Context of digital transformation. econsultancy webinar

The context for
digital transformation
Neil Perkin, Consultant

We are thought leaders in
2
As leaders in digital insight, Econsultancy has produced a
series of research reports relating to the topic of digital
transformation, including:
• Organisational structures and resourcing
• Securing board buy-in
• Insourcing and outsourcing
• Agility and innovation
• Skills of the modern marketer
These reports tackle the issues that senior digital leaders told
us were most important to them.
Learn more about the digital transformation journey at
econsultancy.com/transformation
Econsultancy econsultancy.com/transformation

The context for
Professor Richard Foster, Yale University
3Econsultancy econsultancy.com/transformation
Only 63% of S&P 500
companies a decade ago are
still in the index today
- Thomson Reuters

The context for
IBM Institute for Business Value Global C-Suite
Study based on 4,000 interviews with C-Suite
execs worldwide
CEOs consider technology to be
the single most important
external force shaping their
organizations

Is this
digital transformation?

The context for
FASHIONISTAS DIGIRATI
http://www.capgemini-consulting.com/the-digital-advantage/
These more digitally mature companies
(or 'digirati') are able to combine a focus
on change through new technology,
with a concurrent focus on change
management, people, process, and
culture.
The study found that this group of
companies were, on average, 26%
more profitable, had a 12% higher
market capitalization, and derived 9%
more revenue from existing assets.

The context for
61
Barriers to agility and progress
Legacy technology
is our biggest
barrier. It’s not just
the technology, it’s
the policy, training,
behaviours that
surround it.
Which of the following are the most significant challenges or
barriers to digital progress for your organisation?
57%
37%
34%
34%
28%
26%
24%
22%
9%
6%
Legacy systems and processes
Finding staff with suitable digital skills
Difficulty joining up data
Focus on short-term revenue targets
Senior management buy-in for investment in
resourcing and training
Training / upskilling staff
Identifying correct priorities
Making business cases for investment
Keeping hold of digital staff
Finding suitable agencies
Econsultancy, Organisational structures and resourcing best practice guide

The context for
Barriers to agility and progress
Accept that if
people around the
Board table fail to
grasp what it is you
are doing or why…
it is your failing not
theirs.
Our board / senior managers have a good grasp of the potential of
digital channels for our organisation
31%
44%
3%
13%
9%
Strongly agree Partially agree Neither agree or
disagree
Partially disagree Disagree
Econsultancy, Securing board buy-in

Digital transformation
structures

 


02 CENTRE OF EXCELLENCE
03 HUB-AND-SPOKE
04 MULTIPLE HUB-AND-SPOKE
DISPERSED 01
FULLY INTEGRATED 05
Digital transformation structures
The evolution of team/organisational structures
The most digitally mature companies tend to use
the Multiple Hub-and-Spoke model, but the
majority of businesses are utilising the Centre of
Excellence or Hub-and-Spoke models.

A model for the allocation of resource
Ecommerce
Digital Marketing
E-Business
Strategy & Planning
SEO
PPC
CRM
Affiliates
Display
Analytics/data
Content Marketing
Social media
UX
Design
Content/UX
Mobile
Operations
CMS
Small change
request
Tech/Build
Brand
Customer
Insight
Brand strategy
Large scale
request
Web Build
(Social Media)

Lack of learning outside of Centre of
Excellence
Lack of focus on smaller business units
Hindrance to integration
Shared learning within Centre of Excellence
Consistency & control: processes,
terminology, standards, measures
Governance & focus - efficiency in resource,
prioritisation, unified commercial entity,
senior buy-in
Focal point for the business, Scalability in
support & tools
01
02
03
04
ADVANTAGES DISADVANTAGES
The continuing importance of centres of excellence

Hub as Strategy, spoke as execution
The desire for greater integration and
potential devolvement of expertise
“I think we’ll see more strategic
aspects, like the development
of capability, remain at the
centre, but more devolvement
of the executional stuff to the
local teams”

