The tl;dr of ‘Digital Posture’:
- Organizations with mature digital capabilities are more agile and resilient to external shocks.
- Digital Posture has four facets: Breadth and maturity of digital products & services portfolio, end-to-end data enabled digital processes, completeness of digital tooling, and the sophistication of digital culture.
- There are straightforward metrics for assessing the maturity of your organization’s digital posture
- CEOs, boards and leadership teams should be focused on improving digital posture maturity for their organizations.
Covid-19 is not the first massively disruptive event we have had to navigate, and it will certainly not be the last. But what we are now managing makes clear that the maturity of an organization’s digital posture directly impacts its resilience and ability to adapt quickly to these types of external shock.
In military strategy, force posture is defined as the combination of materiel, capabilities, placement, infrastructure, personnel, industrial base and the economic wherewithal to bring capabilities to bear quickly. The same strategic analysis can be applied to any organization’s need to compete, grow and adapt to challenges in today’s digital economy. We use the term digital posture to describe that analysis.
Digital posture: The combination of digital products and services, processes, tooling, skills and culture that enables an organization to achieve its strategic objectives and to adapt and respond and be resilient in the face of adversity.
On the other side of the Covid-19 pandemic – hopefully in just a few months – CEOs, boards, leadership teams and staff will need to internalize how effectively their organizations coped, what lessons need to be learned and applied for the future and where deficiencies in digital posture impacted the ability of the organization to be truly resilient in the face of change and adversity.
Understanding your organization’s digital posture and taking actions to improve it should be a core part of CEO and board’s fiduciary responsibilities.
Accomplishing strategic objectives – be they revenue and profitability targets or advancing a mission – requires overcoming daily challenges. Organizations compete in markets for business, for the attention of consumers or influence policy makers and the public to advance a mission.
No matter what objectives an organization is pursuing, the primary means of achieving them today is likely to be digital in nature. An organization’s ability to execute strategically and to be resilient in the face of adversity hinges on the maturity of its digital posture.
If we learn any business lesson from the Covid-19 disaster, it will be that we can no longer be ambivalent about the maturity of our organization’s digital capabilities. Having a mature digital-ready culture, digital tooling and a robust portfolio of digital products and services has become essential for all organizations. Digital posture is everything!
Assessing digital posture
The maturity of an organization’s digital posture can be assessed against four key capabilities:
- Digital products and services – The portfolio of revenue or mission driving digital solutions the organization makes available to its customers and partners and the product management processes required to keep them aligned to market of mission needs;
- Digital processes – The degree to which the organization’s key operational processes are digitally enabled, automated and informed by data;
- Digital tooling – The platforms, services and data-landscape upon which the business of the organization is carried out and through which connections with customers, partners and stakeholder are facilitated; and
- Digital culture – The combination of talent, skills and relationships that enable an organization to fully exploit and leverage digital processes, tooling and the evolution and creation of new digital products and services.
Culture is the foundation that underpins and enables each of the key aspects of digital posture.
True strategic effectiveness requires maturity in each of the areas above. Maturity of digital posture is a sum of maturity in digital processes, tooling, product and services, with culture having an out-sized role and impact. Strategies to improve digital posture require a balanced approach of improving in each of these four areas with close alignment between them all.
There are a small number of critical indicators of digital posture maturity. They aren’t complicated to assess or to measure and they don’t require a deep background in technology to understand and act on.
Digital products and services
Building a diverse portfolio of digital products and services is essential for organizational resiliency and the ability to respond to emerging challenges and changing market and customer needs. Digital products provide an opportunity to continuously deliver value to customers beyond a one-off sales transaction or service intervention.
Extending traditional physical products or human-delivered services with digital capabilities provides a flow of operational usage data that enables much more effective way of sensing change and providing early warning of emerging needs and threats. Most importantly from the perspective of strategic digital posture, digital products and services can be re-tooled, repurposed and evolved far faster than traditional products that depend on complex physical processes, infrastructures and a web of human intermediated decisions.
Tesla Motors is perhaps the most impressive current example of a company transforming and extending a traditional physical product category with digital products and services. Tesla is really a software company that happens to build vehicles to move that software around. The value of this approach has been well documented elsewhere but some of key benefits are: An ability to continuously deliver value by updating and delivering new services over the life of the car, the ability to provide automotive capabilities such as autonomous driving that would not be possible without a rich, connected digital services platform in the car, and the ability to provide responsive emergency service in the case of an accident.
Mature digital product organizations have robust product management processes which use customer usage data and feedback to drive planning processes and defined roadmaps. These organizations apply an iterative approach to delivering ongoing feature enhancements with prioritization driven by data-driven hypotheses development and validation in the real-world. Using data in this way enables a positive feedback process to drive continuous product or service improvement.
