the exponential digital social world...(boomers and x’s) grew up learning and sharing knowledge...

THE

EXPONENTIAL

DIGITAL SOCIAL

WORLD Executive Guidance

Abstract Every business is impacted by global digital

disruption and even our most successful, iconic

businesses of the 20th century must transform.

How do we adapt to seize the opportunities upon

us at this historic point in time? This e-booklet

explores the four disruptive forces in play, shaping

our society, our businesses and governments into

the future. It outlines the strategic assets and

capabilities an organisation needs in bridging from

the analogue to digital worlds, imbuing an outside-

in, stakeholder centric mindset and blending

analogue assets and experience with a born digital

start-up culture. It then sketches a transformational

approach that is agile, holistic and based on logical

transitions that can be dialled up or down.

Debra Bordignon, CTO, Dimension Data Group Australia With contributions from: Neil Wilson, CEO Oakton

THE EXPONENTIAL DIGITAL SOCIAL WORLD © 2016 DIMENSION DATA ALL RIGHTS RESERVED

1 Contents

Contents

Abstract 0

Contents 1

Preface - The Exponential Digital Social World 2

Part One: It’s Happening So Fast – Global Macro-Trends and the Nexus of Forces Upon Us 3 The ‘Digital Social’ World – Engagement Really Matters 3 The Generational Tipping Point – Re-generate Value Propositions 4 Business Models – Somersaulting From Supply Chain To Platforms and Eco-Systems 6 Technology Is Now Part Of The Atmosphere- Being Prepped To Breathe Is Essential 8

Part Two: the Next Waves of Technology Innovation 11 Artificial Intelligence and Robotics 11 Virtual Reality / Augmented Reality and the Human Machine Interface 15 Nanotechnology and 3D/4D Printing 16 Cyber Security and the Blockchain 17

Part Three: Disrupting Ourselves - What Needs to Change? 20 The Digital Social Balance Sheet 20 The Stakeholder Experience 21 Information Value 22 Portfolio Development 23 Smarter Processes 24 Business Models, Eco-systems, hand in hand with People and Culture 26 Technology Fabric 27 Some Benchmarks 30

Part Four: The Destination and Transformation Journey 30 Assessing The Current State 31 Envisioning The Future State – Vision Unplugged 33 The Anatomy Of The Future State 34 About your digital business model (Neil Wilson, CEO Oakton) 36 36 Transformation Phasing – Step, Run, or Leap? 37 Horizons Of Change – Three Is The Number 38 Themes And Theme Teams 39

Conclusion 40


2 Preface - The Exponential Digital Social World

Preface - The Exponential Digital Social

World

There’s hype, anticipation, excitement, confusion and even some concern surrounding the ever

increasing focus on ‘digital’ disruption. Daily we hear of new facts, examples, and remarkable

stories of disruption driving new markets and hastening the decline of industrial era businesses

that cannot adapt.

A Deloitte Access Economics Report on the Digital Economy in Australia (March 2015) reported

that the Australian digital economy contributed $79bn to GDP, representing 5.1% of economic

output, generated by 4% of the workforce. This is a larger contribution to our National GDP than

agriculture, retail and transportation. Further to this, the report states that our economy was about

$45 billion bigger in 2013 than it otherwise would have been, because of the productivity impacts

of digital technologies. Revenues from digital business activity are growing at 12% CAGR and by

2020, the digital economy is forecast to reach $139bn, representing 7.3% of total GDP. The report

co-authors added that “Not only is it growing, but it’s rapidly changing how businesses and the

Australian economy operate…..The digital economy is changing from being a standalone industry

to being embedded in businesses across the economy.”

While most business leaders are aware of the headline stories about the opportunities and threats

from a real time, digitally globalised economy, few are confident they remain abreast of the

progressive changes potentially impacting their business and personal lives month by month,

week by week and daily.

In this discussion, we outline why every business is impacted by global digital disruption and why

every business will embrace digitalisation to survive and flourish. We overview the strategic

capabilities an enterprise needs to bridge from analogue to digital, imbuing an outside-in,

stakeholder centric mindset and blending analogue assets and experience with a digital start up

culture. We then sketch an approach toward an effective transformation for your business, in

order to seize the opportunities upon us, at what is an historic point in time.

“So, the truth: Right now, today, in 2016 is the best time to start up. There has never been a

better day in the whole history of the world to invent something. There has never been a better

time with more opportunities, more openings, lower barriers, higher benefit/ risk ratios, better

returns, greater upside than now. Right now, this minute. This is the moment that folks in the

future will look back at and say, “Oh, to have been alive and well back then!” The last 30 years

(since the internet was invented) has created a marvellous starting point, a solid platform to

build truly great things. But what’s coming will be different, beyond, and other. The things we

will make will be constantly, relentlessly becoming something else. And the coolest stuff of all

has not been invented yet. Today truly is a wide-open frontier. We are all becoming. It is the

best time ever in human history to begin”.

(Kevin Kelly, co-founder of WIRED Magazine, June 2016)


3 Part One: It’s Happening So Fast – Global Macro-Trends and the Nexus of Forces Upon Us

Part One: It’s Happening So Fast – Global

Macro-Trends and the Nexus of Forces Upon

Us

There are a number of macro-trends at play that are sources of growth for emerging and mature

economies. The list below is estimated to generate $USD 27t, or 30% of the world’s GDP in 2020

(Bain and Company). Information technology is central, it is either leading these trends, or an

enabling platform for it to flourish.

The growing middle class and associated consumerism in emerging economies

The essential refreshing of national infrastructures in mature economies after decades of

low investment

Improving the outputs from energy and primary production

Defence strategies being re-cast for the 21st century and resultant militarization of

existing and rising powers

Investing in human capital supporting the shift from farm and factory to services and

technology based economies

Reforming and innovating healthcare, both clinically and systemically, to keep our

(aging) population healthy

In affluent economies, the next evolution of consumerism, focused on creating higher

priced premium and personalised products to substitute regular consumer product

purchases

The quickening cadence of disruption as core computational technologies have

advanced and can enable other technology breakthroughs that weren’t previously

feasible

Across all these endeavours, there is a marked shift in the narrative of leaders of governments

and businesses who are addressing strategic growth and change. Firstly, the story telling is about

the need for transformative change and disruptive technologies features prominently, it’s a core

theme for presidents, prime ministers and captains of industry alike. Secondly, while efficiency

and productivity is always integral to healthy performance, these themes no longer occupy

business news headlines, they are the expected hygiene factor. Leaders are commonly citing

‘softer’ attributes as the critical success factors for new times. For example, they talk of people

centred values and an innovative, opportunity oriented culture as key to generating new products

and service offerings and new business models. In this, they are recognising and striving for

mastery of the nexus of forces shaping the nature of capital and value creation into the future.

It’s the digital social world – engagement really matters

We’ve reached the generational tipping point – re-generate the value proposition

Business Models have flipped – somersaulting from supply chain to platforms and eco-

systems

Technology is now part of the atmosphere – being prepped to breathe is essential

The ‘Digital Social’ World – Engagement Really Matters

Every day, individuals are at any point in time a patient, citizen, student, bank customer, friend,

relative, employee, advocate, trader or community activist. We live our lives through our

devices, interacting and transacting through the access we expect anywhere and at any time,

while at home, in the car or in a coffee shop. We expect our interface to the digital world to be

increasingly personalised, in the context of the point in time requirement (am I a patient or a

student at this point? Am I being provided information and service related to this requirement?). We



also expect that in our digital relationships, the security and privacy of our information will be

assured as it flows across global, boundary less eco-systems in service of our needs.

What are we actually doing in our digital

world? The answer is the same things we do in

the physical world – just hanging out, checking

things out, playing, window shopping, hunting

down information, imagining possibilities,

asking questions, sharing problems,

conversing, creating social and professional

connections, researching solutions, reaching

decisions and for a small amount of our online

time, (less than 10%) conducting a transaction.

Born digital enterprises intrinsically get this

and they build their platforms around effective

engagement – it’s not just a digital model, but

a digital-social model. Digital marketplaces

are continuously forming and changing, they

are places where people are co-designing

new products and services, crowd-sourcing finance, co-owning assets, freelancing their skills,

asking for expert advice, sharing what they think about a company’s brand and values. This is a

different way of being, a shift in business relationship fundamentals.

15 – 20 years ago, 20th Century enterprises approached the internet as a new channel for

transacting and e-commerce was born. An era of investment in content rich web sites (both B2B

and B2C), customer relationship management and multi-channel integration has ensued. Yet,

the design premise has so often remained an organisation centric and transactional view of the

customer journey. Continuation along these lines will be a major factor in the decline of many

enterprises – Rocketspace estimate that by 2027, 75% of today’s S&P 500 will be replaced

(RocketSpace Disruption Brief, March 2016).

The Generational Tipping Point – Re-generate Your

Value Proposition At work today, we have a blend of four generations of co-workers interacting. Two generations

(boomers and X’s) grew up learning and sharing knowledge using ink pens, blackboards,

calculators, periodicals and libraries. They were career conditioned to covet the corner office

with the best views and biggest desk. In the ASX 200, or S&P 500s, this cohort still hold most of the

senior leadership positions, they own the transformation challenges to survive and thrive. Two

generations (millennials, or Y’s and Z’s) have grown up learning and exercising knowledge using

computers, the internet, google and YouTube.

According to PwC research, in the back end of 2017, we approach a generational tipping point,

where the younger cohort become the workforce majority and continue their rise, with non-

digitals declining to less than 10% workforce representation by 2024. They won’t disappear. With

increased lifespan, improved general health and extended retirement ages, many GenXers will

continue to work on as ‘elders’ and they will complete a transition to digital ways of working.

What wonderful cocktails of diverse perspectives and skills we can create!

These changes are not just something to consider, they’re necessary to be acting on now and

continuously into the future. Is your work environment not at all digital social, is it transitional or

is it digital social by design? Businesses need to re-consider their traditional work environments,

culture and innovation orientation in order to retain and attract more than their fair share of wise

elders, new skillsets and emerging leaders. Ideally, the work environment will embrace

demographic, cultural and ability diversity and be a place for continuous learning, collaboration

http://www.pwc.com/gx/en/services/people-organisation/publications/nextgen-study.html



and creativity. People expect to move about a work space, team up in formal and informal

settings, blend physical and virtual engagement, having continuously connected devices, systems

and flows of information.

If this sounds like altruistic waffle that is a distraction

from productivity or profits, think again, with this

mindset you may hold no attraction to the people who

can drive your next decade of value creation. Apple,

the globally preferred device for end users, and

Cisco, global leader in networking and

communications technology, take it very seriously.

They have formed a global alliance, with Dimension

Data as a strategic services enabler, to allow users of

Apple devices to experience seamless and continuous

connectivity whilst moving about their workplace

environment. Their work related applications also

receive ‘fast lane’ treatment across the network, so the

speed and quality of service is superior. A blend of

Cisco (Spark) and Apple (Facetime, Siri) voice and

video services can now inter-operate on the user’s

iphone or ipad, displacing the old corporate phone

system and desktop handsets.

Business boundaries are porous, digital technologies and ‘platform economics’ (discussed next)

are enabling jobs to be more flexible, agile and dynamically networked internally and externally,

the leaders in this are attractive to millennials, the laggards are avoided. Furthermore, we are in

the era of the micro-peneur and peer to peer freelancer, a growing economic movement inspired

to create their own job and prima facie a rejection of the traditional business career value

proposition. If an enterprise can’t win these people over as employees, they should consider how

to engage them as collaborators or associates on key projects.

As millennials also become the majority of our consumer population (the digital end users), the

focus of customer acquisition and engagement activities of businesses is with the digital natives,

who are not just adopters of technologies, but who drive innovation of new technologies to

enhance their lives. All organisations, including banks, universities, healthcare providers,

governments, retailers, service industries and not for profits, need to re-think and transform their

value proposition, assets and capabilities to meet this next raising of the bar of expectations. A

web site, an online account, a few mobile apps, animated videos and pod casts won’t cut it. An

immersive experience, an individual digital store catalogue and fitting room, a 24/7 avatar case

worker, robo data privacy manager, a smart home communicating with your personal device, a

local restaurant showing a real time visualisation of available tables and video cam tracking of

drone home deliveries is more like it.



