In the last blog I explored how evidence has shown that the most agile companies are the most resilient. In this article, I thought I would explore how a company can achieve agility through the use of ‘digital factories’.
The world of business has been undergoing digitisation for decades. Since the first industrial revolution humankind has been almost compulsively looking for ways to build machines to replace boring manual tasks. And today’s machine of choice is the computer.
Let’s start by breaking it down to the core fundamentals. The purpose of any machine, like any company, is to turn input into output. The company machine runs on thousands of turning cogs where every cog represents a critical process in the chain from input to output. Traditionally, these cogs have been people. However, people are inconsistent, some days they work harder than others, other days they work better than others; both quantity and quality are unknown variables. The problem is, if you want to optimise your machine, you can’t have any unknowns. Enter, the computer.
Today’s machines are no longer exclusively human cogs, they’re made up of both computer and human elements, and as you can probably guess, they don’t have a great track record of working well with each other. Artificial intelligence, cloud computing and Big data were all supposed to herald a new age in business. They were supposed to be the catalyst for productivity and output through improvements in operational performance. The problem was, we were trying to drive a Formula 1 car like we were popping to the supermarket for the weekly shop. It plays by different rules. In fact, according to Mckinsey, only 16% of executives say that their company’s digital transformations are actually working, so clearly, we need to change our approach.
Traditionally, a company has a development team that runs a series of projects that have been designed to create solutions that drive the company forward. To achieve these projects the development team draws resources from across the organisation and this is where the litany of problems start. Development teams are developing solutions for processes they don’t use and, therefore, don’t fully understand. Staff members are pulled from project to project across the organisation with no great understanding of the project goals or status. So, is it a wonder that this concoction of confusion isn’t producing the designed digital transformation?
So, what’s the solution? A digital factory is a small team of individuals that have been brought together to combine data, intelligence and personal experience to deliver a digital business change project in the business unit in which they operate. A business-unit leader acts as the sponsor providing the goals, agenda and funding to complete the project. Apart from that, every team has full autonomy as to how they achieve the goals they are set. In essence, they function as a little digital start-up who operate as a “sidecar” to the main business. They can draw from the main company’s control functions like legal, risk, compliance and procurement resources if they wish, but otherwise, they operate in complete isolation.
Why does this work? A major competitive advantage of a small start-up is their ability to make quick decisions in response to business threats and opportunities – they are agile. By allowing them full autonomy, they, the people who use the processes in need of development every day, decide how they achieve the objective. They are involved from start to finish and take full ownership of the results. This transparency and control align the incentives of everyone in the team to a common goal that gives clarity in decision making. This clarity, when combined with the intimate knowledge that comes from using the processes in question every day, allows the ‘factory’ to produce an output that delivers lasting value to the business.
Now the question remains, how do you move from a legacy development team structure to a digital factory?
1. To start with, you need to set a digital strategy – how does digital technology contribute to the achievement of the business objectives?
2. Then you need to identify what areas of the business you need to digitise to achieve that.
3. Next, you need to think about the individual ‘missions’ you need to accomplish to achieve digitisation.
4. Who do you need in your digital factory for each mission 1?
5. Who do you need in your digital factory for each mission 2? And so forth…
In the end, you have a number small digital factories that become an agile incubator of change and drive your organisation forward.