Key metrics that might be used to evaluate digital product and service maturity would be:
- Percentage of an organization’s portfolio of customer and partner interactions that are self-service enabled;
- Percentage of an organization’s total revenue derived from purely digital product and service offerings;
- Percentage of an organization’s product and service portfolio with customer and business driven prioritized backlogs; and
- Total cycle time of product and service enhancements and releases.
A few years ago we were invited in to assess the data-capabilities and data-flows of a global brand named CPG company. As part of that engagement we mapped the core business processes from raw materials through manufacturing to distribution and retail sales. Remarkably we did not find one process – or even a stage within a process – that did not require an employee to intervene and make a decision, or massage data from one form to another. This is an organization that spent many millions of dollars on IT and data capabilities and yet from a digital process perspective is clearly not at a high level of maturity.
It would be hard to find today any startup organization whose core processes were not almost entirely automated and anchored around a central 360 degree view of data. New businesses today are born digital. It is these organizations that are disrupting traditional markets and creating new competitors for longer tenured organizations.
Integrated data capabilities provide the lifeblood for making responsive, evidence-based business decisions. Without access to a 360-degree view of the data for your operations you are flying blind at the best of times and have a critical deficiency in times of crisis.
Key metrics that might be used to evaluate digital process maturity would include:
- Percentage of an organization’s portfolio of core business processes that are carried out end-to-end in the digital domain;
- Completeness of integrated 360 view of core operational process data captured, analyzed and used to improve process effectiveness (email does not count); and
- Percentage of employees whose roles involve them being a decision, approval or transformation step in a core business process or customer interaction.
Modern cloud computing platforms and cloud services, application architectures and integrated data capabilities give organizations that use them three significant operational advantages.
- Scalability – The ability to scale up AND down as market and customer demands change, moving fixed operational costs to variable costs that align with demand and revenue flows;
- Resiliency – Applications and infrastructures built on top of cloud computing services provide levels of operational resilience that are incredibly expensive – or even impossible – to replicate with traditional on-premise IT infrastructures; and
- Data integration – Modern cloud computing services streamline the process of sharing and aggregating operational data and the ability to analyze and act on that data.
Integrated data capabilities provide the lifeblood of making responsive, evidence based business decisions. Without access to a 360 degree view of the data for your operations you are flying blind at the best of times and have a critical deficiency in times of crisis.
Key metrics that might be used to evaluate digital tooling maturity would include:
- Percentage of IT operating, business process and digital product and service operations costs that are fixed vs. variable (flexible IT operations based on agile platforms enable an organization to scale costs up and down as demand changes);
- Degree to which infrastructure enables an integrated 360 degree view of data assets and ability for data to freely flow within and between systems; and
- Percentage of an organization’s digital tools portfolio enabled for ‘zero trust’ deployments (secure and accessible from anywhere and not requiring staff to be in a physical corporate location or even behind a corporate firewall).
Netflix is perhaps the most-lauded example of a mature digital culture. The keys to that culture have been frequently articulated by CEO, Reed Hastings and are available for anyone to peruse on Netflix’s Jobs site.
There’s no need to reinvent the wheel. Netflix lays out an excellent set of principles that would help any organization trying to build an empowered digital culture:
- Encourage independent decision-making by employees.
- Share information openly, broadly, and deliberately.
- Be extraordinarily candid with each other.
- Keep only our highly effective people.
- Avoid rules.
Culture change requires leadership and leadership starts with the CEO and C-suite executives, supported by their boards. Leadership teams have to be the champions of culture change, consistent in applying these operating principles every day and in every situation. Digital cultures undermine traditional command-and-control models of organizational governance. This requires senior leaders to give up explicit control. That’s a tough thing to do.
Key metrics that might be used to evaluate digital culture maturity would be:
- Percentage of operational decisions that require face-to-face negotiation and agreement;
- Percentage of operational decisions that require specific approval by a more senior member of staff;
- Percentage of time staff are expected to be in physical office locations;
- Percentage of time CEO and senior leaders spend communicating with staff via real-time communication tools; and
- Percentage of operational decisions that are augmented with live data from operational processes.
Taking the next step
Hopefully the measures and factors laid out above provide a good starting point for an analysis of your organization’s digital posture and the steps you might take to improve maturity in each of the four critical areas.
The principals at Digital Prism Advisors have many decades combined experience in senior operational roles in digitally mature organizations. Feel free to contact one of us directly to set up a conversation about how we might help your organization assess and implement the strategies required to build resilience and improve your organization’s ability to adapt and respond to the challenges ahead.
|Adriaan Bouten, CEO, dPrism||[email protected]|
|Len Gilbert, COO, dPrism||[email protected]|
|Jonathan Murray, EVP & CTO, dPrism||[email protected]|