Jobs in 2025 – Our Livelihoods Redundant Jobs - According to CEDA, 40% of today’s jobs will

be gone in 10 – 15 yrs. With continued global workforce

commoditisation, an explosion of connected devices and

machines sharing data and automating tasks, as well as advanced

artificial intelligence, robotics and virtual reality - work that is

repetitive or binary or has low levels of creativity or social

interaction, is being de-humanised. Over three million

Australians are currently employed in jobs involving driving

(trucks, taxis, trains, delivery bikes and vans) and as autonomous

driving systems take hold, the human skill of driving is no longer a

requirement of these jobs. But it’s not just our blue collar workers

who are being displaced, so are expert fact-based knowledge

workers in domains such as law, accounting, pharma and

medicine. blue collar jobs – industry, agriculture, mining

all forms of transportation

digital hospital logistics

newspapers – journalism and editorial

white collar professions – accounting, law, economists, bankers

clerical – administration, back office processing

retail – check outs, commodity purchasing

robotic pharma, nursing, surgery, dentistry

Emerging mainstream jobs - Jobs that have appeared in

recent years, that were considered specialised, will become

embedded into the standard workforce and team structures in

organisations. For example, new business systems will be

natively mobile, run from the cloud and incorporate security

standards to protect against cyber threats. Other conventional

jobs will be significantly enhanced by technology. For example,

your local plumber will analyse data from sensors on your home

fixtures, use digital diagnostics, print parts using a mobile 3D

printer, provide you an augmented reality view of your plumbing

systems and conduct some repairs by directing a robotic

apprentice.

web development, mobile applications development

interface design and software programming of machines –

fridges, cars, houses

social media managers

digital experience consultants and designers

data analysis and interpretation

cyber business continuity consultant

cyber security analyst

immersive reality experience - hospitality, tourism, healthcare,

education & training

freelance online lecturer / tutor

using digital diagnostics and decision support – all professions

and trades

New jobs – the list below (iterated from Leon Gettler, Journalist

and Writer, 2015) is an imaginative but not at all fanciful

extrapolation from the technology, social, environment and

economic trends playing out now. For example, reputation and

personal data managers will assist individuals with the

management of their digital identity, monitor their persona and

protect them from unwanted approaches or reputational damage.

Democracy designers will guide emerging states or provinces in

sustainable systems of government leveraging digital platforms

for policy, governance, citizen engagement and services delivery.

Aged Care - social facilitator, facility designer

Data Management - data interpreter, home integration expert

Digital Identity and Reputation - reputation manager, personal

database manager

Education & Disability - learning facilitator, micro-degree / nano-

degree co-ordinator

Services Broker - legal broker, relationship broker

Health & Wellbeing - data personal trainer, geneticist healer,

brain implant surgeon, health promotion consultant

Manufacturing & Supply Chain - 3D print product designer, drone

delivery network operator

Agriculture - data farmer, tropical climate specialist,

Social Sustainability – elder, democracy designer

Games, Entertainment, Training - motion capture actor, virtual

reality (VR) process consultant

Environmental Sustainability - computer scavenger, energy

efficiency adviser, sustainability engineer, planetary engineer,

water conservation engineer, builder of dykes

Impacts – the pace and extent of these changes finds politicians,

governments, educators, company directors, employers, unions,

ethicists and social planners reacting to address the impacts

already upon us. The response suffers from short-termism. In the

absence of a broad, forward focussed response, people are

becoming more anxious about the future. Nationally, we need far

reaching discussion of the macro-economic and societal impacts

and we need to set down cohesive plans. For example, what and

where are the new jobs for blue collar workers? Should we

prepare for a generation (or more) of displaced workers and in so

doing, make proportionate adjustments to our system of social

safety nets? What are the opportunities for systemic reforms and

nation building?

We also need to drill down into the micro impacts on communities

– schools, local businesses, streets and families? What are the

scenarios for your neighbourhood, are people concerned or

excited about what this means for their survival, purpose and

meaning? Where are digital factures and divides emerging?

How is this playing out across city and country areas, across

industries, cultures and generations?

Business Models – Somersaulting From Supply Chain To

Platforms and Eco-Systems In October 2016, six banks in Canada announced their joint investment in a Blockchain fin-tech

start-up called SecureKey (read more on Blockchain in the next section). They plan to roll out a

national digital identity network in Canada, offering a secure way for consumers to exchange all

types of personal data. Supported by the Canadian government, the banks are offering

consumers an individualised privacy system for their personal data. When fully operational in

2017, consumers will be able to easily and safely do business online with private and public

sector service providers and to conduct peer-to-peer transactions. For example, an individual

https://medium.com/@jennifer.schenker/how-blockchain-will-allow-banks-to-become-brokers-of-personal-data-7d2971ed222e#.f77nrue03



may provide permissions for a bank and employer to release digital records to a real estate agent

for the approval of a rental application.

The concept behind this Canadian digital identity network is putting the customer at the centre, so

they control their identity and who gets access to which sets of their data. The banks are

positioning themselves to create and safeguard digital identities and be the brokers for all types

of exchanges of data. Their value proposition is that they bring a capability and trust in bank

grade privacy and security to the global exchange of any digital asset between any party or

group of parties.

The participating banks will monetise the services by charging a fee to the government and other

parties making the requests for information, creating new revenue streams alongside traditional

bank fees from payment transactions. Canada’s banks are hoping their nation-wide initiative will

place them in a strong position in the digital economy. One of the bankers described this as

going beyond Digital ID, to the creation of a marketplace of digital attributes. This example of a

related diversification strategy for banks, is emblematic of the tectonic shifts occurring in

business models.

Digital technology disruption together with social disruption, has brought about a true paradigm

shift that overturns premises of business and markets from the industrial era. Hence, inside board

rooms and executive offices around Australia, leaders across all industries are re-appraising their

organisation’s purpose and how they operate in changing scenarios. What business are we now

in, do we sell a product, or

a product as a service?

What are the

characteristics of digital

marketplaces, how do the

platform businesses

operate versus the

suppliers? Who are our

customers and their

stakeholders and what

don’t we know about them

that we should? What’s

our value proposition in this new era and what asset classes and capabilities will drive value into

the future? What options exist to grow portfolio value and what new forms of diversification,

related or unrelated, does this entail? What talents do we need, where will this come from and

what working environment and culture will be compelling for our people? As we develop our

business strategy for the digital social era, do we have the critical technology capabilities we

need to execute on this?



The Business Journey of Leaders We all read the headline stories of this new digital social era - about how Skype, Apple, Uber, Airbnb, Alibaba,

Estonia.eu to name a few leaders, have disrupted industries. Uberisation is a well coined term describing the game

changing platform facilitating new business eco-systems. Where these innovators lead, others follow. So, can we

surmise where they will lead next?

Perhaps we can see patterns emerge from their business journey so far – why, how and where they have invested or

innovated to create strategic, extensible capabilities. What are the key capabilities that set them apart? With an

understanding of the strategic capabilities and characteristics of sustainable business success in the digital social era,

other organisations can also map a pathway and execute with an innovation posture, choosing whether to be a first

mover, early adopter or early majority. The late majority players or laggards are not likely to survive. These strategic

capabilities and characteristics, which become the assets of the digital social era balance sheet are discussed in Part

Three. For now, consider some of these iconic journeys.

Technology Is Now Part Of The Atmosphere- Being

Prepped To Breathe Is Essential



In such a short time, what was considered disruptive technology (cloud, big data, social, mobility,

the Internet of Things and cyber security) is now atmospheric – the air from which savvy

organisations draw breath and grow their business into digital platforms. Having these elements

in place enables the next higher order of business innovation. Repeating Kevin Kelly’s sentiments

about the future and this historic point in time, we now have, on our doorstep, the technology

foundations to create solutions that couldn’t be conceived before.

This diagram shows

the technologies that

are passing through

linear improvements

toward to the point of

exponential

breakthrough. The

vertical timeline

estimates the peak of

the bell curve of

adoption, at which

point these

technologies will be

commercialised and

largely

commoditised, adoption shifting from the early to late majority.

Today, 2017, the early majority are exploiting cloud, mobility, big data, analytics, effective cyber

security and also the combination of all these capabilities in the Internet of Things. Innovators and

early adopters are already exploring the beyond band and pure and applied research in the band

of other, for now largely uncommercial, rapidly evolves.

Through globally networking information flows between people and businesses in real time, the

internet changed the world. Commerce and knowledge based power structures are radically

different now and so is how we see the world. At the heart of all this is data. In our first world

nations we regard access to data as our democratic right and necessary to flourish. In

disadvantaged regions, data access is seen as a human right in order to nourish development.

So, what is happening with data and what has brought about such change? The genesis of change

was cloud computing, we can look at this in terms of BC and AC (before cloud and after cloud).

Data has always been the lifeblood of computing, after all, it is called IT, not merely T. Before

cloud, data was generated by people or business events within closed systems, stored in

databases or repositories. Systems generated reports and knowledge workers massaged reports

and raw data sets using analytical tools, creating actionable insights. The practice of data science

by skilled analysts created insights

to improve, automate and increase

value creation around an

organisation’s purpose.

The internet allowed for the

collection and circulation of huge

amounts of data. Before Cloud,

internet data flows were stored on

owned (or corporately outsourced)

computer hardware assets. Growth

in stored information holdings

required a hardware and storage scaling up exercise, depreciating assets were added to the

balance sheet in successive upgrade cycles. It wasn’t usually possible to scale back. Hence, in

waterfall style increments, the ‘data circulatory system’ evolved its capacity. As well as being



capital intensive, the potential for value creation was constrained by the scarcity of expert

resources – all of the knowledge workers in the world today can’t leverage more than 2% of the

data available to explore.

Cloud computing has been the

game changer. Cloud (whether

public, private or hybrid) provides

for economical, flexible and

massive scaling of data processing

and storage when needed. Cloud

has also created a data network, a

vast set of connections between

people and things. Digital signals

can be shared via the cloud, and

machines can now ‘talk’ to one

another. This cloud enabled

connected state is called the

Internet of Things (IoT).

Automated analysis of the data collected from machines provides a feedback loop, just like

feedback shared by human knowledge workers. Machines can sense the world, interpret,

transmit experiences, decide, act and learn, with analytical models running in the background.

The feedback loop is generative, learning can progress to from simple decisions and actions to

adaptive self-managing actions and then predictive and preventative actions.

The capacity for data

driven automation and

data value creation is

truly vast. According to

McKinsey Global

Institute, up to USD$11.1

Tn of incremental

economic value will

come from IoT and

machine learning

enabled business

activity by 2025 – that is

around 12% of projected

global GDP.

Unfortunately, greater connectedness and collaboration brings greater risks and vulnerabilities

and the level of security breaches and cyber-attacks is rising, as are the stakes. Hence, security is

a critical capability to be embedded within our digital atmosphere.

Past technology approaches designed security as fixed entity architectures comprising

centralised systems with perimeter controls. This isn’t suited to the new norm of cloud services

and business eco-systems. The new context is ubiquitous connectivity, boundary less information

flows and distributed data storage. Cyber-security needs to be comprehensive - an intelligent,

multi-layer capability that is agile and adaptive to:

a) a hybrid environment of legacy and cloud systems, requiring real time integration and

sharing of data internally and laterally with other organisations as part of digital service

platforms

b) vast data flows and numbers of connected devices (from mobility and IoT)

c) new models of e-commerce / m-commerce with an expectation of choice and

convenience


11 Part Two: the Next Waves of Technology Innovation

d) individual’s possessing multiple digital personas and identities at any time, creating

correlated vulnerabilities

e) individual expectations of greater transparency and selective consensual control over

personal data usage

f) virtualisation of security to the data and user level (users also being things)

g) the growth of fraud, the insidious dark web and organised cyber-crime

Cyber business continuity and integrous operations is a fast growing field of professional and

technical expertise. Most organisations struggle to manage and govern cybersecurity through

their own resources. Leveraged consulting and managed security services are increasingly

filling the capability gap. Expertise in vulnerability assessment and testing, Managed Security

Operations Centre (SOC), Threat Intelligence and Management and Cyber Emergency Response

Teams (CERTS) can provide assurance of effective risk management, lift confidence in innovation

and accelerate transformation.

