In part two of the Digital Solutions Stack series, CEO of Innovation Platform, David Swank, dives into the importance of strategic digital planning, something every organization needs if they want to survive today's digital disruptions. Learn what a digital strategy plan entails and how you and your organization can get started on building one today.
David: If you fail to plan, you plan to fail. Welcome to the Digital Change Podcast. The podcast where we really talk about change and specifically, how that change applies to the digital transformation that is happening within enterprises, organizations and communities. We are glad that you joined us today. We're in the midst of a six-part series about digital maturity. Last week, we spent some time talking about the concept or context of digital maturity. This week, we're going to be talking specifically about digital strategy planning. Next week, we're going to be talking about digital access and adoption. The following week will be about building a digital platform that allows you to scale. In the fourth week, we'll be talking about convergent architecture. How technologies are emerging and beginning to converge and coming at us at exponential rates. In the last week, we're going to be talking about digital optimization. What does that look like in our enterprises, especially as we talk about advanced analytics, predictive analytics, prescriptive analytics and so forth? We hope that you'll join us each week as we continue to talk about this digital maturity stack as we reference it. Today, again, we're going to be talking, specifically, about digital strategy planning. As we go through today, we're going to talk about that in the context of how that looks in regard to your digital capabilities. We're going to talk about the inner game and the outer game. The inner game being your digital operations. The outer game being that of the customer interface. Lastly, we're going to talk about how we look at financial investments and making investments in the digital era because on one hand, there's significant risk, but on the other hand, there is tremendous opportunities if we look at those investments in the light or the lens of digital and its capabilities.
Let's begin today talking a little bit about this whole idea of planning. As I referenced at the beginning of the podcast, if you fail to plan you plan to fail. I say that because so often in our lives, we find ourselves getting so caught up in what we do each and every day that we just don't take time out to plan. I'm reminded of a story that I once heard where a young man approached the foreman of a logging crew and asked for a job.
The foreman responded, “That depends. Let's see you fell this tree.”The young man stepped up forward and skillfully felled a great tree. Impressed, the foreman explained, “You can start on Monday.” So, he started on Monday. Tuesday came. Wednesday came. Thursday rolled by. On Thursday afternoon the foreman approached the young man and said, “‘You can pick up your paycheck on the way out today.” Startled, the young man replied, “I thought you paid on Friday.” The foreman replied, “Normally we do, but we're letting you go today because you have fallen behind. Our daily felling charts show that you have dropped from first place on Monday to last on Wednesday.” The young man looked at the foreman and said, “But I'm a hard worker. I arrive first, I leave last and even have worked through my coffee breaks.” The foreman realized that the young man was earnest and had integrity, so he began to think. He asked a simple question, “Have you been sharpening your ax?” The young man replied, “I've been working so hard that I haven't taken the time to do that.”
The reality is that we find ourselves in that same scenario. Where each and every day, we come to work, and we work hard, thinking that working harder will make us more productive. That it will increase revenues, whatever that may be. Yet so often, working harder is working harder at processes and methods that are no longer processes and methods that are relevant to the environment we're in. It is so important today that we began to stop and sharpen our axe. That we really began to realize as an organization, we may be falling behind. That our margin levels are decreasing. That our revenues and how we generate those revenues are looking much different than they did in years past. So, how do we begin to look at that? How do we begin to think differently? One of the key elements of strategic planning or of digital strategic planning is beginning to think differently. I read a book many years ago from John C. Maxwell entitled Thinking for a Change. It's interesting because what Maxwell, the author, poses is that many times we do not stop and really think because what we do every day become so routine. Because we're creatures of habit. We really don't stop and think strategically. So, when we think about planning, we do a lot of planning probably every day. Creating checklists or whatever that might be. But, when we really think about strategic planning, it means that we really give thought to what we're doing and what we need to be doing. Maxwell says that good thinkers solve problems. They never lack ideas that can build an organization and they always have hope for a better future.
