations)
- A digital platform (e.g. to enable the rapid creation of digital offerings)
- An accountability framework (e.g. to establish ownership for each digital component)
- An external developer platform (e.g. to expand the range of solutions available to customers)
The starting point for business transformation isn’t so much technology as it is strategy. Leaders need to adopt a holistic approach to modernisation. There’s little benefit in changing one silo, or bolting on a new piece of technology. There’s much more to be gained in synchronising business design, processes and resources to take big steps forward as one organisation.