If one thing has become clear over the last year or two, it is that the winners and losers in industry after industry are determined by those that can lead or respond quickly to digital disruption. For this reason, it should come as no surprise that legacy organizations are increasing unsure about whether they can cross the digital divide and continue to flourish. Fortune magazine’s Alan Murray says the life of a public corporation is now less than 20 years and will quickly approach 10 years. Imagine the impact to capital formation and business careers alike.
The sheer rate of change causes many to ask is there a way forward. According to Jeanne Ross of MIT CISR, “competitive advantage will come from taking capabilities that others may or may not have and integrating them in ways that make something extraordinarily powerful”. This in Jeanne’s mind is how established companies can best startups because startups “can only do one thing well”. Jeanne believes that integrating business capabilities provides a value proposition that is hard for others to copy. In other words, winners can connect their organizational capabilities ‘at will’ to respond to what are becoming waves of digital disruption. According to David Teece, winners have the ability to reconfigure their business capabilities and their business models to “adapt to changing customer and technology opportunities”. For this reason, CIOs that enable this are creating ‘connected businesses’.
CIOs take on the connected business
I recently got to ask CIOs about the notion of a connected business. I started by asking about how many organizations have achieved more than a set of siloed, disconnected business processes. CIOs were clear that not many have. They suggest that true digital transformation requires that legacy technology and ‘process debt’ be eliminated. They claim, unfortunately, for many legacy organizations this debt can be ubiquitous.
Given this, I asked CIOs whether competitive advantage will go to those that connect their business processes to transform how their organizations create business value. They indicate just connecting is not enough to digitally transformation. They believe in particular that one-off, hard-coded integrations and flows will no longer cut it. They say that advantage goes to those who can put in place measurable, end to end processes that align to an enterprise value streams. Ideally, this should put together people, process, and technology in a way that drives real business advantage.
What holds back organizations?
I asked CIOs what holds back most organizations from connecting their business processes to enable enterprise business strategy. Collectively, CIOs believe ten things hold organizations back.
- Short term thinking
- Fear, uncertainty, and doubt
- A lack of business strategic planning
- An attitude of ‘we have always done things this way’ or ‘business as usual’
- Thinking too much about technology and not enough about information and people.
- Lack of clarity and alignment between existing technology capabilities
- Increasing pressure from investors to lower spend and not invest
- Organizational concrete or inertia
- The new shinny tendencies to build and not integrate or have an enterprise architecture
- Too much focus on automating the back office versus innovating the front office
To respond to these, CIOs feel that it is essential to get incentives and culture right in order to allow business risk taking and business change. CIOs claim that IT organizations should always be looking for ways to add value. They should prioritize which gaps if addressed contribute value to corporate strategy. And in this process, CIOs should look for small wins that prove the value of architecture and integrated business processes. Achieving a connected business requires that all stakeholders are involved in defining go forward business architecture. With this in hand, a connected business can efficiently move resources to overcome changing business challenges.
Today’s business winners are able to change business capabilities and business architecture at will in order to respond to continual waves of digital disruption. They are in the 10% that Geoffrey Moore says are able to survive and possibly lead change to business model. They are synched and have the cultural ‘right to succeed’, but most importantly they have spent the time to fix their business architecture. They have no more one-off, hard-coded integrations and flows. Instead, they have an architecture that supports business change at will.