How important is it, today, as leaders as we think about planning, that we really think about does our planning solve problems? Solve problems, not only for our organization, but for our customers, for our constituents. Does our planning provide hope for the future? In his book, Thinking for a Change, Maxwell, in two of his chapters, talked about this idea of strategic planning as he posed the question about cultivating big picture thinking. So, I'd ask you, are you a big picture thinking individual? Especially if you're in a leadership role. David Schwartz said this, “Where success is concerned, people are not measured in inches or pounds or college degrees or family background. They are measured by the size of their thinking.” I'll just point out a few things that he [Maxwell] indicated as we begin to frame this discussion or this thought, today. He talked about how in cultivating big picture thinking, we need to be learning, continually. So, what is your organization, or as an individual, what are you doing to continually learn? Are you taking time out of each day to create a disciplined process for yourself and for your organization to continually learn? ‘Learning’ meaning that we are actually reading and engaging and digesting things that perhaps don't agree with our current business model or don't agree with our current thinking, but it forces us to think differently. Maxwell also talked about listening intentionally. You know, it's interesting that many times when we sit down to talk to someone, we have so many things on our mind today, so much information that's flowing through our minds, sometimes it's just very difficult to stop and be intentional about listening. Even when we do, a book called Crucial Conversations talks about how we tell ourselves stories. Many times, when we're talking to someone, we're already framing exactly what we are going to take from that conversation or we're framing what we think of the individual or the circumstance and so we tell ourselves stories.
In Crucial Conversations, it talks about how we must start with the heart. Meaning that we sit down, and we listen to those who perhaps don't share the same opinion we do, but realize that they, just like us, believe strongly in what they believe in. How can we have a very heartfelt conversation about what we can do collectively and maybe even find areas of common ground? Maxwell also talked about the fact that in order to cultivate big picture thinking, you have to be able to look expansively and look beyond your current circumstances. Writer Henry David Thoreau wrote this, “Many an object is not seen though it falls within the range of our visual ray because it does not come within the range of our intellectual ray.” How many things do we walk through each day, reading, seeing and we really don't think about them from an intellectual process? Intellectual process being, what does it really look like? What does it really mean? What are the facts that perhaps I can glean from that to change the way that I'm thinking? My father used to tell me many times, you have a right to be wrong in your opinion but not your facts. So, how do we become more intellectual? By looking at things from a factual standpoint, looking more expansively. Lastly, he says in that chapter, we need to live more completely. He states people who see the big picture expand their experience because they expand their world. As a result, they accomplish more than narrow-minded people. Are you a big picture thinker? Another chapter I would mention that I think helps frame our discussion today, is when he talks about harnessing creative thinking.
Vince Lombardi once said, “The joy is in creating not maintaining.” I fear today that there are many industries, many market sectors who are doing more to try to maintain status quo. Doing more to try to maintain the current business structure rather than taking the joy in finding new opportunities that the digital economy presents. Maxwell states that creative thinkers value ideas. Do you value ideas? He talks about how creative thinkers explore options. Are you looking at options today for your organization and for your community? He talks about how creative thinkers embrace ambiguity. That's a tough one. It's very difficult today when we all want to be comfortable and yet we're living in a society where we know and understand that disruption means we're going to be uncomfortable. It means there's going to be some ambiguity as new technologies come. It's going to take individuals or, as Maxwell says, thinkers who can connect the unconnected leaders. People who do strategy are able to take the areas of new technologies and what I would call connect the dots. Lastly, he says in that chapter, we need to be creative thinkers that don't fear failure. The reality is, in the world of technology, there's going to be failures. Many say that we need to learn to fail fast so that we can move forward. Again, I would pose to you, are you a big picture thinker? Are you a creative thinker? I pose those questions to you, today, because if you're going to move into true strategic planning, especially that deals with digital strategic planning, it's going to require big picture thinking. It's going to require creative thinking.
