How To Digitize: Simplify First
A common question I receive in my role as chief digital officer (CDO) is, “Where do I begin my digitization journey?” This is key—both because it is hard to know where to start among a sea of potential areas to transform and because setting out in the wrong direction can hurt your competitive position, waste time, and be a strategic distraction.
Given the wide-ranging scope of digital business transformation, it may seem incongruous to use “simple” and “digitization” in the same sentence. Most CDOs I know like to build and fix things. While this trait is vital for success, CDOs must be careful not to over-engineer things. In fact, successful digitization requires that CDOs simplify how work gets done in their companies as they reimagine how to create new value for their customers.
Most companies have a complex web of business processes that developed over time. This complexity can be an artifact of past success, including autonomy in innovative business units or manual processes that were quickly set up to launch a new product, but were never digitized. While these processes may have contributed to success in the past, they constrain future growth and competitiveness.
CDOs only make matters worse if they digitize this complexity, or build new processes on top of it. Even a great architect can’t succeed by building on a shaky foundation. And in a world where digital disruptors could displace 40 percent of market leaders in the next three years, companies can’t afford self-inflicted wounds.
I spent the first four months as Cisco’s CDO examining every aspect of our business model and the processes that enable it. Even at a company like Cisco, which has been extremely successful, there were many processes that required simplification, especially as the company continues to evolve from selling discrete products to providing integrated offerings comprised of hardware, software, and services.
Working with Cisco’s leadership team, we are eliminating unnecessary complexity and driving digitization based on a simplified blueprint that supports our newly established business model. One year in to my role, this work is already having a big impact.
Until recently, Cisco had an astonishing 70+ ways of selling and delivering products and services to customers. We have now reduced this number by more than ten fold to just seven core customer-facing models. This makes it easier for companies to buy Cisco’s offerings across our entire portfolio, while simultaneously reducing internal operating costs. This clarity creates the conditions to improve quality and accelerate execution across every function required to drive Cisco’s market-leading position.
When it comes to successful digitization, hold back your inclination to over-engineer. Even with an eye on the future, and potentially building a new business, remember that simplification must precede automation. With this approach you will be on the path to successfully transforming your company into a digital business.
How are you dealing with complexity as you confront the digitization challenge?
In my next blog, I will touch on the other most frequent question I am asked, “How do we change our culture to enable and embrace digitization?”
Keywords: digitization, digital, transformation, operating model, process, automate, automation, simple, simplify, simplification, CDO