We used to have a
more functionally-
based team but now
the lines between
content, SEO, social
are less clear so we
increasingly need to
join things up more.
Most exciting opportunity 2015 vs ‘5 years time’
The importance of customer experience and content
Econsultancy Quarterly Digital Intelligence Briefing – Digital Trends 2015
22%
15%
13%
11%
11%
7%
7%
6%
5%
3%
20%
8%
8%
16%
14%
5%
12%
7%
4%
5%
Customer experience
Content marketing
Mobile
Personalisation
Big data
Social
Multichannel campaign management
Marketing automation
Video
Location-based services
Most exciting opportunity in
2015
Most exciting opportunity in
five years' time

Two-pizza teams originate
from Amazon and is an
organisational structure
focused around small teams,
typically comprised of 8-10
people ('Two-Pizza' teams -
the number of people who
can be fed easily with two
large pizzas).
• Individuals and small
teams can have a massive
impact
• They can experiment, fail,
try again, and more easily
get their successes to a
global market
Two-pizza
teams

skills

skills
IBM CMO Study
Marketers are redefining their
relationship with technology:
Re-invention is required, but
most are still feeling their way.

CMOs need to be able to pull
together multiple threads and
weave product campaigns
with customer conversation.
This kind of strategic planning
outlook once sat with our
agencies but is coming
increasingly in-house. You can
no longer only have a
traditional campaign calendar
– you need to be more agile,
iterative and plan quarterly or
even monthly.
Digital transformation skills
The rise of the marketing technologist
Only 18% marketers feel that they currently have the
marketing technology they need to succeed.
Source: Scott Brinker

The softer skills
are what will
define the
successful
digital marketer
of the future.

The rise in soft skills
How important would you say the following softer skills or behaviours are
to being an effective marketer in the modern digital world?
75%
63%61%
45%45%
38%
26%
24%
33%
32%
44%45%58%
57%
1%4%
6%9%10%
3%
14%
1%1%1%1%3%
The ability to
embrace
change
Ability to spot
opportunities
and adapt
strategies
quickly
Being
passionate,
hungry to learn,
curious
Being open and
collaborative
Ability to deal
with uncertainty
Lateral thinking,
and the ability
to make
connections
between
disparate ideas
or concepts
Being
comfortable
taking risks
Not important
Neither important or
unimportant
Important
Very important
Econsultancy, Skills of the Modern Marketer

ARTICULATION/PRESENTATION
Clarity when articulating digital ideas and
requirements, persuasive presentation of
ideas, ability to talk the same language as
non- digital
EMPATHY
Empathy with the requirements of
other functions and stakeholders,
empathy with customer needs.
DATA/INSIGHT-DRIVEN
Extract insight, make digital data
actionable, data-driven decision
making.
COLLABORATION
Naturally collaborative way of working,
ability to work well with other teams
across the business.
A check-list for soft skills
CREATIVITY/LATERAL THINKING
Make connections between diverse ideas,
concepts, data, to originate new ideas,
fresh thinking, challenging thinking,
thinking big.
ACTION-ORIENTATED
Willing to get stuck in, bias towards
action.
PASSIONATE
Have the hunger and passion for
continuous learning and to embrace
change.
ADAPTABILITY
Embracing uncertainty, comfortable
with change, know when to
compromise and when not.
TECHNOPHILES
Keen adopters of new technologies, enjoy
learning about technology, working with it,
seeking out improved ways of doing things
using technology.
PROJECT/CAMPAIGN
MANAGEMENT SKILLS
Think holistically, be organised, work
well with processes and work well with
other team members
CURIOSITY
Willing to explore new ideas,
interesting concepts, to be
intellectually curious

Digital tools to enable your people

T-shaped people are
defined as those who
have a strong vertical
expertise but also wider
knowledge or empathy for
other digital disciplines.
This is not to say that
vertical expertise is less
important, but more that
when this is combined
with that wider
understanding it is
increasingly valuable in
appreciating the wider
context of specialist work,
identifying opportunities
for greater collaboration
or efficiencies, and seeing
the bigger picture.
T-shaped
people

Broad skills in future
Which areas of requirement for digital resourcing / upskilling do
you anticipate will grow most over the coming year?
44%
41% 41%
35% 34%
22%
18%
16%
12% 12%
7%
3%
1%
Econsultancy, Organisational structures and resourcing best practice guide

