The digital ecosystem – where next?

The pace of change in today’s business environment has become relentless, with rapidly evolving consumer demands, evolving technologies and the impact of macro-economic factors.

At Moorhouse, we have looked at how organisations are adapting to these changes in our recent Barometer on Change report1, where we assess the importance of focusing on Courage, Agility and Talent for leaders. If we step further into how organisations are run, CIOs and CTOs are wrestling with how to meet these business challenges, and what course to take in investing in or leveraging emerging technologies.  

The past is not a predictor of the future

The answer to this question is made more complex by the sheer amount of new technologies. Our clients often ask which ‘next big thing’ they should invest in. For example, is Blockchain the next internet or is VR destined to be tomorrow’s mini-disk fail? Perhaps we should glance 15 years into the future to consider some possible outcomes2,3.

Figure 1: Horizon Scanning – Some potential visions of the future

We believe our predictions may come true, it is too risky for most organisations to place a series of bets to see what happens – the immediate challenge is finding ways to disseminate the changing technological landscape to help make informed decisions on their digital journey.

Fin Goulding and Haydn Shaughnessy pick up on this in their book Flow: A Handbook for Change-Makers, Mavericks, Innovation Activists and Leaders, highlighting the critical need for organisations to deliver at speed and how digital transformation is driving organisations to become more agile. 

Joining the dots 

At Moorhouse we believe there are four key elements organisations should consider when assessing how to bring together emerging technologies to support the move towards digital. These are:

Digital Customer: applying emerging technologies and developing digital channels to enable a better customer experience, to engage, attract and retain customers, to develop better insights and to deliver higher value.
Digital products and services: inovatively embedding digital solutions into existing and historically non-digitised products and services to deliver new value, better insights and to engage and delight the customer.
Digital workforce: providing the workforce with new ways of working and digital solutions to make their work easier, faster, more flexible and more engaging, and ensuring the workforce embraces the digital environment.
Digital infrastructure and operations: empowering organisations with digital solutions that lead to efficiency and agility and streamline their entire physical and industrial environments including supply chain, manufacturing and operations.
 

Figure 2: Our interpretation of the Digital Ecosystem

Breaking down the barriers

Everything we call digital today has been increasing interconnectivity between businesses, people and products. The barriers between industries and markets are low or gone, and the way the business is run has changed forever. There is a paradigm shift towards third party involvement, distributed digital ecosystems, and stronger digital partnerships4

According to the World Economic Forum5, the future businesses will be built on scale of data rather than operations, customised products and personalised services rather than mass production, connections strengthened through digitalisation, continuous product improvement rather than building high switching barriers, and creating an interplay between talent and technology. That is why breaking the digital challenge into these four key areas can help identify where a business needs to improve in order to become an organisation of the future.

There are organisations who are already strong in all four areas, and cross-industry behemoths like Rakuten, Alibaba and Amazon are examples of that. However, not every company will succeed in orchestrating complete ecosystems as they can be prohibitively complex and expensive. We believe, most businesses will differentiate themselves by investing heavily and delivering excellence into at least one ecosystem area. In order to be more agile, organisations will simplify as much as possible across the non-strategic areas of their ecosystems as the majority of their business will not be that unique6. Some may find it more effective to join existing ecosystems led by partners7.

Build, buy, partner

Whether they build their own, or join existing digital ecosystems, organisations will accelerate testing new technologies in their pursuit of innovation. They will struggle with scaling the best ideas, applying them in a way that would make a true difference, and embracing new ways of working8 that technology has been opening up. Confidence in organisations' overall agility will be key. Without agility, exploration and emerging technologies, coordination of initiatives and embedding them back into the business at the right time will not be possible. They will need courage to lead rather than wait, to build partnerships, and to engage actively in their ecosystem to fill any capability gaps. And of course, they will need to have the skillset to go through a constant technological transformation.

Whilst the four areas of a digital ecosystem provide focus when investing in emerging technologies, organisations must also consider the technical implications9 on their technology estate. Technical considerations will include building a flexible architecture where modular solutions can be easily connected in order to future proof product build. Connectivity will vary from secure APIs to 3rd party anything-as-a-service solutions all the way to cloud and/or edge computing for processing of large volumes of data from connected products, robots, and systems. The architects of the near future will need to implement consistent user interfaces and usability across many new platforms including smart screens and VR. Enormous volumes of data will flow through every business function and team, so consistent meta data and schema tagging for better insights and navigation will be required. These technical considerations will differ according to the technology type and the maturity of the organisation's estate. It is critical that these are mapped out alongside your digital strategy as it will inform your next steps and potential costs.

To conclude, fifteen years ago Facebook was small website to engage with your friends and Google was a basic search engine. Today they are two of the biggest companies in the world in the business of Big data. The only thing clear about the next fifteen years is that businesses and the world as we know it will be fundamentally different. Understanding your digital ecosystem and making investments accordingly is imperative to an organisation's survival. 

We will be examining each of the four core areas of a future digital ecosystem in more detail in subsequent perspectives, with our next one focusing on Digital Workforce.

For more information, contact Indi Kalirai, Nikita Knyazev or Don McShee

1. https://www.moorhouseconsulting.com/insights/publications/barometer-on-change-2018-19/
2. https://www.gartner.com/smarterwithgartner/gartner-top-strategic-predictions-for-2018-and-beyond/
3. https://go.forrester.com/blogs/the-future-is-here-want-a-ride-in-a-3d-printed-autonomous-shuttle/
4. https://blog.g2crowd.com/blog/trends/digital-platforms/2018-dp/digital-ecosystem/
5. http://www3.weforum.org/docs/WEF_New_Physics_of_Financial_Services.pdf 
6. https://go.forrester.com/blogs/myth-4-your-company-needs-a-digital-strategy/
7. https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/Digital%20McKinsey%20Insights%20Number%203/Digital-McKinsey-Insights-Issue-3-revised.ashx
8. http://www3.weforum.org/docs/Media/47538_Digital%20Enterprise_Moving_Experimentation_Transformation_report_2018%20-%20final%20(2).pdf
9. https://www.gartner.com/technology/topics/business-ecosystems.jsp 

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