An example of all of this – cloud, mobility, big data, analytics, IoT and security – coming together

to enable a business to transform, is the Amoury Sport Organisation (ASO) and their running of the

Tour de France event. The TdeF was conceived in 1903 as an event to promote and sell the ASO’s

publications. The TdeF is the most watched annual sporting event in the world. Spectators,

athletes and coaches are hungry for details and insights into the race and the athletes. Starting

from the 2015 TdeF event, the ASO has leapt forward as a digital business. Data collected from

sensors connected to the athlete’s equipment is aggregated on a secure, cloud based big data

platform, analysed in real time and turned into entertaining insights and valuable performance

statistics for followers and stakeholders of the tour. This has opened up new avenues of

monetisation for ASO. Dimension Data is the technology services partner enabling this IoT based

business platform.

If your organisation is not yet on the technology transformation path, consider starting in this

current period. For business to draw breath from the digital atmosphere, you must be ready and

capable to seamlessly connect humans, machines and data and to assure secure eco-system

flows. The settings of our home or car, schools and learning, health and fitness, offices, cities,

retail, factories, defence, emergency services, logistics and services are all becoming forever

different in this digital atmosphere.

Part Two: the Next Waves of Technology

Innovation Let’s now gaze into the beyond and other horizons by looking into the disruptive technologies that

are most likely to be impactful. We have grouped four pairs of interlinked technologies – artificial

intelligence and robotics; virtual / augmented reality and the human machine interface; nano-

technology and 3D/4D printing and; cyber security and the blockchain.

Artificial Intelligence and Robotics Artificial Intelligence is

a science and set of

tehcnologies insipired

by the way humans

sense, perceive, learn,

reason and act.

We are rapidly

consuming AI and

embedding it into our

daily living, taking it

for granted – think



about how we rely upon GPS and location services, use Google for knowledge, expect Facebook

to identify and tag faces, Amazon to recommend a good read and Spotify to generate a

personalised music list – not so long ago, these technologies were awe-inspiring.

Now and into the next 15 years, there is an AI revolution underway, a constellation of different

technologies coming together to propel AI as a central force in society. Our relationships with

machines will become more nuanced and personalised. There’s a lot to contemplate here, we

really are at a juncture where discussion is needed at all levels about the ways that we will and

won’t deploy AI to promote democracy and prosperity and equitably share the wealth created

from it. As a framework, it helps to understand what the ‘hottest’ AI technologies are and the

settings where the greatest impacts will occur.

The Hottest AI technologies for the Next 10 Years

Cloud computing has enabled massive connections of people, things and data. This has lead to

the maturing of a number of forms of machine based learning. Deep learning is one form of

machine learning that has greatly improved the scaling of information processing algorithms,

allowing mastery of big data. The computational power of computer hardware has also

significantly advanced, providing grunt for data driven investigation and innovation. In a market

driven economy, the apetite for new, data driven products, services and business platforms is

creating much of the incentive for AI driven technology. The push is toward building intelligent

systems that don’t just do smart things autonomously, but are also human aware and can

collaborate.

The AI Technologies to Watch Reference material – Stanford University, Hundred Year Study on AI

Large Scale Machine Learning – to uplift the learning potential and hence realise value from

mass data, algorithms need to be able to scale and run ‘unsupervised’ across very large data

sets. Significant gains are being made in this area and the capability will become embedded

as core data management services in smart services / data driven platforms

Deep Learning – a machine can only learn from what it can recognise. Deep learning

breakthroughs have enabled object recognition, video labelling and pattern recognition –

that’s how Facebook can label your photos

Natural Language Processing - Advances in audio, speech and natural language processing are

occurring, enabling conversational dialogs with machines. This is progressing rapidly,

including in the area of multi-lingual translations. NTT Group is prototyping a multi-lingual

translation platform to enrich the experience of visitors to the 2020 Tokyo Olympics. This

includes translation of text, vision (photos or video) and speech

Reinforcement Learning – deep learning has lifted machine perceptions to a new level, enabling

a focus on decision making, actions and cumulative analysis of the outcomes – reinforcement

learning. This sits behind the Google DeepMind programme called AlphaGo, which beat the

human Go champion. The programme acquired data from a human expert database, played

against itself many times, and applied reinforcement learning, making moves never before

contemplated by the human masters

Internet of Things (IoT) – as noted, machine learning underpins the purpose of the Internet of

Things. A key area of AI enablement is in automating data standardisation. Currently the

standards for communications protocols, data models, data security and device APIs

(application programme interfaces) are somewhat ‘wild west’ and AI is helping to tame this

frontier

Computer Vision - Computer vision is the most prominent form of machine perception and

innovations in this area have gone hand in hand with the rise of deep learning. Computers can

now perform some visual classification tasks better than people. This is enormously important

in the era of exponential non- relational big data processing, with voice, gesture, video, VR and

3D imagery becoming standard operational data

Robotics – robotic automation of repetitive tasks in controlled environments is already mature,

delivering benefits to manufacturing, mining, construction, defence, agriculture and postal

work. Deep learning and reinforcement learning, along with advances in computer vision and

interactive object manipulation through mastery of touch and force, open up new use cases for



robotics in the home and across service industries. Cyborgs, swarmbots and humanoid robots

are on the horizon

Collaborative Systems, Crowdsourcing and Human Computation - in this field, models and

algorithms are developing, to form complimentary, collaborative systems of partnership

between autonomous systems and humans. Further to this, crowdsourcing can be used to

augment computer problem solving. Wikipedia is a platform created in this way – people

(netizens) have provided massive scale and depth to the content, AI tools within the platform

have improved the curation and relationships across the data. Citizen science platforms, such

as Innocentive, bring communities of problem solvers together around published challenges.

In a co-innovation initiative, Western Sydney University and Dimension Data are creating a

mass data observation platform, bringing civic data collectors and researchers together in the

field of social research, their work enabled by contemporary analytics and AI tools

Super Computing - computer engineering has long been exploring far more powerful models

of computer processing and these are now advancing toward reality. Notable is quantum

computing, based on quantum mechanics, which if viable will mean that problems could be

processed using quantum algorithms, which are non-binary and theoretically exponentially

more powerful than current classically based algorithms. Another area of super computing

research is neuromorphic computing, which is creating computer circuitry that mimics human

neural systems, and is conceivably many thousands times more powerful than conventional

circuitry. This is progressing via a $1.3bn European Commission funded Human Brain Project,

a 10-year collaboration from 2016 that is attempting to simulate a complete human brain in a

supercomputer using biological data, and use that data to build new neuromorphic computing

technologies. It is made up of a group of researchers in neuroscience, medicine, and

computing

Settings With the Greatest and Soonest Impact

Transportation - Autonomous transportation is the most publicly visible example of AI. How it

progresses will influence perceptions of AI across the board. Autonomous vehicles encapsulate

the IoT, all forms of machine learning, computer vision and also robotics. This will soon break

through the exponential point, once the physical hardware systems are robust enough. If as

expected, autonomous vehicles will be safer and afford a better life experience for users, they

will become commonplace rapidly. Tesla’s first recorded fatality on autopilot mode was in June

2016, after the vehicle’s camera systems failed to detect a truck in front of the vehicle and drove

under it. From this tragedy, Tesla have made a strategic shift from camera to radar detection

technologies and improved their sensing algorithms. It is worth noting that Tesla vehicles

completed 130 million miles on autopilot before the first fatality, compared with 94 million miles

per fatality for regular driving (US data). In August 2016, Singapore unveiled an autonomous taxi

service, partnering with a small start-up called nuTonomy. Uber will soon let users of its ride-

sharing app hail autonomous Volvo SUVs in Pittsburgh. Google, who were a first mover with their

self-driving car project in 2009, aspire to fully autonomous vehicles, while others are coming to

market more quickly with hybrids (eg Tesla, Volvo, Daimler Chrysler, Uber). Google’s path to

commercialisation may be through their self-driving software (Chauffer) being included in auto-

manufacturer’s cars, and also potentially enabling a platform for autonomous fleet management.

All these developers of autonomous intelligent vehicles talk of 2020 as the tipping point. Some

are also casting their innovation horizons to the next wave, including autonomous buses and

trains, drone based delivery networks and autonomous flying cars.

Infact, transportation system planners are modelling fully autonomous transportation networks –

super systems of self driving cars, trains and buses, an orchestrated blending of large volume

public transport and smaller peer to peer services, inter-operating with intelligently integrated

timetables and routes, which can be adapted real time in response to pedestrian and vehicle

flows, events and incidents. City planners are extending these future scenarios to also consider

the impacts of reduced number of cars, fewer accidents, declining car ownership,

decentralisation, land usage and real estate values.

https://en.wikipedia.org/wiki/Human_Brain_Project

http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on



Traditional Employment and Workplace - As machines do more of the work that humans used to

do, the future of work for entire economies is changing. Industrial era jobs are declining or

changing, more technical specialisation and/or knowledge based outputs are required to avoid

displacement. For example, a robot inspects a pump system at a petroleum refinery, transmitting

images and diagnostic readings to a maintenance engineer, who interprets the diagnostic data

collected and directs the robot’s repair work remotely. The robot has displaced a fitter and

turner, the maintenance worker has upgraded to a plant equipment engineer. As the robot learns

more and extends its task repertoire (via reinforced learning), the plant equipment engineer also

gains more insights from the data, enabling him to predict maintenance scenarios and make

improvements to asset utilisation. As noted earlier, this is more than a just a blue collar shift. AI

will do a lot of the generalist research and problem solving of first year lawyers, financial

advisers, accountants and doctors.

Given that circa 40 - 55% of operational costs are people based, AI opens up new opportunities

for business to save operationally. Moreover, of the global workforce, 9% are high value

knowledge workers, earning 27% of the wages pool. As the lower to middle order aspects of

roles are cognitively automated, this frees up more headspace for human creativity and

innovation.

Home / Service Robots – Robots haven’t learnt to do much for us at home, they don’t even vacuum

that well. But, with both Amazon and Uber investing in creating robot personal services,

leveraging their business platform and data sets, and with homes and home appliances bursting

with smart sensors, plus through advances in natural language processing and speech

recognition, we can expect advances in special purpose personal service robots, delivered under

some interesting business models.

Healthcare – there is significant potential for pervasive use of AI in pure and applied research and

healthcare service delivery, as well as aged and disability related services. However, this is

stifled by regulatory, systemic and cultural trust issues, retarding the collection and use of health

system data in Australia. So much more could occur. Nationally, anonymised data sets are

available to support health research. AI will enable the co-relation of this data with myriad other

datasets and enable large scale algorithmic experimentation.

The collection of data from clinical equipment, eg MRI scanners and surgical robots, clinical

electronic health records, facility based room sensors, personal monitoring devices and mobile

apps is allowing for more complete digital health records to be compiled. Analysis of these

records will evolve clinical understandings. For example, in the US recently, NTT Data

announced a Unified Clinical Archive Service for radiologists, to provide machine learning

interpretation of MRI brain imagery. Partnered with software provider AnatomyWorks, the

service provides digital translations (algorithmic) of MRI brain scans and contains complete data

sets of normal brain functions gathered from John Hopkins University in the USA. Radiologists are

able to quantitatively evaluate their patient results with the normal population to improve

diagnostics. Each new dataset adds to the eco-system of knowledge.

