Accelerating Digital Reinvention® with the customer in mind

Examine capabilities and strategic priorities, identify gaps and opportunities, and develop a reinvention roadmap with component business modeling

In the most recent IBM Institute for Business Value CEO study, 60 percent of CEOs surveyed said that more competition is coming from outside their industry, a 50 percent increase since 2013.

As a result, many business leaders today find themselves on what feels like the horns of a dilemma. Do they digitally reinvent their businesses, or try to hang on as discrete parts of their organizations are ravaged by nimbler, technologically superior upstarts from outside their core industry?

Digital Reinvention® is about reimagining all key elements of your business strategy, operations, and technology, with a central focus on creating improved customer experiences. It calls for embracing technological change and disruption, and viewing an enterprise as a collaborative unit that is part of a wide ecosystem.

Moreover, digitally reinvented businesses commit to learning by doing and continuously calibrating and improving. They see innovation as a cross-company and cross-value chain opportunity, engaging all employees as well as clients, business partners, and even regulators when appropriate.

And an ever-increasing proportion of touchpoints will be digital. Eighty-two percent of CEOs say there will be more digital interaction with customers and partners over the next three years, up from only 60 percent in 2013.

Here is the dilemma: On one hand, postponing Digital Reinvention may provide short-term comfort, even while business slowly erodes. On the other hand, Digital Reinvention can be a slow, painstaking process that may cause immediate internal disruption both to a company’s processes and to its culture. However, the long-term benefits of Digital Reinvention–with the corresponding benefits of improved customer experiences–make it a worthwhile endeavor. 

It’s like the story of the student who is running to school pushing a bicycle. A bystander asks the student, “Why are you running?” “I’m late,” replies the student. “Then get on your bike and ride it; that will be faster,” the bystander suggests. Zipping past, the student shouts, “I don’t have time.”

The potential disruption of Digital Reinvention may be giving you pause, but there’s a better course of action. Component business modeling (CBM) may be just what you need to increase the speed and reduce the disruption of Digital Reinvention within your enterprise.

You can use CBM to help examine organizational capabilities and strategic priorities, as well as to identify gaps and opportunities and develop a reinvention roadmap.

CBM allows you to make customer issues and experiences the primary evaluation criteria for future capabilities modeling. At the same time, with CBM, Digital Reinvention can be “modular- ized”–broken down into a set of smaller activities–allowing you to determine the pace and timing of change. This information can help you identify and manage the impact on processes and culture.

In this way, CBM both accelerates Digital Reinvention for customers and moderates the effects on employees. With a manageable number of discrete, reusable components, you can identify opportunities for improvement and innovation, employing a sharp focus on the core capabilities needed to run the business and drive business strategy.

By using CBM to jumpstart Digital Reinvention, you can generate actionable insight very quickly. In just a week or two, a CBM map of an enterprise can help you determine competitive levels and establish an initial view of the economic contribution of each business component.

Once all components have been identified, and the necessary business leaders agree the component map reflects reality, identifying opportunities and priorities for Digital Reinvention becomes much clearer.

A CBM map will help determine if you need to enhance capabilities in order to digitally reinvent. Or perhaps you’ll need to build entirely new capabilities–such as digital marketing or cognitive analytics–to create the experience your customers desire.

And that desire, increasingly, is for personalized experiences. In fact, 71 percent of CEOs believe they will need to focus more on treating customers as individuals and not as part of a segment. Armed with this new view of the business, you can take the following four steps and watch for themes for your Digital Reinvention to emerge.

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Meet the authors

Edward Giesen

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, Global IBM Consulting Partner, European Growth Leader Digital Strategy, Digital Strategy Center of Competence

André Ribeiro

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, Senior Manager, Digital Strategy Center of Competence, IBM Consulting

Anthony Marshall, Senior Research Director, IBM Institute for Business Value

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Originally published 12 April 2017