Tag: digital disruption

How Digital Transformation Skyrockets Lean Six Sigma In Impact | Sherpas in Blue Shirts

The promise of Lean Six Sigma is continuous improvement and that it will deliver business performance improvement by 3% every year. That was great in a business world where 3% was enough. But not today, when organizations can gain performance breakthroughs of 40-60% or more. Plus, Lean Six programs didn’t enable organizations to change their competitive position. Those two facts are why digital transformation is overwhelming Lean Six Sigma. But to capture the value that digital promises, it’s important to understand how it differs from Lean Six Sigma.

What is it about digital transformation that makes it so much more powerful than Lean Six Sigma? The outcomes from Lean Six Sigma depended on adjusting business processes. In contrast, digital transformation enables the opportunity to reconceive the underlying business model and completely transform the business.

Read More at My Forbes Blog Here

Is Big Bad? Two Sides of the Coin for Scaled-up BPS Providers in the Digital-First World | Sherpas in Blue Shirts

One of my favorite quotes is “Disruption doesn’t discriminate.” And you’d have to be living under a rock if you hadn’t noticed the fundamental shifts taking place in the global services market due to digital disruption. We know that digital disruption is generally chaotic. It shakes up the existing business models, (likely destroys them), and paves the path for new ones. And it creates a set of opportunities not apparent earlier, while eliminating those we took for granted.

In general, big incumbents find it difficult to change, (change is hard, really hard when you are large – just ask prehistoric dinosaurs!), thus creating opportunities for smaller, nimbler ones that embrace it. Is this the case in the Business Process Services (BPS, also called BPO) market as well? Are the large incumbents necessarily in the disadvantageous position? The answer is actually more nuanced. Here are two big themes that highlight two very different sides of the coin:

  • Curse of Incumbency The rise of automation (especially RPA) is creating the biggest challenge for incumbents in their existing business model. Everest Group research shows that on a like-to-like basis, buyers are expecting the price per unit of work delivered in transactional BPS to reduce by at least 25-30 percent. If the incumbent shows reluctance, buyers are not hesitant to move the work to others. To put things in perspective, it means a USD $1 billion BPS company would see its base shrink by at least USD $100-120 million every year on an as-is base account basis (assuming an average five-year contract term, 40 percent of the portfolio will each year face pressure coming from renewal (20%) or a mid-term benchmarking (20%) situation). In reality, providers with the right approach and strategy will be able to mitigate this through scope expansion and new wins. Nonetheless, the pressure on an existing large book of business is tremendous.
  • Benefit of Data As I highlighted in a blog last year, scaled-up providers are sitting on a treasure trove of data that is ready to be exploited and monetized from a benchmarking and associated analytics perspective. Some of the providers have started to make the right moves here. The next frontier is leveraging it for artificial intelligence (AI). One of the big challenges of making AI tools enterprise-ready is helping them learn fast. Injecting the AI tool with variety, volume, and contextual data is key to making this happen. Large incumbent providers are uniquely positioned to exploit this opportunity. Combined with their deep domain expertise, this can act as a powerful differentiator, and help them create significant value for their client, and, in turn, for their own business.

Big is not bad. It is about identifying the digital disruption opportunities while managing the risks proactively. Speaking of size, my next blog will discuss what sized providers seem to be well positioned to exploit the opportunities created by digital disruptions. Stay tuned.

Digital Transformation: The Rise of New CEO, the Chief Everything Officer | Sherpas in Blue Shirts

There’s a mind-numbing alphabet soup of C-level titles in today’s enterprises. Beyond the standards, there’s also Chief Digital Officer, Chief Robotics Officer, Chief Automation Officer, Chief Cognitive Officer, Chief Customer Officer, Chief Experience Officer, and so on.

The Chief Executive Officer (CEO), of course, is the one on whom the organization most depends, as “the buck stops there.” Historically, the CEO typically engaged with the Chief Finance Officer, Chief Strategy Officer, and Chief Operating Officer. The CEO set the long term strategy, and the organization executed it. And the CEO was considered great if he or she could be the face of the organization to drive broader strategy, business development, and market leadership.

Digital transformation and disruption is evolving the role of CEO

But digital disruption is driving massive transformation in the shape and flavor of the CEO’s role. While expected outcomes continue to be largely the same, today’s CEO must be technologically savvy, and must possess a techno-centric business view, not only to be the champion of digital transformation but also to take along the other C-level executives.

As digital transformation shrinks “front-to-back” processes, the CEO needs to understand the newer, shorter value chain, and how it makes the enterprise more competitive and relevant. Understanding this new world will also assist the CEO to be the best judge of digital transformation in the organization, rather than completely relying on business consultants.

Unfortunately, a lot of businesses are doing the opposite of what is needed. They are creating layers between the business and CEO by creating titles that serve as the “channel” to the CEO or the ear of the CEO. While this worked before digital disruption started creating havoc, innovation can now come from any part of the organization, and the CEO needs to be connected to that part.

Indeed, the CEO should ideally be the driver of digital transformation. Therefore, if the CEO does not understand Twitter, he/she can’t proactively suggest that as a channel to the HR team. If the CEO does not understand mobility, he/she can never outthink disruption or reimagine the business model. Of course, the CEO would have business leaders driving such change, (e.g., the HR head or CTO), but without the CEO’s proactive involvement and understanding of these fundamentally disruptive models, the enterprise won’t be able to derive business value.

The new kind of CEO needed in the age of digital transformation

What enterprises really need is a new CEO – a Chief Everything Officer. This is a C-level executive who understands everything in the digital landscape…the market, competition, customer, and, of course, technology. This CEO directly understands how digital disruption can impact different parts of the organization in order to create a vision for the enterprise that cannot be obtained from reliance on other C-level executives. Sure, the CEO would have a lot more bandwidth if other C-level executives were driving digital adoption. But that bandwidth would be valueless as the organization would be set up to fail. The reality is that digital transformation is not a project, but rather a business in and of itself. And the CEO must drive it in order to create meaningful value.

Is your company’s CEO the “Everything” he or she needs to be to enable the enterprise to compete and thrive in the midst of digital disruption?

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