Health data collection also supports the design and delivery of new clinical pathways for an

integrous continuum of care across the modalities from general practitioner, hospital, community

and home. Patients, carers, family and providers are all increasingly interacting with intelligent

sensors and machines in a collaborative relationship, hence, the users digital interface becomes a

key interaction point. AI will enable the interface and information to be presented in context for

each stakeholder.

Education – AI promises to enhance education at all levels, particularly in providing

personalisation at scale for all learners. Interactive machine tutors are now being matched to

students. Natural Language Processing, machine learning and crowd sourcing have boosted

outcomes from online learning and the growth of this data pool is continuously evolving



capabilities. Learning analytics can detect how a student is feeling, how they will perform and the

best likely interventions to improve learning outcomes.

Online learning has also enabled great teachers to boost their class numbers to worldwide

audiences, while at the same time, student’s individual learning needs can be augmented through

analysis of their response to the global mentor. Post graduate and professional learning is set to

become more modular, point in time and flexible, with AI used to assess current skills and work

related projects and match learning modules of most immediate career value – an assemble your

own degree experience. Virtual reality along with AI, is also changing learning content and

pathways to mastery, and so will be highly impactful. AI will never replace good teaching, and so

the meaningful integration of AI with face to face will be key.

Public safety and Security – Cyber security is a key area for applied AI and is discussed further

ahead. Machine learning from AI against the datasets from ubiquitously placed cameras and

drones for surveillance is also a key area. In areas of tax, financial services, insurance and

international policing, algorithms are improving the conduct of fraud investigations. A significant

driver for advances in deep learning, particularly in video and audio processing has come off the

back of anti-terrorist analytics. All of these things are now coming together in emergency

response planning and orchestration and in the emerging field of predictive policing.

Entertainment – digital media has transformed entertainment, and AI has seen this globalised on a

massive scale. The rise of Youtube and Spotify, for example, has come about through deep

learning and natural language processing. This has enabled both the technology platform and

the business models – Spotify’s algorithm for generating personalised music lists is key to its

success. AI enhances the composition of music, generates movie scripts and news stories, and

with Virtual Reality, now generates scenes in 3D from natural language scripts. AI will

increasingly drive new forms of entertainment that are interactive, personalised and engaging.

Virtual Reality / Augmented Reality and the Human

Machine Interface The lines between

the physical and

digital worlds are

merging, along the

‘virtuality’ continuum

of Augmented and

Virtual Reality.

Augmented Reality

(AR) technologies

overlay digital

information on the

‘real world’, the digital information is delivered via a mechanism, such as a heads up display,

smart glass wall or wrist display. Virtual Reality (VR) immerses a person in an artificial

environment where they interact with data, their visual senses (and others) are controlled by the

VR system. Augmented Virtuality blends AR and VR. As virtuality becomes part of our daily

lives, the way we will interact with each other, learn, work and transact are being re-shaped.

Games have lead the innovation curve with AR and VR. Pokemon-Go, an AR ‘treasure hunt’ game

set in the physical world burst onto the scene in 2016, quickly amassing more users than Tindr.

Beyond games, AR and VR have obvious use cases in the consumer market, enhancing sales,

marketing and communications and providing new experiences in tourism (virtual holidays),

sports and entertainment (3D viewing and augmented big data analysis). Recently a VR and AI

platform (Psibernetix) won a simulated flight combat battle against a retired Air Force Colonel.

The platform is likely be utilised for real world combat flight assistance.



Enterprise possibilities for adoption of AR and VR are far-reaching. In terms of AR, high impact

functional uses cases include 3D visualisation of data for workplace safety, quality management,

owner manuals, manufacturing and construction, inspections, operations and maintenance,

warehousing and training. Early adoption is occurring across Defence, Industrials, Utilities,

Resources, Logistics and Healthcare sectors.

Early enterprise VR use cases include teaching peacekeeping skills to troops in conflict zones,

creation of travel adventures, immersion in snowy climate terrain to reduce pain for burns victims,

teaching autistic teenagers to drive and 3D visualisations of organs, prior to conducting surgery.

It isn’t hard to imagine the impact on educational and therapeutic services, government service

delivery, a shopping experience, on social and cultural immersion for remote communities and

on future business process design and product engineering.

In June 2016, Riley, a 13 year boy with Cerebral Palsy, achieved his dream, to drive a car. Dr

Jordan Nguyen, biomedical engineer, developed a device to track Riley’s eye movements (the

only part of his body he can control) and enable him to use those movements to act as commands

for a computer that can then control a lot of things around his home. Most importantly for Riley,

this system was used to enable him to drive a car through an obstacle course.

Riley’s story is an illustration of the future for all of us. As our interactions with technology

become more seamlessly integrated, today’s computer keyboards and touch screens will be

augmented and even displaced with more humanised devices and control systems. The device

could be a smart glass wall, a garment with sensors, our skin, a VR character or simply the digital

‘atmosphere’ created from massive upscaling of connected sensors. Our conversations with our

machines will drive commands and so will our skin changes, brain signals, eye movements,

gestures or facial expression – in other words, by simply moving our bodies and doing what

comes naturally we will interact and direct the ubiquitous digital atmosphere. Furthermore, it

may not always be our physical selves interacting, it may be our digital presence, our ‘meta-me’,

who performs many actions for us independently.

Nanotechnology and 3D/4D Printing

Technology at the

molecular level is now

science fact, not fiction.

The combination of

quantum physics and

nanotechnology, is

opening up new fields

of research and

innovation in organic

chemistry, molecular

biology,

semiconductors and

micro-fabrication. This is resulting in new composite materials, nano sized intelligent devices and

self-forming molecules, impacting what we know ‘matter’ to be. The vast range of applications

includes nano-electronics, biomaterials, energy production, agriculture and consumer products.

In the near term, expect to see new self-forming robots (called swarmbots), nano-batteries,

building materials, chemicals, home and business electronics. However, nano-technology holds a

higher order purpose for humanity. It could provide a positive adaptive response to climate

change and crop failure and even more profoundly, impact our health and longevity. Nano-

medicine enables targeted and individualised cellular level interventions to prevent or treat

disease, disability or sensory impairment.

The 3D printing revolution is enabling new business models which impact traditional enterprises,

like retail, manufacturing, supply chain distribution, construction and industrials. It is also

http://www.abc.net.au/btn/story/s4473643.htm



spawning new smart materials, such as food compounds, human tissue and construction materials.

As 3D enters mainstream, it will reshape what we want and how we expect it to be delivered to us.

4D printing refers to the printing of matter, for example, organic material, that can be self-

assembling and adaptable, changing shape and structure in response to the environment over

time (the 4th dimension). It’s conceivable to print and plant sea corals to renew the Great Barrier

Reef, to print self-cooking foods for space missions / disaster zones or to print human transplant

tissue that can adapt to body structure and chemistry.

Through the convergence of robotics, nanotechnology and 4D printing, scientists recently created

a bioray, a biologically engineered & printed stingray, comprising a gold thread skeletal

structure, rubber body and grafted rats heart tissue. The practical application of this will see

meaningful medical research, for example, disease eating nano-worms and bionic body parts are

under development.

Cyber Security and the Blockchain

Security attack

techniques are

becoming ever

sophisticated. The 2016

NTT Global Security

Intelligence Report

identified the top

threats as coming from

private access attempts

and exploitation

software ( this includes

a dramatic rise in phishing), web application attack, reconnaissance, application specific

attacking, brute forcing (up 135% and now emanating from over 75 countries), malware (also

dramatically on the rise), network penetration and Denial of Service (DoS). Of concern, the NTT

report cites that only 23% of organisations are capable of responding effectively. Industries most

targeted and impacted are (in order) government, manufacturing, hospitality (loyalty card dataset

are targets), finance, retail, healthcare and pharmaceuticals. Organisations should move to

improve their cyber resilience, addressing the risks of breach on brand, privacy, safety,

regulation, transparency and commerce. The NTT reports urges a comprehensive approach and

two key areas of innovation that enable this are security analytics and identity management.

Security analytics focuses on predicting and preventing breaches, the early identification and

intervention of threats to minimise harm and the forensic examination of intrusions to apprehend

criminals. It has emerged to counter the rise in sophistication of security threats and also in

response to regulatory change, requiring more stringent security protocols to be implemented

and to be shown to be in practice.

Adoption has been led by government and defence industries, as their data and applications are

most prone to advanced threats. However, the rapid advancement of cyber-attacks related to

identity theft, financial fraud, intellectual property theft and malicious business disruption is

impacting all enterprises, most notably in the IT & Telecom, healthcare, banking and retail

verticals. The NTT Global Threat Intelligence Platform (GTIP) is an example of security analytics

assembled as a toolkit of software and managed services platform, in order to proactively identify

and defend against threats through the intelligent consolidation and analysis of threat data from

multiple sources.

Bio-metric security is becoming the identity management standard as a more secure, convenient

and accurate form of authentication. Governments across the globe have adopted biometrics

based authentication for passports, voting systems, driver’s licenses, border management and

http://www.inc.com/lisa-calhoun/meet-the-first-artificial-animal.html

https://www.nttsecurity.com/en/who-we-are/threat-intelligence/gtip



national ID’s. Biometric user authentication is also being adopted to enable access to physical

and logical resources (buildings to computer systems). In mobile commerce, by 2017, the

biometric fingerprint sensor will become the predominant identification mechanism, due to its

convenience and superior security.

In healthcare, biometrics will also become the mechanism to identify patients, streamlining

benefits payments and reducing fraud. Innovations across the biometric modalities are expected,

from the mobile phone fingerprint sensor, to facial and iris recognition, chemical recognition from

smart clothing and electro cardiogram sensors and recognition of unique gestures. The industrial

internet of things redefines the way we use and secure devices and systems. Biometric security

will evolve to verify the identity of the person or thing interacting and passing data across these

exponential systems.

In line with the shift in business models from ‘inside-out’ to ‘outside-in’, Personal Digital Identity

Management (PDIM) sees individuals controlling their identity, their trust and information sharing

preferences with third parties. An organisation’s ability to respond to this user driven system of

trust will become a defining factor in who we choose to do business with. To date, PDIM has been

largely a concept tested through some piecemeal technology innovations. However, the concept

of each of us owing and controlling our personal data eco-system is now rapidly progressing,

through the mainstream emergence of the following, potentially most profound technology

disruption, the Blockchain.

Borne out of the design of crypto currencies, the blockchain is a peer to peer system of trust that is

intended to be inviolate. The blockchain is a series of distributed ledgers, each containing

information from a particular party. A transaction involves a party giving another access to their

ledger via an encrypted key. An end to end transaction comes together as a series of ledger

permissions – information is not flowed in and out of systems, rather blockchain ledgers can make

up a ‘virtual’ ledger pointing back to source. Blockchains can operate in the public domain, or, as

private (member only) peer to peer networks. Theoretically, it is impossible to breach this

system of trust as multiple parties would need to allow access for a violation to occur.

This means that past models of internally controlled systems, where data was transferred,

requiring verification of identity and trust across systems, in order to complete a transaction, are

redundant. Blockchain can be thought of as the next generation of digital operating system, re-

defining systems architecture at every level – infrastructure, networks, applications, data,

interface, device, security and identity.

Think about your experience today buying a home – collating personal data, getting finance

approval, signing sales contracts, engaging a conveyance lawyer, settling and having title

transferred – it is constipated with process repetition, data replications and siloed participants

and is risky in terms of your information flowing around (via emails, web forms and contact

centres), landing into centralised systems you do not understand or control, but which are data

honey pots for hackers.

Blockchain means that all of this can occur with you storing your data once only (in your

blockchain ledger), with end to end completion in a fraction of the time and cost. In July 2016, the

first property ownership transfer occurred in the United States on a Blockchain-powered real

estate platform (Ubitquity) – a paperless process and effortless experience for all parties.

Across most industries and their supply chains, a significant number of interactions and

transactions between parties and across entire supply chains can be ‘blockchained’, resulting in

streamlining, dis-intermediation of players and ultimately, re-design of organisations and

economies.