Vertical skills in future
…and a looming talent time
bomb?
Over the next few years, of these skill areas, which would you say
will grow the most in significance for marketers?
51%
50%
46%
44%
25%
15%
15%
10%
9%
6%
5%
1%
5%
Mobile marketing
Content marketing
Web analytics / data
Social media activity
Community management
Website design and build
Search engine optimisation
Apps development
Email marketing
Paid search (PPC)
Display advertising
Affiliate marketing
Other
Econsultancy, Skills of the modern marketer

Recruitment challenges
Some disciplines that are
identified as being challenging
to recruit for are also areas of
anticipated growth and
demand – analytics/data,
social media
28%
17%
16%
15% 15%
14%
13%
8%
7% 7%
6%
3%
Over the next few years, of these skill areas, which would you say
will grow the most in significance for marketers?
Econsultancy, Skills of the modern marketer

board buy-in

01 UNCONVINCED
Board are not persuaded of the
merits of digital investment
Board buy-in
Levels of buy-in
02 CONVINCED, LOW KNOWLEDGE
Board are convinced of the importance of digital but
effective prioritisation of investment can be an issue
03 GOOD KNOWLEDGE, ENGAGEMENT
Board are fully involved, making informed
decisions, regularly updated but digital still separate
04 FULLY INTEGRATED
Digital is fully integrated a part of
wider business decision-making

Insourcing, outsourcing

insourcing, outsourcing
A trend towards insourcing?
Which areas of requirement for digital resourcing / upskilling do
you anticipate will grow most over the coming year?
45%
32%
23%
More in-house
More outsourced
Same
Econsultancy, Insourcing and Outsourcing
Striking the right balance for digital success

A trend towards insourcing?
Which areas are you most likely to do more in-house over the next
couple of years?
47%
38%
36%
26%
24%
23%
16%
13%
13%
13%
12%
7%
1%
Content marketing
Social media activity
Email marketing
Web analytics / data
Search engine optimisation
Community management
Website design and build
Paid search (PPC)
Apps development
Affiliate marketing
Mobile marketing
Display advertising
Other Econsultancy, Insourcing and Outsourcing:
Striking the right balance for digital success
Nuance: There is a greater
investment in resource in
data, content and social, but
also more sophisticated
outsourcing.

A continually shifting dynamic
Opportunity at the centre
(automation of core, well-
defined, controlled processes),
and at the edges (emergent, set-
up, design, understanding value)
http://www.jarche.com/2013/01/the-power-of-pull-and-pkm/

agility

Digital transformation agility
Digital maturity model
Emergent Managed Optimised
Change
management, KPIs
Digital capability development
not central to organisational
strategy/KPIs
Strong digital vision and
strategy, organisational
priorities/KPIs change
Digital vision lived through
leadership and operations,
top-down bottom-up, agile and
adaptive strategy
Data and
technology
Siloed data sources, basic
analysis tools, technology
restricts, legacy platforms
Software-as-a-service tech,
multichannel, joining up data,
basic modelling
Joined-up data/tech
empowered front line staff,
customised dashboards,
scalability of the cloud,
actionable modelling,
integrated digital and
online/offline, real-time
decisions
People, teams,
culture
Isolated knowledge, vertical
skillsets, poor training
CoE, specialists and
generalists, tech skills, more
fluid structures, collaborative
environment
T-shaped, deep knowledge,
human layer over tech,
knowledge sharing, highly
fluid/collaborative, agile
culture
Working practices,
processes, tools
Rigid structure, waterfall
project mgt, infrequent release
cycle
Agile development, SCRUM,
test and learn, rapid
prototyping and build
Interdisciplinary agility, cross-
functional, small, nimble
teams. Permission to fail.
Entrepreneurial
The model is useful
in understanding
high level maturity
in skills, people and
culture, but also the
context of that with
other critical
dependencies such
as strategy,
processes and use
of technology.

