It’s maddening. You’re planning a groundbreaking business transformation that leverages the power of the cloud to launch a new business model, reinvent your customer experience, streamline your operations, and lay the foundation for your company’s future. You secure funding, assemble the team, and bring high-tech and service partners on board, but the program falls short of your expectations and ambitions. Even worse, it falls short of your leadership or customer expectations.
Does this sound familiar? It’s important to realize that the problem isn’t the idea, but rather your approach to the transformation, which may feel more like herding corporate cats and grappling with supplier alligators than moving forward together with a common goal. In short, you have both an internal coordination problem and an external ecosystem value extraction problem.
SEE: Digital Transformation: A Guide for CXOs (TechRepublic Premium)
Controlling transformation is key to driving growth and differentiation
In a world where you can leverage technology solutions to solve business challenges and generate revenue and profit faster than ever before, you must accept that transformation is not a one-time activity. It is and remains a new way of working. At the same time, you will need to drastically improve your internal coordination and your ecosystem orchestration.
Mastering transformation as a competency requires a new, forward-looking approach that:
- Uses adaptive planning and execution to pursue a North Star business outcome – you take small steps to achieve it, using techniques from modern application development.
- Aligns business, operations, and technology teams in new and more creative ways of thinking and working, often with the help of partners.
- Forces service providers to be co-innovation partners that bring solutions, assets, alliances and communities together, not just technology or people.
- Use pricing and value-aligned termsheets as leverage to motivate service providers to focus on your business goals and invest in your shared success.
And wow, does it work! Sophisticated, forward-thinking companies that embrace these practices accelerated their growth nearly twice as fast as their competitors.
Change the way you deliver value to successfully transform
Thanks to IBM, EY and other companies, we call this new approach “value orchestration” (Image A) – a business model for technology-enabled business transformation, built from: 1) incentives that align and motivate internal departments to tackle the whole problem together; 2) outcomes-based contracts with full-service co-innovation partners to select and integrate available technology and business opportunities in the cloud; and 3) value-oriented planning and execution to coordinate work and keep all parties on track.
Three forces come together in a successful transformation where value orchestration is central:
1. Common cause — leadership and motivation
If your CEO isn’t stepping up to support this transformation, you might want to call it something else. When the CEO does, the transformation execution falls into place with aligned objectives and key deliverables.
Internal coordination requires shared common cause and OKR measures of contribution and results. External coordination requires co-innovation partners based on principles that create the connections and commitments that keep all parties moving in the same direction. The key is result-oriented contracts with additional conditions for contribution, coordination and compensation.
2. Coordination — business agility at scale
Unless your business, operations and technology teams care about the outcome and have input into the roadmap, you won’t get the transformation done. Because the transformation is software-driven, agile techniques work, including agile-based finance that funds teams rather than projects.
Use a quarterly planning process that links strategy, design, implementation, analysis, and money, and use one that also asks executives from every department to attend meetings. This forms the sponsor base for two week design, development and implementation sprints.
3. Co-innovation — the best of you and your partners
Tech leaders will want to place bets on technology vendors investing in innovation pipelines aligned with their immediate goals and long-term aspirations. They should also ask service partners to put their skin in the game to keep them motivated to invest for mutual benefit.
In all cases, structure contracts based on results that keep their internal teams motivated and their partners invested in their cause.
Value orchestration pays off with transformation success
Forrester has collected masses of evidence that this approach works and works well: major brands making experience-based transformations; industrial companies launching innovative IoT-powered products; banks embracing open financing; insurers offering behavioral policies; medical device companies creating new health protocols for diabetes; car manufacturers are becoming mobility providers — the list goes on. In each of these situations where we are personally involved, value orchestration has proven to be the key to success.
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Ted Schadler, VP and Principal Analyst, Forrester
Ted has 33 years of experience in the technology industry, analyzing the effects of disruptive technologies on experience and on business strategy and architecture. His research agenda focuses on digital transformation, experience-driven transformation, commerce and digital experience service providers, and the future of services. Co-author of the books “The Mobile Mind Shift: Engineer Your Business to Win in the Mobile Moment” (Groundswell Press) and “Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business” (Harvard Business Review Press), Ted holds a master’s degree in management from the MIT Sloan School of Management, an MS in computer science from the University of Maryland, and a BA in physics from Swarthmore College with honors.
Fred Giron, VP and Senior Research Director, Forrester
Fred leads Forrester’s research teams in Greater China and Southeast Asia. Fred’s own research agenda spans the domains of Asia Pacific market trends, the future of the service industry and value-aligned technology strategies. Fred holds a master’s degree in electronics and project management from ENSEEIHT in Toulouse, France.