The earliest to market blockchain solutions broadly fit into four categories; verification (licenses,

proof of records, transactions, processes, events); movement of assets (transferring payments);

ownership (registries, titles, chain of custody for a physical asset, eg diamond trading) and;

identity management (e-identities for secure digital services such as voting, passports



referendums). The use cases across industries such as financial services, legal services, supply

chain, real estate, government services and trading platforms are flourishing.

Blockchain Early Adopters The potential for business simplification, cost

savings and new revenue streams is seeing

consortiums form, comprising blockchain startups

with traditional industry groups (such as finanaical

services) and legacy technology companies -

bringing together cutting edge expertise, agility,

innovation, industry reach and global scale.

Here’s some highlights from 2016.

BHP Billiton revealed that it will use blockchain

across its supply chain. The first initiative records

movements of wellbore rock and fluid samples to

better secure the real-time data that is generated

during delivery. Currently everything is being

tracked through spreadsheets. The blockchain

based system will drive internal efficiencies and

allow BHP Billiton to securely share data with

vendors with a constant understanding of status.

The Bank of England announced it was exploring

using distributed ledgers as part of the UKs

financial settlement system. Other central banks followed, including the European Central Bank

and the Bank of Japan

In 2016, IBM joined NTT, Accenture and others in

the Hyperledger project, a Linux Foundation

project focused on standardising blockchain

technologies. IBM then announced an aggressive

blockchain strategy that would incorporate

overhaul of its legacy banking platform used by

many of the world’s top banks.

In January 2017, the Depository Trust and

Clearing Corporation (DTCC) announced a

complex and large scale deal, to move $11trn worth

of credit derivatives to a custom distributed ledger

system based on blockchain technology from VC start up Axoni and managed by IBM as the overall

technology integrator. Multiple banks, who have invested in blockchain as a consortium (R3CEV)

are party to the deal. Global savings to the banks

could be as high as $20bn per year.

In 2016, two notable hacks of crypto-currencies violated the blockchain system of trust. This has spawned the next level of security maturation. NTT

Labs, in a venture with Apache Milagro

(incubating) and MIRACL are establishing a new

internet security framework made of cryptographic

service providers called Distributed Trust

Authorities. The results of this joint development

are now contributing to Apache Milagro

(incubating) using the code to build blockchain

security applications, multi-factor authentication,

secure communications, and data

governance/compliance, which meet the stringent

requirements for finance services, government and

healthcare

Of particular interest is the leap frogging

opportunity that blockchain affords legacy

constrained governments to improve services and

streamline bureaucracy.

Here’s some innovative public sector examples.

Delaware – is focused on moving state archival

records to an open distributed ledger, and also

allows any private company that incorporates in

that state to keep track of equity and shareholder

rights on the blockchain.

Singapore - is seeking to prevent traders from

defrauding banks, driven by an incident where

Standard Chartered lost nearly $200m from a fraud

in China’s Qingdao port two years ago. Fraudulent

companies used duplicate invoices for the same

goods to get hundreds of millions of dollars from

banks, so the Singapore government developed a

system with the local banks focused on preventing

invoice fraud by using the blockchain to create a

unique cryptographic hash of every invoice.

Estonia - has established an e-residency program

where anyone in the world can apply to become an

e-resident of Estonia. In return, residents receive a

digital ID card with a cryptographic key to securely

sign digital documents, eliminating the need for ink

signatures on official paperwork. An e-resident can

also open bank accounts using Estonia's e-banking

system, set up an Estonian company using the

country's online system and use their e-

services. With the blockchain, Estonia is bringing

worldwide residents to them virtually, and gaining

new revenue streams accordingly. Estonia also has

a healthcare initiative where medical records are

tracked, and as a patient, you know who looked at

your record and when. This puts you in control of

your own data, and you have transparency about

the medical care you are getting.

Georgia, Ghana and Sweden – are all developing

blockchain land registries, a key reason for

Georgia and Ghana being to provide tamper free

systems that overcome corruption concerns and

encourage investment. Sweden is planning to

place end to end real estate transactions on the

blockchain

United Kingdom - is exploring the use of a

blockchain to manage the distribution of grants.

Monitoring and controlling the use of grants is

incredibly complex, and subject to potential fraud

or abuse. A blockchain, accessible to all the

parties involved, is a better way of solving that

problem.

http://www.bloomberg.com/news/articles/2016-05-22/fraud-in-4-trillion-trade-finance-turns-banks-to-digital-ledger


20 Part Three: Disrupting Ourselves - What Needs to Change?

Part Three: Disrupting Ourselves - What

Needs to Change?

The Digital Social Balance Sheet If we accept the imperative to bridge the analogue and digital social worlds, what does our

transformed business look like and what re-defined asset classes will drive value for

stakeholders?

We have identified seven strategic capabilities that are a framework for business value creation in

the digital social era. This holds across all industries, though may be expressed differently and

have different relative emphasis for various sectors - for example, for stakeholder, read customer

experience, citizen experience, student experience, patient experience. This framework of

capabilities can be used in two key ways:

To construct your ‘digital balance sheet’ reporting – values and measures can be

assigned and monitored against organisational objectives

Across each capability we have defined five levels of maturity. This forms the Dimension

Data Digital Enterprise Capability Maturity Model (DE CMM), an holistic, globally

standardised transformation framework. From this innovative tool, organisations can

assess today, specify their target state, conduct competitive benchmarking and map out a

clear pathway for their business and stakeholders.



The Stakeholder Experience

Have you recently had an experience of fragmented interactions with an

organisation? Did it seem like parts of the organisation knew bits about you

and/or were only concerned with their tasks and not your need? Have you

experienced being passed from one contact centre agent to another, because

the channels to market are organised around the company’s products /

categories, not your multi-faceted relationship with them? Some banks, telcos

and government services come to mind don’t they!

These are manifestations of an inside-out organisation, where the traditional

business ‘value chain’ centres around offerings, the customer comes in at the

end point, interacting and transacting according to siloed systems and rules of

the business.

As an inside-out company expands its range of offerings, the fragmented experience will be

amplified, and if information is inconsistent across the channels to market, customer frustrations

will soon impact the top and bottom line. A web site with information inconsistent with another

channel, will result in a spike in call centre enquiries, which will take more time to complete, with

a lower rate of satisfaction overall.

The first steps taken to improve this scenario typically focus on creating ‘a single view of

customer’ through improved customer information systems implemented across the organisation.

Stakeholders at least feel better understood and informed because people from the organisation

are reading from the same file notes.

Consistency across all channels requires steps to integrate information across all touch points,

building stakeholder confidence in dealing with a common source of truth. The multi-channel

experience entails information and process integration across all touch points, for example, an

online search for home loan information may transition across to a contact centre agent via web

chat and from this, a video call with a loans officer may ensue. With its genesis in the .com era,

the 2,000’s, the multi-channel experience stems from an inside-out organisational perspective and

models transactional flows.

The omni-channel experience is achieved through thoughtful attention to stakeholder ‘journeys’,

which drive new outside-in business process flows and engagement patterns that flow seamlessly

and interchangeably across all channels. The quality of engagement with the user is of prime

importance here, after-all every transaction is preceded by interactions of exploring, imagining,

discussing, researching, comparing and deciding about something. These systems of

engagement should reflect an intelligent understanding of the stakeholder and an appropriately

personalised response. Ultimately, an organisation that flips from a single view of customer, to a

single view of organisation for the customer, contextually integrated into their digital world, can

sustain personalised, trusted relationships in the digital social world.

Stakeholders aren’t just customers (eg patients, students, businesses, consumers), but also, your

staff, business partners, the community and the broader social eco-system – anyone who interacts

with your organisation. Relationship management is multi-dimensional, an organisation’s

performance is impacted by how the digital social world perceives their products, leadership and

ethics, including social, cultural and environmental values.



Information Value

Information is the lifeblood of digital eco-systems. How well this is managed,

integrated, understood and leveraged determines your capacity for

differentiation, by deepening relationships, improving operational decision

making and investing resources selectively in purposeful innovation.

Data quality management is core hygiene. Organisations that are

operationally siloed, will also have siloed information systems, creating

redundancy, inconsistency and confusions over the source of truth. They will

be unable to effectively assemble views and analysis of the current

environment.

A whole of business capability for describing, managing, securing, sharing

and assuring information is a pre-requisite for analysing today’s business

performance, coping with the flood of data being generated in the digital world and exploring

digital frontiers.

Consistent data management and curation provides a foundation for an organisation to

intelligently receive and filter data from multiple sources, internal and external. This data can

then be more readily aggregated for analysis, insight and response, giving the organisation an

edge in learning and responding from its information assets. Master data management (MDM)

has emerged as a discipline in recent years. It drives organisation wide definitions of entities and

consistent application of them across an enterprise, which is critical for cross-functional business

activities to be streamlined.

Some organisations implement MDM around particular data sets (e.g customer data) or specific

applications (e.g ERP), which is an effective start, but the point of MDM is to create a common

language or framework for understanding across all systems and sources, which are broadening

beyond transactions and internal records to include third party sources, customer browsing

history, machine logs and social data.

A responsive Information value capability sees MDM approached as a ‘hub’ or competency

centre. Data management becomes an embedded function with high levels of automation. This

brainstem or middleware style competency includes automated acquisition and ingestion, data

de-identification, privacy preservation, security, governance and lifecycle management, the

assignment of common data structures and ability to query using enriched data models, non-

relational tools and advanced search (such as through natural language processing). This doesn’t

mean bringing all data together into a common repository or warehouse, this is not practical, or

necessary. The hub is a virtualised competency that can marry multiple data sources, internal and

external, static and dynamic, applying these competencies to the increasing variety, volume and

velocity of data flooding in from the digital world.

This effectively enables new ways of working with information, anticipating that increasingly,

people across diverse teams will collaborate, share knowledge, model and visualise data

according to a context and that what they learn and create, will also be shared back with a

context.

The exponential growth of information is beyond human consumption abilities. The distraction

and confusion this can cause requires filtering and visualisation of information that is faster and

easier to comprehend for the purpose of the user. The meaningful presentation of information

has become an important aspect of engaging users and accumulating information asset value.



Contrast the two visualisation methods of the same data sets below – a numeric data table vs a

block pattern. Which tells a story quickest and best for you?

The pinnacle of information value management for businesses is to accurately forecast risks and

opportunities, model scenarios and so make highly effective decisions. A predictive analytical

capability leverages data to anticipate the unknown future and predict outcomes. The focus is not

just traditional structured profiles, but unstructured (social) profiles of customers and employees.

This is the crystal ball gazing realm of data science. It uses data mining, statistical models

(algorithms), machine learning and AI against historical and current data sets to predict patterns

and probabilities.

Portfolio Development

Designing new digital products and services, or digital ‘wrappers’ for existing

products and services, is a critical organisational capability. If the customer

experiences your business through a mobile app, then that software interface

defines your product in the customer’s eyes. Digital start-ups, the disruptors,

start with no back office and no ‘analogue’ world assets to defend. For mature

businesses to compete in the same way, they may need to incubate a born

digital approach within their organisation, insulating new innovations from the

BAU models, culture and performance measures.

An inside-out organisation typically ‘innovates’ from within its product or go-

to-market divisions. Whether this takes the form of individual initiatives or

programmatic plans, the ultimate creative and innovation potential is capped

by inherent protectionism of the existing portfolio and a siloed scope of reference.

In line with movements in stakeholder capability toward a single view of customer and multi-

channel and also in line with information intelligence that enables deeper insights and

responsiveness, is the shift to stakeholder centric portfolio development. An example of this can



be seen from some banks, who are re-packaging and tailoring core products around typified

customer lifecycles for their target segments.

An integrated approach means that portfolio is viewed as a set of modular components

(technology, relationships and processes) that can be dynamically integrated to address an

opportunity. A portfolio can be considered an evolving services catalogue. This is a feature of

platform businesses. For example, Uber has continuously re-compiled its core assets to branch

from car sharing and rides, to fractional finance for vehicles, to insurance, to parcel delivery and

now home delivered eats. Uber’s strategy can flexibly evolve from its modular peer to peer

platform and franchise.

