Category Digital Transformation

A recent article by an Austrian newspaper stated that the growth in sales of the ‘Christkindlmarkt’ (Christmas Market) Vienna exceeds the turnover growth of online shops by 30%. At the first instant, I was quite surprised by this fact. Why are traditional business models like of the Christkindlmarkt still competitive? Why are companies of the old economy like large banks still around even if not having radically transformed to innovative business models?

In my opinion, the best answer to these questions is given by the German philosopher Odo Marquard . His famous essay “Zukunft braucht Herkunft” (“Future needs Ancestry”) discusses why every innovation must be based on the capabilities that have evolved over centuries. In other words – if you are an elephant even years of training cannot make you a zebra. If you are the Vienna Opera even hundreds of Agile coaches cannot make you Spotify. If you are a big bank even thousands of consultants cannot make you a fintec.

After some contemplation, I asked myself questions like:

• Could it be that we admire companies like Amazon too much?
• Do we live in an age that believes too much in technology and progress?
• Are companies of the old economy aware of their tremendous strengths that still keep them in front of innovative startups like fintechs?
• Is the hype of digital transformation slowing down because of the reality of real, tangible assets that can not be disrupted by internet companies?

After answering these questions from my point of view I would give the following recommendations: Read More

Structure not only increases our chance to success,
it makes us more efficient at it.’ – Marshall Goldsmith

When people discuss digital transformation, they talk mostly about innovation, agility and new technologies. Companies put a tremendous amount of effort into initiatives that should make them more agile and innovative, but most of the companies I know do not manage their innovation initiatives towards a big architectural picture. The overly complex structure of dependencies between innovation- and other projects, and between new technologies and legacy-IT, are not handled with intent. Just present a fancy technology to top-level executives. If it has a low time-to-market and includes AI, chances are high that you can do it. No matter if it’s integration with legacy IT results in unnecessary complexity, ‘technical debt’ that introduces a total cost of ownership that outnumbers the business benefits by far. No matter if it is architecturally sound.

Let’s have a closer look at what ‘architecturally sound’ means, what architecture is all about and why the concept of architecture is helpful, especially in the context of innovation: Read More

For a long time, setting the direction of a company was done by a small group of top executives that elaborated a detailed business strategy. Business strategies typically define goals that are normally associated with the creation of value for the coming ten years or so. The concept of ‘Business Strategy’ has been introduced in the 60ies by [Chandler62]. 

This 50+ years old concept is still valid today. What has changed dramatically over these 50+ years is the planning horizon. The notion of ‘long-term’ became shorter and shorter. Today, in the VUCA world, there is no ‘long-term’ anymore. Strategies become more fluid, like software that needs constant upgrading. The reality, today, is that most companies do not have a clearly written out strategy. Why formulate a strategy any more when things are changing before you have your strategy ready?

But how do you make strategic decisions without a clear, verbalized strategy? The answer is given by [Westermann14]:

‘The only effective way we’ve seen to drive transformation is top-down, through strong senior executive direction coupled with methods that engage workers in making the change happen by setting direction, building momentum, and ensuring that the company follows through. This kind of change does not happen through a simple mandate, it must be lead. Among the companies we studied, none have created true digital transformation through a bottom-up approach. Successful transformation starts at the top of the companies’.

What you should do: Read More

If you want to learn more about capability modeling – register for the ->capability webinar we do approx. once a month.

Today, every company in the world is looking for ways to transform in the direction of more digital capabilities. Many companies of the old economy look up to companies of the new economy like Amazon or Google and perceive them as role models if not as archetypes. Most of these companies want to become ‘a bit like Amazon’ but forget about one key thing: their existing business capabilities that represent the strengths that made them successful in the past. They do not model their current and strategic future capabilities systematically. They do not use the key to open the treasure chest of digital transformation.

The basic idea of capability modeling is simple: structure the business of a company hierarchically by capabilities it needs to create customer value.

Why is it important to model business capabilities?

• Capabilities clarify terms and concepts across organizational borders.
• Capabilities provide a robust skeleton, a framework for assigning all the other elements of the enterprise architecture.
• Capabilities can be used as the central structure for heat mapping in order to answer questions such as: ‘Which strategic fields of actions do we see in which capability’; ‘In which capabilities are we planning to invest how much?‘; ‘Which capabilities are not supported enough by IT?’
• Assigning IT-applications to capabilities is a powerful way to support business & IT alignment.

What you should do:

Read More

Last week I attended the #1 EAM Conference in Germany, the “Lean42 EAM Conference”

At the closing podium session of the conference, I had the opportunity to discuss the following questions with brilliant people from companies of the old economy and Feras Alsamawi of Amazon:

• What are the success factors for the digital transformation?
• What is the contribution of EAM to these success factors?
• What is different in companies of the old- and the new economy?

After thirty minutes of discussion, we agreed to the following guidelines: Read More