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    Democratizing Transformation PDF

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    SHUN (경영전문대학원 경영(Global MBA)) KAJITA

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    Democratizing Transformation PDF

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    SHUN (경영전문대학원 경영(Global MBA)) KAJITA
    68 views7 pages

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    Democratizing Transformation PDF

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    SHUN (경영전문대학원 경영(Global MBA)) KAJITA

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    Marco Tansit ic Satya Nadella 1: Chairman and Spotlight Democratizing Transformation e o Give your entire workforce the capacity to become innovators. decade, Novartis has invested heavily in digital transforma. tion. Asthe Swiss pharmaceutical giant moved its technology infrastructure to the cloud and invested in data platforms and data integration, itreerulted AL specialists and data scientists to build machine-learning models and deploy them throughout the firm. But even as the technical teams grew, managers from across the business—sales, supply chain, HR, finance, and marketing— ‘weren'tembracing the newly available information, nor were they thinking much about how data could enhance their teams’ work, At the same time, the data scientists had litte visibility {nto the business units and could not easily integrate data into day-to-day operations. As aresult, the investments resulted in only occasional successes (nsome aspects ofthe R&D process, {for example) while many pilots and projects sputtered ‘More recently. however, pilots target ing both R&D and marketing personal- ization started showing business value and captured the attention and imagina- tion of some of Novartis’ more creative business executives, They became Increasingly excited about opportuni ties to deploy Afin various parts of the company and began to earnestly cham: plon the efforts. (Disclosure: We have both worked with Novartis and other companies mentioned in this article in variety of ways, including board mem- bership, research, and consulting) They realized that technologists and data scientists alone couldn't bring about ‘the kind of wholesale innovation the business needed, so they began pairing data scientists with business employees ‘who had insight into where improve- ‘ments in efficiency and performance ‘were needed, Novartis also invested in tralaing frontline business employees tose Gata themselves to drive innovation. A _growing number of teams adopted agile methods to address all kinds of oppor- ‘unites. The intensity and impact of transformation thus accelerated rapidly, driving a range of innovation initiatives, 43 Spotlight including digitally enabling sales and sales forecasting, reconceiving the order and replenishment system for health- care-services customers, and revamping prescription-fulfillment systems and processes. ‘The progress in digital transforma- tion became invaluable as the com- pany dealt with the initial chaos of the pandemic, Novartis business teams partnered with data scientists to devise ‘models to manage supply-chain disrup- dons, predict shortages of critical sup: plies, and enable quick changes to prod- uct mix an¢ pricing policies. They also developed analytics to identify patients who were at risk because they were pult- {ing off doctor visits. As the Covid crisis wore on, the value of Al became obvious tomanagers companywide. Bofore this wave of Al adoption, Novartis's investments in technology consisted almost entirely of pack- aged enterprise applications, usually implemented by the IT department with the guidance of external consultants, vendors, or systems integrators. But to build companywide digital eapability, ander the leadership of then chief dig- ital officer Bertrand Bodson, Novartis The Elements of Tech Intensity enable transformation, companies must reste synerayin vee key aro: Capabilities | = Ogenitions! |» DevOps ows SSariateral | sesecture diplnes decumentation cikere Ciuzen ataonenption |» APstatey Training and developers Real-time Experimentation Gevclopment | « Proeuet, saves rare Low-code/ ‘management = Data Teeeeeet Technology Data platform Eovernance Machinelearsing |< Hzontl Deep tearing ration and not only developed new capabilites in data science but also started to democ- ratize access to data and technology ‘well outside traditional tech silos. The company is now training employees at allJevels and in all functions to identify and capitalize on opportunities for incorporating data and technology to Improve their work. In 2021, the Novar- ts yearly A summit was attended by thousands of employees. ‘The potential for employee-driven digital Innovation is impossible to calculate, but according to the market research firm IDC’s Worldwide IT Industry 2020 Predictions report, enter- prises across the global economy will need ta create some 500 million new digital solutions by 2023—more than the total number created over the past 40 years. This cannot be accomplished by small groups of technologists and data scientists walled offin organi- zational silos. twill equite much larger and more-diverse groups of cemployees—executives, managers, and frontline workers—coming together to rethinkhow every aspect ofthe busi- ness should operate. Our research sheds light on how te do that, THE PROBLEM THE JOURNEY THE IDEAL Mary companies st bes the te stages of The ideale the native stage, whose halimarks deployment of Alsbased applcat n digital rane stage, whore digtal and techoologyare the deplay Al at seale across a huge, dist spectry ating architecture designed to broadly accessible, easy-to-use tls: and in teaining and capability bu AA. gcse ovanes teen o - * © Digital transformation requires that executives, managers, and frontline employees © work together to rethink how every aspect of the business should operate, Oo vewenaeaees 