Digital Development
Digital technology is used to acquire, analyze, process, store, and transmit data — 1s and 0s — for creating information, increasing control, and reducing uncertainty. It has become so pervasive in our lives and work that it is easy to forget its essential function. It does not replace human experience or interaction, it makes those things easier and more meaningful while reducing costs and risks… or it should.
Too often, digital technology (DT) gets in the way. It creates more work. Or it just doesn’t work, failing when it is needed most. And it isn’t adequately or well used. Automated processes add to rather than replace manual ones. Powerful features developed at substantial expense never get used. Smaller scale production wastes more resources and is less efficient than large, centralized operations.
Practical limitations and shortfalls are not inherent to the technology. Like features and functionality, technological failures are a result of the development process—or the lack thereof. A good development process capitalizes on the capacity of components to effectively and reliably deliver useful information. When considered holistically, the process is actually quite simple.
The critical reality of digital development — the process of building and using digital technologies — is that the source of value shifts in the process. As one digitally develops one must move from data to information to knowledge. At first the focus must be on costs and efficiency but development involves building on that to increase efficacy and revenue, which provides insights and relationships necessary for innovation. Here’s how it works.
Step 1: Automation
The first step in digital development is to automate processes, substituting DT for facilities, labor, and materials. It is all about efficiency… and data. That’s the critical function of automation that is too easily lost: Data, lots of high-quality data. Establishing an online store isn’t just about reducing real estate costs, it’s about more efficiently and effectively gathering data about customers, their preferences, and their willingness to buy.
Another important aspect of automation is that it doesn’t just substitute for other resources, it generates slack resources that can be used for expanding the business, getting more customers, and increasing revenue. If your tech strategy is just to close facilities, cut costs and jobs, and reduce material requirements, you are missing 90% of the value at the start. Data must be carefully considered and managed. What are the key data points, those items that are critical for understanding your customers and operations? How can you redeploy your resources, particularly your people’s talents, to better serve customers?
Step 2: Customization
Data, along with digitalization, enables customization. The second step is to modify or vary products and services in ways that are valuable to your customers. How do you know what those are? By looking at the data. Use slack resources to do experiments. Make changes for which data — including direct customer input — indicate demand, especially with no or marginal additional costs. This step is all about increasing customer base and revenue, but also about building customer relationships and getting business insights from them.
Think holistically, across all lines of business and your entire value chain: where do the data reveal needs and opportunities? Digital technology enables you to hear from more customers as well as tailor your products and services based on data. How do you reach into new geographic or vertical markets? What partnerships might enhance your product or services or increase its appeal? Data and slack resources from step 1 not only make it possible to answer these questions, they enable more and better customer relationships. Those personal connections provide insights into customer values, particularly what those mean in context.
Step 3: Innovation
True innovation is common yet uncommon: Human history is essentially a long chain of innovations but innovations happen in particular, unusual circumstances. Context matters. The simple “secret” is to listen to customer and truly understand the context for your business. Peter Drucker pointed out that unexpected results is the greatest source of innovation. That implies there is some action to have results and expectation for them. That is context which can only be fully understood through relationships in a place at a time open to new ways of doing things.
DT is new way of doing new things. It provides a means to realize innovation, a platform for fundamentally different approaches. It is effectively impossible to see opportunities for innovation if one is either too close or too distant from the context. DT enables you to be directly engaged with customers, co-creating products and services. The innovation opportunities emerge from the relationships. The platform for innovation is the customized version of the automated system.
The Key to Digital Development
Purpose is the key to digital development. It focuses the overall process as well as each step, connecting the steps and optimizing the results of each for the next. Digital development is not a linear process. It progresses via iteration. Purpose keeps iterations grounded and defines context.
Automation is not a singular activity or event, it is general and on-going, applied in one context then another then another… Multiple iterations of automation build capabilities for customization. Numerous instances of customization build the relationships and provide the context for innovation. Each iteration at each step generates capabilities and context for the next. The efficiency and speed of development depends on how well all of the iterations at each step are aligned. That is the purpose of purpose: to align practices so they develop and improve.
Key Takeaway
When you think about how to improve what you do, do it better, faster, more flexibly or resiliently, start with why you do it. What is your purpose? It directly translates into your customer value proposition, why others support what you do. With purpose clearly in mind, DT can provide huge value — substantial benefits with lower costs — by automating, customizing, and innovating what you do.
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Open source software enables you to own what you do with DT!