Before we unpack those elements under digital strategy, let's talk for just a moment about the idea of strategy or strategic because I think it's important to note that many today believe in this new technological world. That by investing in a new technology, a new shiny object if you will, means that I'm strategic. But MIT Sloan just recently released a report that actually gave the facts that simply going digital or investing in digital is not going to cut the strategy anymore. What we're doing is potentially putting ourselves a greater risk by not first thinking strategically and then investing. In this report, they say only 15% of respondents from companies that are in the early stages of going digital say that their company has got a clear digital transformation strategy. So, if you're in investing in fiber or investing in solar or investing in battery storage or investing in analytics or whatever that new technology may be, if it is not supported or backed with a true digital strategy, you need to ask yourself the question, if you're a part of that 15%, in terms of success rate. They went on to say that while for a digitally mature company where digital first has helped transform business models and processes, in other words strategy, it has increased their success rate by 80%. Those are pretty startling numbers and really point to the essence of why we need to be strategic. I would also share with you that I think when you define the idea of strategic, I’m reminded of this statement that we don't know what we don't know. We can't act on what we don't know. We won't know until we search. We won't search for what we don't question, and we won't question what we don't measure. Hence we just don't know. So, when we think about strategy, it is so important that we know. It is so important that we begin to act on what we know. It is imperative that we search and question our current business models. It is a vital that we began to look at measuring or bench-marking what we're doing today compared to what's coming into the marketplace. Then we really can begin to develop strategies that begin to have an impact. Strategies that are achievable. Strategies that are impactful. Strategies that are meaningful for our organization.
Let's talk, for just a moment, about these key elements of developing a digital strategy plan. You'll find in surveys and in studies that many believe what is going to be absolutely vital for any organization is to have and implement a holistic digital strategy. I'm going to share with you these key elements which I believe really create a more holistic digital strategy. The first element is we really need to have a digital health assessment. We need to understand where we're at. We need to be very real with ourselves. Real with our organization. Understand that we may be facing some ailments and some internal sickness, if you will. We really need to begin to create remedies that change this condition that our organization faces. What we provide at the Global Innovation Platform as a service on this digital strategy implementation or creation is first a digital health assessment. A digital health assessment means do I, as an organization, detect the disruptions that are happening within my organization? In other words, can I apply where or detect where those disruptions are changing my revenue streams, changing my margin levels, changing my productivity, changing my customer satisfaction and so forth. Being digitally aware. Secondly, do we have the digital insights at the leadership level in our organization? Do we have people who are in leadership roles that really understand the digital disruptions? How are they going to affect our organization's what I would call leadership clarity? Do we have the ability to look at the digital strategies that are happening in the marketplace and how those digital strategies could create opportunities for our organizations? Do we have the digital intensity? You know, today, we have many organizations who have been what I would call in a monopolistic environment. The question is can we change that monopolistic environment and culture to a culture that is driven more by looking at new profit levels and creating new revenue streams. That's going to require a new intensity. That really means can my organization be aligned around that? Then digital optimization, what's that look like? What's that going to require? When I use those terms of optimization, do I have a platform to build upon? The Innovation Platform has been constructed to truly be a platform that people can grow with and can optimize data and optimize experiences.
Lastly, it's just the digitally execution from a health assessment. Do we have the capabilities, internally, to truly have the digital champions and execute? Results require action. Am I prepared to do that? Am I able to take that health assessment and truly put it into action? I would share with you this statement. This the simple story that I think speaks to or challenges us to move from knowing to more of a results action. What we've talked about here is really a digital health assessment and moving from that health assessment. In many of our strategic planning processes, we build a strategic plan and we think it's going to lead us in the right direction. It's put to us in kind of a hard copy. We hand it out, but nothing really happens. It reminds me of the man who fell into a pit and couldn't get himself out. A subjective person came along and said I feel you down there. An objective person walked by and said it's logical that someone would fall down there. A self-righteous person said only bad people fall into pits. A mathematician calculated how deep the pit was. A news reporter wanted the exclusive story on the pit. An IRS agent asked if he was paying taxes on that pit. A self-pitying person said you haven't seen anything until you've seen my pit. A psychologist noted your mother and father are to blame for your being in that pit. The self-esteem therapist said if believe in yourself and you can get out of that pit. An optimist said things could get worse. A pessimist claim things will get worse. People who have values, people who see issues and see challenges, they confront the issue and they reach a hand to the individual who's in the pit and say I'll help you out. As leaders of organizations that's what we've got to be. We've got to be individuals who see that there are challenges and they're people who are in challenges. Are we willing to once we assess that? When we see, in essence, a pit, something that is a pitfall or whatever you want to frame it as, are we capable then of beginning to put solutions to that rather than just providing advice or being in a consultant role? We need individuals, today, who take a hold of situations. Take a hold of other people's hands, lock arms and move forward and provide opportunities for those we serve. So, we move from health assessment to then really starting to engage what are our digital capabilities? How can we begin to really look at, internally, from an inner game and an outer game, what are our digital capabilities as an organization? Are we as an executive team truly aligned behind a common digital ambition or are we competing for resources under a broad catch-all vision? Are we building alignment and engagement deep within the organization? Are we investing to build an agile, adaptive operating model and a robust capability to support our vision or are we creating a two-speed organization with limited impact on our core business? You see, an essential component of our digital capabilities is to understand that we need to achieve scale. We need to enable transformation that is sufficient in meeting those challenges that are coming at us with the correct expertise, the correct talent, the correct experience. In essence, the capabilities that are going to be required to meet the digital economy we're facing.
