THE DIGITAL BUSINESS INFLECTION POINT
1.1 - Thinking
May 2020
Thinking. It's what we do as humans right? Scratch the surface a little and you come to realise that understanding thought is a rabbit hole that leads you on a journey of enlightenment that is more complex than you ever cared to imagine. To pigeon hole into critical thinking, analytical thinking or creative thinking is a logical way for us to gloss over the innate human ability to store, retrieve and navigate our own brain.
In the introduction to The Digital Business Inflection Point we learned what digital is, what digital enables and the operating system of the internet. With an understanding of the evolution in digital business trends over the last quarter of a century we continue to break down some of the key tenants to a day one digital business and look at this from the perspective of thinking, creating and technology.
Not so long ago when the internet was a gleam in futurists eyes, businesses tended to be structured similarly. The trend in the later years of the last quarter of a century was to structure a business in a way that had evolved over many years of trial and error. People were trained and educated in a way that from a young age we were exposed to structure, process and hierarchy. As we transition through our preschool, school and tertiary education systems we are being conditioned for a workforce which rewards following commands, consistent measurable outputs and to do the job your title says you should. Structure brought certainty, if you wanted to hire a senior manager, look for an MBA or if you needed help with your five year plan, hire a Management Consultant. Structure enabled a clear path of accountability and enabled actions and decisions to flow up and down the chain of command, often filtered for the masses and sometimes, like marketing of the time, untrusted. The org structure was the pot of gold for a sales person, a clear path to the decision makers and the budget holder, once you understood the decision making process, often by reading the company's employee handbook you could secure a deal before Friday and finish the week with a round of golf.
For a business to thrive in the past quarter of a century the formula of trade was similar, as we learned in the introduction to The Digital Business Inflection Point there is a recipe for producing, betterment and distribution of products and services as well as a proven formula for running your back office and operations, ask anyone who has worked in consulting and you will uncover the concept of a recipe - it has a name which includes framework. The recipe was unique to the firm, and often a mash up of a competitors recipe. A lot of time and effort went into honing the recipes into the framework which could be shrink wrapped, marketed and sold to the masses. The recipe for a digital business draws similarities to a deconstructed dish at a restaurant. One where you can see the individual components. One where you can swap an ingredient out based on location, availability or individual taste. One where the product is crafted with care and thought and not just an execution of a recipe.
A loss leader is a product or a service sold typically at loss but in the hope it energises a market enough, or creates meaningful good-will to leverage additional products and services at an inflated margin. Often loss leaders were used to entice customers or saturate a market and drive competition out on price. As globalisation has accelerated in the last decade loss leaders have become more aggressive as well as the emergence of growth by acquisition. Loss leading in a digital world has taken the form of freemium, however whilst there are similarities they are not the same. By thinking about the two scenarios you will begin to see the subtle differences and the epiphany that this is just a new, but different model. Scenarios like this reinforce the importance of thinking, there is no cookie cutter model for freemium like there is for loss leading.
When your business is truly digital you will enable a leverage like you never believed possible, an opportunity to operate zero marginal cost products and be so close to your customer at a scale that has simply not been possible in the past. Efficiency is no longer about time in motion studies, or restructures but is now about which process needs to be digitised and what the data is saying. If your data tells you the bottleneck for conversion with your shoe store is because your return policy is complex then people who can think will solve it. Solving an issue like this in a digital world is simple, can be deployed immediately, iterated a number of times to fine tune and will scale infinitely. Within several weeks zero marginal cost is possible as the additional sales outweigh the cost of change. Once the upfront cost has been written down from the increase in sales there is no further cost to the business for every other sale thereafter - zero marginal cost. This would only be possible by people thinking, by people who understand the customers and clients, by people who are empathetic humans and work for a digital business where they are empowered to act in accordance with the manifesto.
I know, this sounds utopian.
The organisation of the past employed workers to complete tasks, to follow a process and to submit steps in the workflow. Once trained, a worker's thinking was typically limited by their respective role, that is unless you were senior enough to have the privilege in your job description. Not in a digital business. Sure there are tasks to be done, processes to follow and workflow but these are not the primary objectives. When you have a flat structure of virtual teams with people assembled to contribute to the best product or service possible suddenly you awaken the sleeping giant.
A digital business requires a new way of thinking and a new set of thinking skills.
A digital business has a manifesto and not a mission statement. A digital business is customer centric and customer driven, not product, features and benefits. A digital business focuses daily on results and not monthly on targets and budgets. A digital business is fast moving, decisive and experimental. A digital business augments people with technology in a way where humans value humans, where people expect convenience.
A digital business does not watch the world go by, a digital business is the world going by.
Thinking. It's what we do as humans right? It's fair to say most of us have the ability to think for ourselves, however developing deep skills in thinking like separating emotion, applying patterns, drawing on experiences and imagining without barriers is not considered in a typical career essential. It's also evident that some of these skills are missing from our training and education systems. Deep, critical thinking people develop and hone their skills under their own stewardship, it's rare to find people in this cohort who don't execute their craft publically in digital. You won't see them in a traditional CV or in a recruitment company shortlist.
A digital business is driven by people who think differently and have a healthy disrespect for the status quo. People who take action over following a process, people who make seemingly fast decisions, people who deconstruct and then reconstruct problems from a day one mindset, people who iteratively break and improve products and services, people who reason with the norm.
How would you launch a new product in your business today?
Would you take a nonlinear approach? Tell people of your intention, take ideas publicly, promote a vision all while empathising as a human on the problem you are trying to solve. Then challenge the thinking by tearing it down to the smallest components only to reassemble in a way which is human centric. Launch a prototype to your small but loyall early adopters only to iteratively change the product based on data and feedback and gut feeling, at the same time in which the product is being rolled out to a mass market.
This type of execution sounds uncomfortable. This approach requires a different way of thinking and a new set of thinking skills. And no one said it is easy.
Business by its very nature is organisation. Many years of effort by our forefathers and their forefathers have gone into organizing a business. They have figured it out, systemised it with processes and procedures then shouted out to people their mission while handing workers a policy and procedure book. An organisation is highly adapted to its environment and has an organisation chart to navigate your way around. But then the environment changed. Just as it does in nature. Nature has ecosystems where organisms adapt and change, when conditions are right whole species can morph into something new. Living in an ecosystem requires cooperation, the strength of an ecosystem is greater than the parts within. Organisms evolve, adapt to their ecosystem and are far more resilient in the face of adversity, organisations on the other hand tend to be the opposite.
A digital business looks more like an ecosystem than an organisation.
You may logically separate thought into pigeon holes like critical thinking, analytical thinking or creative thinking but the innate human ability to store, retrieve and navigate our own brain is no longer reserved in the workplace for a minority few. The digital business leverages thinking in a new way, one where making decisions with consequences, interpreting data and building highly complex yet exquisitely simple products and solutions are skills used daily.