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Bypass the big bang, transform your business the minimum viable way
Getting the best results from transforming your business to cope with digitalisation is not to aim for the Big Bang approach.
Rather, by moving in bite sizes such as through the idea of “minimum viable transformation”, companies will be able to adapt their business models around their shifting landscape and conditions more rapidly and efficiently, according to professional services firm Deloitte.
“Minimum viable transformations are essentially light and readily-available versions of new business models,” said Mr Mohit Mehrotra, Southeast Asia strategy consulting leader at Monitor Deloitte.
Organisations tend to launch these models in the market as soon as possible and learn from customer feedback on their products or services.
Minimum viable transformation seeks to identify flaws and conduct incremental improvements as quickly as possible.
“It must be specifically designed, not as a proof of concept, but to test hypotheses and gain knowledge about uncertainties and challenges that could derail the success of the product,” said Mr Mehrotra.
“Ultimately, minimum viable transformation is, at its core, a strategy for gathering validated learning about individual business model elements, and how they interact and combine to form one cohesive strategy,” he said.
Mr Mehrotra suggests that understanding the modus operandi of the organisation must also take place.
“Business leaders will need to instruct and empower their teams to launch and learn from minimum viable transformations,” said Mr Mehrotra, who recommends five key principles for organisations to consider. (See box)
Rethinking the fundamentals of how a business creates, delivers, and captures value has become a critical organisational priority at a time of rapid change and disruption.
The prevalence of new technologies has already forced the redesign of many aspects of work that companies and professionals do.
Being customer-centric in delivering relevant solutions and a seamless experience for each customer has taken on much greater significance for companies to stay competitive.
“Don’t just innovate faster for the sake of innovating, but innovate faster to do a better job for the customer,” said Mr Ryan Cheong, managing director for strategy and transformation at Great Eastern.
“Companies will need to develop strategies and business plans that are agile and adaptable to take advantage of the opportunities presented by digitalisation, such as real time information to harness predictive insights,” added Ms Yvonne Chan, director of corporate development and chief financial officer at the Maritime and Port Authority of Singapore.
To effectively harness the benefits of transforming their business models in the age of digitalisation, organisations need to be sensitive to the pulse of their customers and re-balance scarce resources to meet possible multi-fold outcomes.
Said Ms Chan: “Business models that incorporate collaboration with numerous partners, both up and down stream, can create a robust eco-system of interconnected markets for efficiency and effectiveness. This is especially important in this current ‘instant’ age as time is of essence.”
But the digital narrative also has to start with the right tone from the top.
“The digital immigrants, or incumbent businesses, need to align on a common vision, develop strategic themes, identify and develop the enabling capabilities and leverage the world of ecosystems to scale up in the digital world,” said Mr Mehrotra.
To ensure successful execution of minimum viable transformation, observers say mindsets must change.
“Clinging on to familiarity has its downfalls in the age of digitalisation,” said Ms Chan.
A possible way to overcome this, she said, would be to go back to the drawing board and assume that a ‘new’ business or unit is being set up to serve a new or evolved need.
“Adapt from an existing business model or create a new business model to provide the solution delivery to meet this new need in the shortest possible way. All resources will then be re-deployed to this new model - whatever else that cannot fit is then dispensed to reduce cost and improve efficiency,” she added.
Transformation must also start with thinking big about the future.
“Ask the right questions of the strategic driving forces that will shape the way the organisation can achieve its missions and craft a compelling strategy - without one, whatever minimum viable transformation can fast become voluminous amount of activities wrapped around the axle, spinning fast but unable to see a breakthrough,” said Mr Cheong.
Processes aside, organisations can avoid some pitfalls of transformation by getting their people to be committed to the journey.
“In a digital talent constrained world, business model experiments need to be managed with the potential impact they have on talent,” said Mr Mehrotra.
When evolving their business models, it is also important for organisations to learn fast, while celebrating every small success and failure.
“To be able to celebrate the failures, the failures should come early when the emotional and financial stakes are still relatively lower than when a lot has been invested into them. Build circuit breakers in the process for failures to happen early,” said Mr Cheong.
Ultimately, successful transformation will depend on the quality of talent throughout the corporate value chain.
“The heavy lifting must be done by the good and competent people given the resources to cut through the core,” said Mr Cheong.
- This series is brought to you by CPA Australia to share knowledge on topical issues relevant to business, finance and accounting.
Minimum viable transformation – 5 principles
Learn how to learn
Pick up speed
Have a hypothesis
Start at the edge
Source: Monitor Deloitte