So, again, we move from health assessment to an organization holistically to now talking about what are our capabilities. To being real about our capabilities all the way from the c-suite down to field personnel. Thirdly in this digital planning process, we begin to look at our digital operations. We really begin to look at operational business processes. Begin to look at methods, business models, practices and ask ourselves of this new digital transformation, how is it going to change my processes and my methods? I would tell you, as organizations, one of the first steps is we have to get our processes mapped out. If you've done business process mapping where you map out your process, understand that this 10-step process could potentially be a two-step process by initiating digital within my organization. In other words, making me more productive. When you look at it from not just internal operations, but how does that increase my capabilities of delivering the value I deliver to my constituents. A statement from an article from Bain & Company says success doesn't happen. It is organized, preempted and captured by a concentrated plan, concentrated common-sense, concentrated intentional initiatives. In that article, Bain & Company talked about the fact that there has to be, from digital operations, alignment at the top. They stated that there has to be agility in the middle and there has to be mobilization at the frontline. In a recent study done by Deloitte, when they were talking about what are some of the most important things to power companies, in particular, as far as priorities, the survey reported that 56% believed there needed to be a holistic digital initiative in their company internal as in operations. 44% believed that they needed to improve their digital capabilities from an operational standpoint, and they understood that to enable operations that was going to have to be a data-driven organization, that we needed to think about operations or internal operations from a data-driven concept, data-driven thought process. It needs to be through that digital lens.
So, again, my digital health, what are my digital capabilities within the organization? What are some of the digital operations I'm doing, internally? Mapping processes, looking at methods, looking at my business model. Next is looking at the digital customer interface. So, when I look at my operations, what drives my operations is truly how I deliver value to my constituents my clients, my customers, my members, whatever that may be. The question would be, first of all, do I really understand the customer journey? In other words, the journey I'm asking the customer to take with me, as an organization. Am I aligned with the customer as it relates to that journey? My first stint as CEO at a cooperative in Missouri, we had a gentleman come in and do strategic planning for us. He reminded myself, our executive team and our board that we're in an era where we're not comparing quality of service from peer to peer or in other words, utility to utility. We're in an era where people really are beginning to ask the question why doesn’t your experience compare to a company that may not even be in the same sector that I'm in. There's an expectation, today, in terms of customer service, customer convenience, quality of life, and we have to ask ourselves are we capable? Do we have internal operations that provide that type of customer experience? We must begin to create organizational strategy with that digital lens. In other words, understanding that the customer is beginning to want and demand upon that experience to be in the palm of their hands, done by, in this case, their iPhone. Is our digital investments balanced between internal and external? Are we spending more time thinking about the internal and forgetting that today's world is more about customer centric? How we provide? Lastly, in this digital strategy planning, I would just share with you that we need to really think about our digital financial investment strategy. How do we go about that? How do we look at our financial investments in the past? We really have looked at that pretty simply. What's the return on investment? Will it create cash flow? Will it allow me to scale? You know, what are my cost-benefit analysis and relationship to that? What I find interesting is you look at an article from Navigant called Energy Cloud 4.0, they posed the question, especially to those in the utility sector, does your business model achieve the solutions or achieve the demands that the market is putting upon us today? I would encourage you to be thinking about not just financial investments in the context of return on investment, cash flows and revenues growth, but begin to first think about what it as a business model is that I'm trying to achieve. What Navigant did is broke this down into four specific business models that you need to ask yourself because that business model has a lot to do with your scale and your profit margin capabilities. So, what they did is broke this down into are you an asset builder, are