An outcomes focus recognises the centrality of perceived value for the stakeholder, according to

their criteria. Digital commerce is shifting from individual web sites to marketplaces, which are

digital eco-systems rich in expertise, discussion, feedback, options and comparative information.

Customer satisfaction, against the promise and expectations set, will be shared back with the

world. Therefore, the digital engagement and full service experience of the customer is as much

a part of portfolio design as the offerings themselves.

Smarter Processes

All organisations have core business systems (systems of record) that digitise

transactional processing. However, process maturity is discontinuous when

these systems are not connected and people need to seek out the secret sauce

about how things really get done around the organisation. People seek to

solve productivity constraints at their work group level, creating bespoke,

‘mandrolic’ work arounds and the organisation becomes hostage to the

‘knowledge is power’ phenomena.

Process capability improvements may focus on integrating discrete systems of

record to drive efficiencies within or across departments. Corporate services

teams, such as finance, HR or supply chain bring discrete functions together to

execute in a more interlocked, co-ordinated manner. This will lead to

consistent procedures, workflow, forms and business records for these functions.

Enterprise wide business process optimisation is enabled through cross system process

orchestration and governance, which is abstracted above individual systems, spanning the

multiple applications or functions. This re-design of processes is effective when implemented

with a similar approach to information re-design (Master Data Management). This capability is

required for real time processing, for example when offering online services – an internet

banking customer will not be satisfied if their account transaction details are not updated before

their eyes, because the legacy banking platform batch updates hourly. An online purchaser in

unlikely to proceed without a confirmed delivery time, which requires integrated knowledge of

inventory and supply chain.

Lean Six Sigma (LSS) has been around since the early 2000’s and has become the leading

approach to organisational process design. It combines the principles of Lean, the core idea

being maximising customer value whilst minimising waste across the value stream from product /

service to customer. Six Sigma is the methodology that strives to eliminate waste of resources

while assuring quality of processes and products / services. LSS has been perfectly suited to

optimising industrial era businesses. However, the conceptual models of value streams that

underpin LSS thinking are disrupted in the digital social era, hence, the decades of best practice



process IP created around Lean processes must undergo radical review. Much of the data

collation will be taken over by machines and devices and the analysis methods and tools will be

re-considered. The post-industrial Internet of Things is likely to transfer the practice of Six Sigma

from humans to smart machines.

An example where new process thinking is required is 3D printing, which turns the traditional

manufacturing value chain on its head. 3D reduces barriers to entry for product designers,

manufacturing becomes an additive process and the supply chain is largely disintermediated.

Current manufacturing ‘assets’, such as plant, equipment and know-how are becoming burdens.

As additive manufacturing techniques supersede traditional ones, established companies that

cannot make the switch risk being locked out the markets that were previously their bastion.

Even for efficiently integrated value chains, some people in the organisation, usually the highest

value knowledge workers, may still have to act as the ‘human glue’, integrating fragmented flows

outside and between systems of record. The reason for this is the lower priority placed on

systems of engagement in industrial era models. Transactional processes are important, yet they

represent the smaller proportion of an organisation’s business activities. The majority of activity

is unstructured in form and content, it is about people interacting, designing, problem solving,

strategizing, forming plans, presenting, consulting, exercising judgement, reaching decisions,

giving and receiving feedback, monitoring, measuring, governing, serving stakeholders. These

activities are enabled by systems of engagement, which support collaboration, unstructured

knowledge flows across eco-systems, cross functional teamwork and working to shared principles

and goals, more-so than linear, regulated processes.

Smart, data driven processes are digitally created and designed with reference to the stakeholder

journey (knowledge worker, customer, business partner), not just the organisation’s value chain.

These processes connect systems of records with system of engagement, enabling the blending

of data driven processing with human knowledge management. Humans apply principles,

experiences and cognition to their work, which is complemented with data algorithms, analytics

and machine learning. Processes become assemblies of patterns that can be published in a

business process service catalogue for all to access and apply across their work. Automated

processing events occur from the mere appearance of information, for instance from machine

sensors. An example of this is the automated treatment of lodged tax returns against benchmark

data parameters and occupational /business profiles, a form of algorithmic processing ‘triage’.

With rapid advances in artificial general intelligence, there are myriad opportunities to embed AI

to increase automation, augment and enhance knowledge work across the back, middle and front

office. Deciding where to focus for the greatest ‘bang for buck’ depends on a number of factors,

including the overall business strategy, stakeholder profiles and capabilities of staff. A large UK

corporate focussed their first AI use case on automating general ledger consolidations, cutting

effort from 4 person days to 2 hours. In Australia, we are co-innovating with clients to introduce

avatar digital assistants into the contact centre and online channels, to improve customer service

triage and omni-channel flows.

In the near future business process design is set to benefit from a universal virtual / mixed reality

design interface (we predict a 2-3 year technology breakthrough point). This will unleash

creativity in how processes are conceived, simulated, integrated, deployed and executed. From

this point, our standard applications will be designed with VR interfaces and embedded with AI to

support decisions and actions.



Business Models, Eco-systems, hand in hand with People

and Culture

Firms of industrial era mindsets have, at the centre of their

model, the firm, its shareholders and assets. Stakeholders,

including customers, staff and supply partners are defined

by their relationship to the centre, and they are required to

learn how to engage with the business. This can often be

the experience of patients in dealing with a healthcare

system that remains modelled around hospitals and doctors.

For instance, elderly folk with multiple chronic conditions

rely heavily on their GP as their primary care provider and

co-ordinator. They typically have their quality of life

impacted not just by their condition, but the stress of

keeping up with multiple appointments involving multiple

individual trips to specialist consulting rooms, recounting their case histories multiple times,

juggling referral letters, feeling confused about the status of test results and frequently re-visiting

the GP, who ‘owns’ the (presumably) integrated health care record of the patient. Perhaps the

most connected, patient centred aspect of this health system experience is when the pharmacist

dispenses their multiple medications into a single weekly blister pack.

Inside a supply driven business, knowledge is power, the business units have segregated

capabilities and they often compete for resources. Supply chain or value chain models extend

the integration of partners and create cross functional teams, but models remains linear, key

stakeholders remain external to the closed chain of value creation. It is typical for supply side

models to assume supply is finite, hence strategy and planning centres around achieving ‘critical

mass’ in static, product defined segments.

This typifies the traditional University. The campus is the central asset, housing faculties which

conduct a research agenda, set their curriculum and offer courses across a fixed calendar. The

operating premise is that prestige and therefore demand is generated from a university’s

knowledge stocks (research and academic assets).

In breaking with inside-out, supply side models and removing the mindset of capped resources,

finite potential, linear growth expectations - businesses must consider what changes they need to

make to their balance sheet assets. They must set aside old paradigms of asset ownership and

look to leverage the capabilities of others for greater operational improvement, business scale

and growth. Models become more open and adaptive, integrating new capabilities to cover gaps

and explore new partnership opportunities. Governance and risk management re-focuses from

locking down and controlling systems, to enabling systems of trust, putting in place effective

measurement of performance and value creation.



It is essential for leveraged business models to be aligned with a culture that embraces

collaboration and is resilient. Many a CEO has lamented the failure of an important partnership,

acquisition or merger through brittle culture clashes.

To respond to rising stakeholder expectations, organisations adapt their design thinking to

‘outside-in’. A rich diversity of perspectives is sought, optimising the design of stakeholder

centric systems of engagement. The business model becomes demand-driven. Innovation is

actively incubated and the business becomes capable of running a dual strategy - the BAU

alongside the agile incubation of ‘born digital’ portfolios.

A demand driven business is not merely reactive, it knows where it is going, having clarity of its

stakeholders expectations and the future landscape. The demand-driven organisation is

prepared to disrupt itself and will purposefully execute across three business horizons

simultaneously – optimising operations of the here and now business, innovating for agile, near

term gains that map to the future and re-designing around its Massive Transformation Purpose (a

term coined by Salim Ismail in Exponential Organisations). The leadership culture will be

tolerant of some uncertainties and mistakes and exhibit an outward focus, working actively across

the eco-system to build relationships for creation of sustainable value and upholding brand values

that earn stakeholder community support. The level 4 business model and culture enables the

bridging of an analogue and digital enterprise.

The step from level 4 to level 5 encodes digital social DNA. A business that can adapt dynamically

to the forces of change is also equipped to lead their chosen markets. They will become a

platform business, attracting others to their model, who will leverage their capabilities, creating

mutually beneficial relationships across the eco-system. The business does not imitate start-up

behaviour, it is a digital start up within a mature enterprise – a compelling combination of

abundant optimism with foresight, wisdom and heritage assets to tap into. Culturally, innovation

does not need to be protected or incubated, as it is now imbued as a way of being. The growth

strategy supports continuous exploration of opportunities.

Technology Fabric

At the most basic level of maturity, a business has some systems of record,

which may have some integration points with each other but are bespoke and

closed, operating from discrete technology ‘stacks’ of servers, databases,

network, web and security protocols. Users log in and out of systems using

multiple passwords. The IT function may have a help desk to service the needs

of users, but service management is basic and system monitoring is limited.

Systems are non-intuitive and management typically rely on expert users for

key outputs. There are no linkages between IT functions and organisational

strategy, IT is viewed as a cost centre and not a business enabler.

Virtualisation has been around since mainframe times (IDC Group use the term

1st platform), but rapid innovations have occurred across the past decade

(focused on the 2nd platform, client server), which have enabled aggressive commoditisation of

infrastructure, optimised utilisation of resources and enabled systems portability, including

migration of computing workloads to cloud services.

In simple terms, virtualisation abstracts technology into component services and allows for the

sharing of resources. The separation of operating systems and applications software from

hardware resources (hardware virtualisation) means that multiple applications can be run on



shared hardware. The abstraction of applications from operating systems (applications

virtualisation) means that applications installation, upgrades and maintenance can be simplified.

Data virtualisation abstracts data from the database (and in turn storage and applications)

allowing a single virtual data environment, making data flows and integration much easier.

Virtualisation can also be applied to storage, networks, desktops, databases, processing memory

and even within applications, to create modular, re-usable business functions.

The virtualisation of an IT environment, at a minimum at the infrastructure level, is a foundational

step toward enabling digital business transformation. This Digital Core capability sees IT

becoming a service centre capability, delivering core utility services and starting to unify some

user services, such as systems access and sign-ons. Systems that were once ‘owned’ by a

business unit and were vertically siloed, become part of a networked enterprise IT fabric.

Security is operationalised across the IT estate through protocols and a range of tools.

As with an athlete, from a strong Digital Core, it is possible for ICT to then become agile, in the

broad sense of the term. Agility, or being nimble and having cadence, is essential to service ever

rising stakeholder expectations for ICT to enable new systems of engagement for the digital

social world (IDC’s 3rd platform). These solutions are always available, responsive in real time

and adaptive to future requirements. At the same time, ICT is also required to maintain the 2nd

platform estate which the business relies upon for its established functions. An effective CIO will

partner with the business, aligning business strategy with ICT strategy, defining roadmaps and

enablement programmes that align with business portfolio priorities and timescales. Importantly,

the CIO will also be able to contextually apply appropriate risk management and delivery

methods across the systems portfolio, creating a blended (Gartner use the term ‘bi-modal’)

service delivery and sustainment capability.

It is unlikely that an ICT organisation will or can possess internally all the requisite skills,

competencies, tools and governance practices to manage the bridging of the analogue and digital

worlds. Instead, ICT must adopt a leveraged model, developing capabilities in services

integration and management (SIAM) and becoming the services broker of a suite of suppliers

using a variety of capability sourcing models - outsourced arrangements, managed services,

project services, partner secondments, university collaborations, blended co-innovation teams

and resource augmentation. SIAM integrates the multiple suppliers of services to provide a single

business facing ICT organisation. With access to broader capabilities, greater capacity and

specialist expertise, the ICT organisation is agile and the core team is more able to focus on

strategy, business value alignment, relationships with stakeholders and effective governance.