4B §® Companies underestimate the importance of getting employees fo pul transformation into © their funetions rather than having IT groups push the changes out to the business. The Success Drivers When we started our research, we wanted t understand why many companies stuggletoreap the benefits ofinvestmentsin digital transformation while others see enormous gains. What do succesful companies do differently? ‘We looked st 150 companies in manufacturing, healthcare consumer and pharma/biotech, including repre- Senttive sample ofthe largest fins in och sector Some were falling to move the needle, bat many had made dra- satie progress. Perhaps surprisingly. we found that outcomes didnot depend on the relative sizeof budgets. Nor were Digital Transformation Pays Off IRdustis and found tot evonve gonth tho eadeo ene top aust) in tee ety wore nore thon dace that of hoger ne botom quart Revere growth case 16208 2ore209 19 os 1 aa edi0s DES the success stories confined to “bom digital” organizations. Legacy giants such as Unilever, Fidelity, and Star bucks (where one of us, Satya, ison the bboard)—not to mention Novartis—had managed to create a digital innovation mindset and culture. Ourtesearch shows that to enable transformation at scale, companies must create synergy in three areas: Cay Successful transfor mation efforts require that companies develop digital and data skills in employees outside traditional technol. ogy functions. These capabilities alone, however, ate not sufficient to deliver the full benefits of transformation; organi- zations must also invest in developing process agility and, more broadly. a culture that encourages widespread, frequent experimentation, Technology. Ofcourse. investment inthe right technologies is impor especially inthe elements of an Arstack: data platform technology, data engineer- ing, machine-learning algorithms, and lgorithin-deployment technology. Com- panies must ensure that the technology deployed is easy to use and accessible tothe many nontechnical employees participating in innovation efforts. Architecture, Inves:ment in orga~ nigational and technical architecture is necessary to ensure that human eapa- bilities and technology can work in syn- ergy to drive innovation, That requires an architecture—for both technology and the organization—that supports the sharing, Integration, and normal ination of data (for example, making ata definitions and characteristics consistent) across traditionally isolated silos. This is the only real, sealable way. to assemble the necessary technological and data assets so that they are available toa distributed workforce. ‘Many large companies are making headway in each of these areas. But even leading companies tend to nder- estimate the importance of getting employees to pull transformation into their functions and their work rather ‘than having central technology groups and consultants push the changes out to the business. As Eric von Hippel of MIT hnas advocated for many years, frontline ‘users, who are clos ‘and best positioned to develop solutions that fit their needs, must take a central role joining agile teams that dynami- cally coalesce and dissolve on the basis of business needs. othe use cases Building Tech Intensity Ourresearch unpacks how ca bilities, technology, and architecture work together to build what we call tech intensity. Derived from the economies concept of intensive margin—ow much a resource is utilized or applied—tech intensity refers tothe extent to which, employees puttecianology to use to drive digital innovation and achieve business ‘outcomes. Our research found that companies that made good investments in technology and made tools accessible toa broad community of data-and tech: skilled employees achieved higher tech intensity—and superior performance. Companies that failed to develop tech: and data-related capabilites in thelr employees and offered only limited, access to technology were left behind. We ranked the tech intensity of the 150 firms in our study and found that Spotlight decomatictiamiescriet | The Stages of Digital Maturity ‘Transformation Pays Off") We also found that technology, capability, and archi- tecture indices correlated with other measures of performance, from produc- tivity and profits to growth in enterprise value, Using an econometzic technique Known as instrumental variables, we also found evidence thatthe relationship between tech intensity and performance was causal: Thats, greater intensity (especially investments in technical and “organizational architecture) powered higher revenue growth. Staging the Transformation ‘Our analysis confirms that just spending ‘money on technology does not result in ‘more growth or better performance: In fact, in some cases it ean actually dam- age the business fit accentuates divi- sions and inconsistencies across groups. Instead, it isthe architectural, mana- gerial, and organizational approaches to transformation that best explain the substantial and enduring differences among firms. We found that companies typically progress through five stages on their transformation journey. (See the exhibit "The Stages of Digital Maturity”) ‘Traditional model. Not suprisingly, _many companies fit what we considerto be the traditional model of digital inno- vation, whereby digital and technology investments are the province of the IT department (or other technical specialist groups) and impactis scattered across groups, mostly in inconsistent ways. IT works with business units to fund pr cect and manage implementation—say, suelure, process tech arhitectue, and teen deplayment Fw does your company sack up? Native Deneerte dne-ien cented wth GC) Platform ve aeee at Apreatled Bridge Reatsime insights {mature capedilitles Agile culture, Traditional Centralized date: ‘shared scrass. ‘and insights enaeard (sist ‘Cereeeans | inset pci g mn “_ ile Business innovation and wis etkgeare —

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