you a service provider, are you a technology creator, or you are you a network orchestrator? They described that if you're an asset builder, you could scale by perhaps 1.5x in your profit margin for that type of business model and could potentially be in terms of how you could generate additional profits maybe 29-30% greater. If you're a service provider, your scale could be at around 2.5% and the profit margin could be 47% greater. If you're a technology creator. they had 4.7x scale indicator with the profit margin of 61% greater. If you're a network orchestrator, nearly 5.8% in terms of scale and profit margin of 69% greater now. You could debate or argue those numbers or look into the real point here which is that as you consider your business model today, it’s very important to ask the question how much do I want to scale? Can I scale my assets? Can I scale my operations? Can I scale my service offerings? And if I can, can create higher levels of profit margin and for those that I serve? The Innovation Platform that you've heard us describe on this podcast is really about not only scale, but about allowing organizations, businesses, utilities, corporations and enterprises to use a digital platform to increase scale and also increase profit margins and growth opportunities. Today, we've talked about, in large part, the digital strategy planning process. We talked about the core elements of doing a health assessment, looking at your capabilities, considering your internal operations and how those internal operations, in many ways, serve as a catalyst or a springboard for more customer engagement and a greater customer experience. Lastly, from a financial standpoint, beginning to think about that differently. What does my business model need to look like in order for me to truly capture the value proposition of the digital economy? I leave you with this today; in terms of a challenge to each of us in our organizations and those we serve, how high is our AIM? What's the expectation of those we serve? Of us? Because regardless of what our AIM is, we should be asking the question what is the expectation of those we serve?
I’m reminded of this story: a college professor prepared a test for his soon-to-be graduating seniors. The test questions were divided into three categories and the students were instructed to choose questions from only one of the categories. The first category of questions were the hardest and worth 50 points. The second set, which were easier, were worth 40 points. The third and the simplest set were worth 30 points. Upon completion of the test, students who had chosen the hardest, 50-point questions were given A's. The students who had chosen the 40-point questions received B's. Those who settled for the easiest 30-pointers were given C's. The students, of course as all of us would probably be, were frustrated with the grading of their papers and asked the professor what he was looking for. The professor leaned over the podium, smiled and explained to his students, “I wasn't testing your knowledge. I was testing your aim.” I believe today that what the digital economy is really forcing us to do is test our AIM. Do we have the ability to think bigger and be creative thinkers? Is your strategy built on the right targets? Digital. Does your strategy represent a higher AIM? Transformational. Will your strategy position you for the digital economy and opportunities that it represents to your organization and community? I hope, today, some of these thoughts that we've shared with you are helpful. We would love the opportunity as the Global Innovation Platform to help you in these areas. We provide these services to do digital strategy planning. You can engage us further about these services and work with your organization and your community to begin to walk through this this very methodical process of digital strategy planning. I cannot emphasize enough that, today, planning is different than strategic planning and digital strategy planning is different than strategic planning. Digital strategy planning begins to really look at our strategies through that digital lens and through that disruption that is happening at large magnitudes in our world, today. I would leave you this last quote, on that point. Deloitte said this in a recent study or article, “digital is the pervasive thread through all of these disruptive forces as a catalyst, a disruptor and an enabler.” Just a question for us and I would pose to you, in conclusion today, are you capturing in the digital transformation and using it as a catalyst and an enabler? Or are you finding yourselves right now as a victim of the disruption that's happening with the digital transformation? Thank you so much for joining us, today. We appreciate your time here on The Digital Change Podcast and we look forward to next week where we're going to be talking about the second layer of the digital maturity stack which is called digital access and adoption. We look forward to visiting with you again next week. Thank you.
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