A cohesive transformational ICT function also implies an Enterprise Architecture (EA)

underpinning, providing technology design that interlocks with and guides stakeholder

engagement, governance and service delivery. The EA function creates the roadmaps and

reference architectures aligning business intent and business value with the technology eco-

system. EA will also shape and translate business demand themes into a ‘catalogue’ of component

functions and services. This demand catalogue will then inform the supply capabilities needed

and in so doing, direct the SIAM eco-system.

Some functional needs of the business will be unique, requiring custom solutions, but the majority

can be fulfilled through the integration of existing components, creating repeatable solution

patterns.

This leggo-like, modular design approach is not new, in ICT terms, object oriented software

programming and services oriented architecture have been around since the 1990’s, aspiring to

make use of discrete, re-usable component services and industry standard interfaces for

integration. However, the costs of integration and the low performance response of generic

platforms constrained this approach, hence the 90’s and 2000’s were known as the era of big

bang, expensive systems integration, not modular services integration.



Through cloud technology, and

the related rapid progression

in open standards,

virtualisation and more

recently, containers, more

granular modularity and

performance is viable. Hence,

services integration is the

architecture and operational

capability of born digital

businesses.

For a mature organisation, the

capabilities of Agility and

Modularity level the playing

field with the born digitals -

they allow the business to

participate in the digital

economy with cadence and an

opportunistic posture.

Multi-modal capability means

that the service platform/s can

utilise multiple resources for

differing needs, which are

dynamically brokered across the service provider eco-system. A knowledge worker could

choose best fit tools for collaborating, visualising data, authoring content or crowd sourcing a

challenge from an enterprise apps, tools and data store. Resourcing also applies to the formation

of people into virtual, collaborative teams, not just the provisioning of workloads across hybrid

infrastructure. Hence, there is an uplift in both tooling and culture. Technology enables pro-

active services monitoring, brokerage and platform management. The cultural change is about

team diversity, where the norm becomes multiple disciplines rapidly forming and bringing their

perspectives about enabling business requirements, collaboratively defining solutions from a

common, outside-in understanding of business value and stakeholder experience.

Innovation Incubation

A Multi-modal capability enables continuous capability delivery and within this, the ability to

experiment and incubate technology enabled innovation in support of the business strategy.

Innovation incubation

has a technology and

cultural dimension. A

co-innovation platform

provides a forum for

stakeholder

engagement, the sharing

of challenges and data,

crowd sourcing and

ideation from the eco-

system and a

transparently shared

dashboard of the

progression of

experiments and

solutions.


30 Part Four: The Destination and Transformation Journey

The culture of the ICT organisation that will help innovation flourish is critical. Innovation,

whether tactical, disruptive or transformative, requires a creative and programmatic approach to

take ideas forward to solutions. To enable innovation as ‘being’, not just ‘doing’, the ICT

organisation needs to take a pro-active role in enabling the innovation eco-system. Ultimately,

innovation value will be maximised through co-innovation with stakeholders that extends beyond

the organisation. Through value alignment and transparent processes, ICT can guide the co-

innovation portfolio, such that an innovation investment will never be a great piece of technology

looking for a problem to solve.

Some Benchmarks

Earlier we sketched the journey of some market leaders in the global digital economy – Uber,

Alibaba and the Estonian government. Below we infer their capabilities as digital enterprises,

referencing the DD Digital Enterprise CMM. This is not based on a formal assessment, instead our

research of their organisational journeys and milestones, using published material such as articles

and case studies, as well as our personal experiences engaging with their platforms.

Where does your organisation sit? Think about your best and worst experiences with a business

or government organisation this year and based on that, what is revealed to you about their

capabilities?

Part Four: The Destination and

Transformation Journey

There is much discussion around executive tables about determining the key aspects of the future

business model. Increasingly this centres on the aspects described in Parts 2 and 3.

The sense of urgency, opportunity, threat and risk can create confusion about the current state

and target state as aspects of the business, such as Portfolio Development, People and Culture and

Processes may be at different stages of evolution on the transformation journey.



Two things are critical to start the assessment journey. Firstly, the executive group need to be

aligned that each aspect of the business as outlined in the digital balance sheet is part of the

transformation and cannot be materially out of balance or at different, unrelated stages of

evolution if transformation is to be successful. For example, an initiative to introduce a mobile

office worker model will prove an uneconomic and ineffective investment unless the business is

also evolving to break down siloed departments, information is moving to a level of consistency to

facilitate common understandings and the culture of ‘knowledge is power’ is being replaced with

default principles of ‘need to share’.

Secondly, it is important to baseline the current state of maturity, independent of any target state

thinking, as a fact based exercise. This will be revealing about how the organisation thinks and

operates across business functions. It is likely that capability maturity will be distributed within a

band of one or two levels, with some outliers, including discrete pockets of leading practice that

may exist in a particular business area. In a recent base-lining exercise, the marketing team had

developed detailed customer segmentation and profiling analytics. They were frustrated by the

organisation’s inability to leverage this information intelligence to execute effective sales

campaigns. However, people from the supply chain had not been collaborating with marketing

on the profiling exercise and did not contribute all of their customer data. Also, the profiled data

was not available to view from within the customer information system that was used by sales and

service staff day to day to engage with customers. Not surprisingly, there was limited value

derived from these stellar efforts of marketing because it remained siloed. The current state

assessment objectively diagnoses and frames these realities.

Target state development will be informed but should not shackled by the current state realities.

Current state paradigms and problems may seem insurmountable, making it hard for people to

imagine a different future. Disruption means that this mindset cannot prevail and this is not an era

for incremental change but an era of step change to survive and thrive in new times. Definitions

and assumptions surrounding the organisation, industry sector, value chain, operating

boundaries, regulatory environment and performance framework are to be re-examined. The

digital social era industry view is particularly important to review and will influence the priorities.

The overarching vision and goals for a bank, insurance company or a retailer could vary

significantly and shape the sequencing of their transformation. The bank priority may be about

access to information to drive tailored customer experience, the insurance company may have an

immediate focus on the need to access information to meet new regulatory requirements and the

retailer may use information for improved customer segmentation and product positioning.

A range of perspectives should surface around the ability of the organisation to understand and

agree on the business priorities, to absorb change, to have access to the investment required, the

time it will take and the capability of the organisation to execute successfully. A diversity of views

is healthy as it shows no one group’s views dominate and a broad cohort are actively engaged.

Leadership will need to be front and centre in this target state development. It will be critical to

think unconstrained, challenge incremental, shift the risk dial and to reference real scenarios

where the digital business world is dramatically transforming organisations within industries and

public sectors.

Assessing The Current State

If you are an existing business and not a start-up, the current situation assessment begins with

capturing the journey so far - the changes that have occurred to the business model and the forces

that have driven these changes. This will set a foundation of understanding to continue on from as

the future state is developed. It also recaps on some of the less obvious characteristics of the

business in terms of appetite for change, ability to execute, decision making quality and the

degree of collaboration that occurs across stakeholders in executing strategy.



To illustrate this, imagine yourself the CEO of a company called Bubbles, with a mission since 1980

of being “leaders in advanced hair care products”. The business followed a strong trajectory from

the time of inventing an advanced range of products for different hair types. They were leaders for

two decades, mastering key functions of manufacturing and distribution, category management

and sales optimisation.

Bubbles made forays into the online channel during the .com era, and then matured their

approach with an early shift to e-commerce. From 2009 to 2016, incremental changes were

adopted, such as improved e-commerce functions, new forms of online advertising and a

Customer Relationship Management system (CRM) implementation, which provided a single view

of customer account activity. Nevertheless, Bubble’s market share has declined and profits in

chosen categories have been undermined by increasing competition.

To meet shareholder expectations of continued returns, deep cuts to the bottom line were

required, impacting their R&D activities. The board and executive know this is not a sustainable

approach into the future.

The digital balance sheet provides the framework to assess the current state maturity across the

seven strategic pillars. This process will also enable comparisons within and across industries and

identify competitors that are well behind or well in front in terms of their current state.

(please note Bubbles is not a real company and the assessments of L’oreal Professional and StrawberryNET are illustrative

examples only).



Envisioning The Future State – Vision Unplugged

The Board and Executive table discussions needs to step back from thinking about the evolution

of the current business and to think in an unconstrained, “the art of possible” manner as to the

impact of the four forces of global digital disruption. What are the opportunities, threats and risks

that these provide? What is in the best interests of the shareholders given an acceptance of the

need for material change to the business model to remain relevant and to aspire to a leadership

role in the industry the organisation currently operates in? Is a new industry play now possible?

What is your future digital business? How will it drive the business outcomes and value you

expect and some that you haven’t envisaged at this point?

Returning to Bubbles and your role as the CEO. In 2016, the board and your executive reviewed

business strategy in light of the declining performance trends and disruption that was evident in

the market. The group decided Bubbles would not follow a prevailing trend toward selling

through online B2C marketplaces such as strawberrynet.com, as this was a step toward

commoditisation and would alienate the B2B channel partners, the professional salons who are

skilled recommenders of quality, high margin products.

It was decided that

Bubbles needs to

re-engage its core

competitive

strengths, which lie

in product

innovation and

strong relationships

with the B2B

channel of

professional salons.

Bubble’s also needs

to more deeply

understand their

clients and in turn

their customers, becoming a B2B4C business. What they do know now is that their clients are also

being disrupted, the flow on impacts are evident.

Bubbles have flipped their mission from product to customer centricity, now focusing on ‘creating

personalised solutions for healthy, beautiful hair’. They have decided on a big bet and to also

explore some options in a lower risk, experiment and fail fast manner. The big bet is to re-focus

on R&D and accelerate the release of a first to market range based on nano-chemistry – treatments

that adaptively respond to an individual’s hair and scalp and also water conditions. The customer

experience also needs to stand out as fun, cutting edge, unique and personalised.

In order for their salon partners to thrive, Bubbles will explore an option to provide more inter-

connected support for their businesses by prototyping a digital salon management service. The

prototype service will provide the salons with an appointment system, customer information

management, integrated Point of Sale with accounting, Bubbles stock management and re-

ordering, business reporting, as well as a Bubbles co-branded facebook site with online booking,

digital promotions and customer chat. Bubbles will partner with a technology services integrator

to enable this. If successful this would give Bubble’s clients a competitive edge and build a digital

franchise model for Bubbles.



Bubble’s has run a co-innovation forum with some clients and modelled the following ‘art of the

possible scenario’ based on an experience for a client Jane, her customer Jenny and Bubble’s new

AI based online

digital assistant

for clients and

customers,

Amelia.

The Anatomy Of The Future State With the historic business journey and the current state of assets and capabilities understood, the

future business journey map can be created as the roughed out pathway to the future story and

realisation of the vision. This will model the main progressions anticipated from the moves

discussed – the big bets, real options and no regret type moves. The time horizon will be taken

from the leadership group’s view of their window of risk and opportunity and their capacity to

execute moves. It will be refined through more detailed transformation planning, but serves as a

high level story board, heralding the destination and journey for stakeholders and inviting further

perspectives.

When the Bubble’s team approached this step, they examined the following questions.

Is our business model digital and are we a platform business?

Do we divest current assets? What opportunities exist to connect our supply chain with

information and services from other providers / platforms?

What are the experience priorities for our existing and new clients and their customers

and our existing and new people and partners?

Do we have the people edge now and how will be attract talented people and partners?

Are we changing processes to become outside in?

Are we tracking the right risks? What crisis scenarios do we plan for?

Are we considering how we’ll deal with non-traditional competitors?

Where are competitors on their business journey map?

Which of the disruptive technologies are most impactful for us?

Have we modelled scenarios around alternate futures?

How are we building digital trust and intimacy with stakeholders?

Are we ensuring we protect and grow our new data assets?

What are the priorities for updating existing and creating new products and services in our

portfolio?