Top down, bottom up approach to
achieve maturity
Emergent Managed Optimised
Change
management, KPIs
Digital capability development
not central to organisational
strategy/KPIs
Strong digital vision and
strategy, organisational
priorities/KPIs change
Digital vision lived through
leadership and operations,
top-down bottom-up, agile and
adaptive strategy
Data and
technology
Siloed data sources, basic
analysis tools, technology
restricts, legacy platforms
Software-as-a-service tech,
multichannel, joining up data,
basic modelling
Joined-up data/tech
empowered front line staff,
customised dashboards,
scalability of the cloud,
actionable modelling,
integrated digital and
online/offline, real-time
decisions
People, teams,
culture
Isolated knowledge, vertical
skillsets, poor training
CoE, specialists and
generalists, tech skills, more
fluid structures, collaborative
environment
T-shaped, deep knowledge,
human layer over tech,
knowledge sharing, highly
fluid/collaborative, agile
culture
Working practices,
processes, tools
Rigid structure, waterfall
project mgt, infrequent release
cycle
Agile development, SCRUM,
test and learn, rapid
prototyping and build
Interdisciplinary agility, cross-
functional, small, nimble
teams. Permission to fail.
Entrepreneurial

Defining digital culture
Commercially minded
Non-hierarchical
Empowered
Innovative and agile
Collaborative
Customer-centric
Open
Growth hacker
Passion/learning
Data driven

01 Clear principles: data driven, open,
inclusive, iterative, simplicity, context
02 Policy first, user need secondary 03 Working back from user need
GOV.UK case study

The end of sustainable competitive advantage
Digital transformation is a
multi-faceted opportunity touching
many areas of the business
The purpose of strategy has changed from
trying to secure sustainable competitive
advantage to exploiting a series of transient
competitive advantages that in themselves
combine to form long-term advantage. McGrath
based this assertion on research that looked at
companies which had a market cap of over
$1Bn and that had, over the period 2000-2009,
sustained a net income growth of 5% above
global GDP.

Changing shape of business
The Boston Consulting Group
‘Growth Matrix’ Revisited
Cash cows generated a smaller share of total
profits (25% lower than in 1982), and were
proportionately fewer, with the life span of this
stage declining
Greater, more systematic experimentation

Spin-offs Labs Organisational change
Approaches to agile

70-20-10 approach to innovation
Budget split Life stage Objective KPIs Team
70% Core/oldest products Small growth Maintain profit ‘Rowing team’
20% Young/mid Increase share and profit
Profitable growth
‘White water rafters’
10% New Prove leap of faith Solving user problems
‘Diving for sunken
treasure’

The key elements of change
Vision
Vision
Vision
Vision
Vision
Action Plan
Action Plan
Action Plan
Action Plan
Action Plan
Resources
Resources
Resources
Resources
Resources
Incentives
Incentives
Incentives
Incentives
Incentives
Skills
Skills
Skills
Skills
Skills
= Success
= Confusion
= False starts
= Frustration
= Resistance
= Anxiety
All respondents in the
research recognised the
need to align a number of
different but essential
aspects in order to facilitate
the change to more agile
approaches, enhance
innovation, and drive digital
transformation.
A suitable model for
effective organisational
change incorporates five
key elements: vision, skills,
incentives, resources, and
an action plan. Significant
challenges arise if one or
more of these elements are
missing.
Knoster T, Villa R, & Thousand J. (2000). A
Framework for Thinking about Systems Change.
In R. Villa & J. Thousand

Building blocks for leading change
1.
2.
3.
4.
5.
6.
7.
8.
CREATE URGENCY
FORM A POWERFUL COALITION
CREATE A VISION FOR CHANGE
COMMUNICATE THE VISION
EMPOWER ACTION
CREATE QUICK WINS
BUILD ON THE CHANGE
MAKE IT STICK
Creating the climate
for change
Engaging & enabling
the organisation
Implementing &
sustaining for change
Kotter International, John Kotter

Pinterest agility case study
Quarterly planning, mission
control meetings, company-
wide progress meetings,
2-pizza teams, high/low/no
lights
Shared values, PDRs,
Workshops, cultural
interviewers, key principles
and strategic anchors
Ownership mindset, beyond
the job description,
expectation, autonomy,
mastery, purpose
Tight feedback loops.
Reflection time, Go,
Reflect, Adapt
Agility = Velocity x Flexibility

Thank you
44
Contact us and start your transformation
Talk to us about an initial consultation. We’ll discuss
your toughest challenges, outline our methodology
and come back with a proposal.
transformation@econsultancy.com
EMEA: +44 (0)20 7269 1450
US: +1 212 971 0630
APAC: +65 6653 1911
Econsultancy econsultancy.com/transformation

Context of digital transformation. econsultancy webinar

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