How long do we have to make the changes?



Discussion of the vision and business journey next focuses on the digital balance sheet, to identify

the assets and capabilities needed to realise the target state. This process provides a structure to

examine in detail the required capability shifts and their interconnectedness. The gap to target

state is clearly communicated and a common understanding of the nature of changes ahead is

formed among stakeholders.



About your digital business model (Neil Wilson, CEO

Oakton) The increasing ability to connect and share information in real time internally and externally is

creating the opportunity to not only be a platform organisation servicing other organisation’s

value chains but also a provider to the end customers who directly or indirectly consume the

products and services of the organisation. The Bubbles future business journey illustrates this

opportunity.

The digital business model has at its core the focus on business outcomes cantered around the

‘outside in’ thinking of the stakeholder experience (think broadly as customer and worker) and

the operational imperatives of access to information and connectedness within and across

organisational boundaries. Business outcomes are supported by the capabilities that stem from

the strategic pillars of the digital balance sheet, which are in turn enabled by the key

technology directions of the new era. This is represented right to left in the model below.

Guidance on technology enablers Having established the view of the target state, focus shifts to the “supply” side of the digital

business model and to assess the Information Technology “architecture” and delivery models

required to enable the transition for the organisation. Fundamental to this will be consideration

of the themes raised in discussion of technology disruption and the digital balance sheet

capabilities that underpin the target state.

The new world architecture must think more about “outside in” business thinking that caters for

the stakeholder experience. This will entail a platform based approach to information access,

through the implementation of the data circulatory system referred to earlier. The feedback

loops enable the dynamic creation of engagement scenarios in response to evolving

knowledge and intelligence about the specific relationship occurring between individuals and

the organisation.

The data circulatory system also applies to core transactional processing – in other words,

these systems and processes should be designed primarily with an information lens to ensure

real-time access to changing source data and engagement triggers.

The emphasis on security and integration will be heightened significantly as more information

types from multiple internal and external sources will be placed together in volumes never

seen before. This information platform, governed by master data management principles, will

be used to create very discrete and highly confidential information sets around customers,

employees, business operating models, supply chains and the organisations portfolio assets

and intellectual capital.

Regulatory requirements will also drive the need for information access and protection. More

broad scale and sophisticated protection of IT operating environments such as web sites and



mobile channels will be critical as they become core to the business operation rather than an

adjunct to the traditional core system dominated models. The core banking system has always

been the Holy Grail but now it ranks equally or behind the sophisticated and highly confidential

activity occurring on devices in people’s hands anywhere in the world.

The target state of the IT operating model will look very different to the traditional “asset”

based plan, build run lifecycle models. There will be less asset acquisition and implementation

across infrastructure, networks and applications and more focus on the integration platforms

required to enable multiple services from multiple providers to be integrated in a way that

supports the new technology requirements of the target state business model.

Skills will orient more around design, architecture, analytics and integration management and

there will be a much bigger emphasis on the new Intellectual Property of the organisation,

which will be more and more about the way information is organised, integrated and

provisioned and how the services required to enable this are being integrated from multiple

“as a service” providers.

Managing the coexistence of “old” and “new” will also be a challenge and the hybrid IT

operating models will mature, becoming key differentiators in an organisations digital

transformation success levels.

The transformational ICT model shown in the Technology Fabric section of the Digital Balance

Sheet provides a visual summary of these points. It illustrates the inter-related competencies

that are required to effectively enable the digital business model.

Transformation Phasing – Step, Run, or Leap? Having established the current and target state positioning (and supporting detail) on the digital

balance sheet framework the next key strategy is to determine how best to step out the transition

across horizons. Key to this will be:

Complexity of the change

Time to pay off of the change

The ability of the organisation to absorb change

Risk profiling of expected outcomes

Dependencies across and within the balance sheet pillars

Maintaining balance across the pillars

Achieving cost out to enable the innovation investment required to achieve the target

state

Business leaders and IT leaders will need to work together to create the horizon view of change

based on the business priorities and what’s required to be delivered. Dependencies across the

business and the IT environment will also be key to avoid silo thinking and rework of capability

that hasn’t been designed with a “whole of business” mindset.

Within each capability pillar, the analysis of the gap to target state will provide an overarching

view of where the changes need to be made. The holistic alignment across the pillars will create

the interlocked, portfolio view.

Leaders can use these various horizon planning inputs to consider different transformation

models. Is it better to do this by business function? geographical areas?, high priority market

protection / penetration areas?, quick win areas to drive momentum of change? Or, is a full scope

“big bang” change approach appropriate, as the business sees this risk lower than not making

the full change quickly?



For existing organisations with legacy assets, a key input to sequencing the transformation will be

the management of the existing cost base and how the transformation changes planned are to be

managed in an overarching investment / cost envelope. In most businesses the transformation

won’t happen with unlimited investment capacity, so a plan will be developed to cost optimize the

existing Business As Usual (BAU) environment, to enable innovation investments to be made.

Interestingly, some of the core technology changes discussed earlier are not only fundamental to

achieving the target state, they are also key enablers to “cost out” initiatives. For example, “as a

service” or cloud based approaches across infrastructure and applications should deliver savings

based on the consumption model. Application rationalisation and appropriate operational

outsourcing should also deliver sustainable benefits. These changes will be creating more

flexible resource management, in turn, speeding up responsiveness.

The cost out, speed up and innovation in analysis is key to supporting the horizon planning as the

commercial overlay will drive what can be done and when, in the most optimal way, within the

available cost / investment envelope.

Transformation propositions to board and executive groups that include this view are creating

new risk management conversations. Previously it was a discussion around the risk of BAU

change. Often this fell to the “do nothing” side of the ledger as making the change was

considered higher risk than achieving the estimated benefits.

In today’s conversations the view of risk has changed because the risk of not transforming and

innovating is of the highest order in a world of disruption at a pace never seen before. This is

driving a more aggressive approach to “cost out” as the risk of not being able to fund and action

transformation and innovation now far outweighs the risk of making BAU operational changes.

Horizons Of Change – Three Is The Number It’s conventional wisdom today that large scale, big bang change initiatives aren’t viable. Nor are

multi-phased iterations – these extenuate change fatigue and get lost somewhere in the middle

with non-emphatic steps, losing sight of the business intent.

The optimal growth planning approach progresses across three horizons. The overall timeline for

value realization from the business journey map sets the window of time. Generically, the first

horizon secures, extends and orients today’s important assets and capabilities to the future and

puts in place the core new portfolio approach – establishing foundations for growth. It should set

aggressive but realistic time lines, establishing the desired cadence. The second horizon extends

foundations, experiments, drives adoption, establishes the right teams, ways of working and eco-

systems and deals with barriers to change - iteration is to be expected. Horizon 3 exits

obsolescent assets and capabilities, executes selective big bets and embeds continuous



capability growth through small programmes that experiment with options for the business. For

each horizon, there will be fast wins and innovation opportunities appropriate to the capability

alignment and focus of the horizon. Horizons will overlap at the top and tail and some horizon

activities may run across the full timeline.

The analogue to digital transformation horizons will follow a general flow of:

1. Establish – laying out the digital fabric to create the core building blocks for the business

2. Extend - creating an agile and responsive capability

3. Enhance – embedding a new BAU of being innovative and differentiated

Themes And Theme Teams Horizons shouldn’t be waterfall tranches, with fully scoped out, locked down phases. They can

be approached as thematic groups or collections of activities, building up repeatable, additive

business capabilities across horizons.

Themes create and share common, modular capabilities, for example, a theme of deep customer

understanding will create data management, data modelling and insights that will be a re-used to

enable a theme of new digital product design, a theme of operational process digitization will draw

on secure by design standards, a capability developed under a theme of cyber continuity. The

outcome oriented description of a theme retains line of sight with the business intent. Bubble’s

transformation themes are laid out below, illustrating a pattern of transformational blocks. The

blocks will either develop specific capabilities or progress digital maturity horizontally. Note that

the technology fabric pillar is visualized as the underpinnings.

How would you mobilise teams to own these outcomes? Form theme teams empowered to own

their outcomes of course. Highly capable theme teams are drawn from all parts of an organization

(including the eco-system) and are integrated to prosecute their charter. They are empowered

to set their charter and formulate the team viability goals, individual learning goals and

performance goals. They ensure they understand the broader portfolio of change, use this as

context and create the interlocks needed with other theme teams. They have clear ‘rules of the

shed’ in place that value their diversity, maintain openness and respectful communications,

encourage questioning and debate and expect fair fighting in cases of vigorous disagreement.

With growing levels of self-management, these teams will be alert to their responses to

performance pressure, call out signs and support each other. In other words, capable theme

teams will exhibit high levels of EQ along with IQ.

The theme team approach does not require organizational re-structuring, it can be a virtual team

structure, integrated for the series of horizon activities. However, theme teams are likely to


40 Conclusion

become the model of dynamic organizational design and ways of working in the future. So, the

theme teams in action allow for experimentation and observation of new models for managing

talent and performance and generating productivity and creative output.

An outside-in mindset will continuously scan markets and stakeholders for unforeseen shifts in

expectations, new opportunities and emerging threats. To exploit this, consider establishing an

innovation function from the earliest possible point. The innovation function could be mobilised

in the same way as theme teams. It would act as an innovation incubator and accelerator service,

for the theme teams and the BAU business functions. It would enable ideas harvesting, taking

these through a model for evaluation toward purposeful experimentation, using methods such as

rapid prototyping / minimum viable experiment (see a model provided under the technology

fabric section for further detail).

Successful innovation would have the potential to be injected into the horizon plans, accelerating

or leap frogging a themes outcomes. Until innovation is imbued into an organisation’s very being

(typically a Horizon 3 payoff), it is best established as a function serviced by ICT and sponsored

by the business, but not part of BAU functions – the skills, teams, processes, culture and

performance focus will differ and each will distract the other.

The journey – views for all stakeholders

The variety of stakeholder perspectives, roles and responsibilities in digital transformation

requires a tapestry of information to be woven that can be viewed and magnified from many

levels. Leadership teams will follow horizon summaries (horizon 2 example from a university

below), mappings of deliverables to costs, outcomes and business value realization, dashboards

tracking business risk, impact and critical success factors, business and stakeholder scenarios

and journey maps. Execution teams will work with detailed programme and resource plans,

stakeholder engagement plans and the transitions in the stakeholder focused digital services

catalogue. ICT will additionally require business reference models, process flows, transitions in

architectures, service integration and management and the supply catalogue.

This adaptive, personalised approach to information needs, is illustrative of level 4 capability in

information value management - from a common data source, different views can be generated

that match theme teams and individual stakeholders modus operandi, decision making style,

roles and responsibilities.

Conclusion Every business is becoming a digital business. Some businesses are being caught off guard by

the pace and nature of change, finding themselves pulled into the digital social world by the

forces of disruption and the new rules of engagement set by clients, consumers, partners, workers


41 Conclusion

and competitors. Getting on the front foot is important, in order to control your destiny and assure

future success. The disruptive forces upon us present opportunities to create a new future and

value for your organisation and stakeholders. There are also risks, but the risk management

approach of doing nothing is not viable in these times.

The digital balance sheet

and seven pillars of digital

enterprise capability can

be used as the paving

blocks for your pathway

from analogue to digital.

The framework can also

guide and measure the

progressive journey

across three horizons of

change. Effective 3 step

horizon planning follows a

pattern for course

charting and has flex.

The pace and fidelity can be dialled up or down to respond to ongoing disruption and the

dynamic context of your organisation’s digital world. Value your analogue experience, embrace

the essence of outside-in thinking and the new business models this brings about. Step forward

with confidence to make yourself different in the digital social world - and perhaps even journey

to the beyond and other.

The journey is also the destination – mobilise theme teams, drawing on diverse skills and

perspectives, empowered to act using quality information that is meaningful to them – and this will

become your most valuable asset.

the exponential digital social world...(boomers and x’s) grew up learning and sharing knowledge...

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