12: Diverse Teams Create Powerful Digital Solutions

Building solutions requires building from what’s currently possible in the organization to create new digital capabilities. This chapter concentrates on the type of teams involved in building the digital edge and the importance of having an effective IT organization as part of the process. Building digital capabilities requires making decisions about the best way to combine physical and digital resources to achieve business outcomes. Those decisions affect the company as a whole, crossing functional, operational and technical boundaries. To build a digital edge, convene a diverse, cross-functional team that reflects the reality of the digital decisions. That team includes IT, which plays a critical role in contributing to a successful digital solution.

Diverse Teams Create Differences That Matter

The diversity of the team influences the strength of the digital solution. A principle for organizing a digital solution team is: The broader the outside-in customer outcome, the broader the team building the solution inside out.

We cannot overstate the importance of the team’s breadth of skills and their understanding of the unique approach needed to build digitized capabilities. A common success factor across the companies described in this book was their ability to assemble and evolve cross-functional teams through the design and build stages.

A digital leadership team, chaired by the executive most directly tasked with realizing customer value and company revenue, is the team responsible for making decisions on issues that run across functional lines or require one function to adjust their processes to better accommodate the overall digital outcome. This type of team was essential for CHLA when it defined a prioritization protocol for information flowing across its network — the highest-priority information getting the highest-priority resources. Representation from every department ensured that such a complex technical, political and process-oriented decision would involve all major constituents.

Building consensus on what the highest-priority information should be might be a contentious matter. However, the defined customer outcome and experience should provide the yardstick for defining the “best” decision. Without the customer outcome, decisions can readily devolve into functional interests and politics.

CHLA formed a digital leadership team with decision makers from all of the clinical areas and charged the team with resolving cross-clinical issues in the interest of the goal of eliminating information-based causes of patient harm. The result was a priority on patient test results. Now, even massive data files such as CT scans receive network priority so that no one needs question when a test result is in. In other words, if everyone knows that test results are top priority for network traffic, then no one questions whether the data file might have been too large to transfer to the patient record. It’s a requirement of a successful solution and a priority.

Other companies studied for this project employed similar types of teams. At Royal Caribbean, the leadership team consisted of the senior vice presidents of hotel operations, customer service and the CIO. At CDW, the CIO in his role as “chief productivity officer” holds the digital leadership role, reflecting the alignment between information, applications, processes, customer service and supply chain solutions.

Traditional forms of IT steering or oversight committees lack the capacity or context to resolve contentious issues in a timely manner. Making these decisions requires active, rather than passive, executive presentation. The decisions are simply too frequent, complex and fast-paced to handle in a traditional manner. For this reason, each leadership team member should have the authority to make binding decisions for the area they represent.

Diversity Is Key

Expert teams from different disciplines should form the core of the design and development teams. Team diversity is a critical success factor. The temptation to staff expert digital teams with digital experts will be great. After all, people may wonder how those with a vested interest in today can create solutions required for a disruptive future. This is a valid point, but the digital teams in the companies we studied exhibited an important trait: We found a relationship between the power of the digital solution and the people required to build it.

Narrow teams work best when building narrow, predefined or prescriptive business solutions. A narrow team consists of people with similar backgrounds, responsibilities or interests. These teams are good at building concentrated digital point solutions, like connecting parking meters or placing remote sensors that address specific business issues via digital technology enablement. They tend to build and optimize what they know and are therefore less suited to building solutions that change a customer experience. A narrow team is less likely to recognize the value of customers knowing how the products are packed — via the digital image CDW provides — than optimizing the packing list. A team that concentrates on how the technology works — its functionality — more than the customer experience may be too narrow to create a digital edge.

Broad teams build broader business solutions that reflect the connections required to deliver a different customer experience. The truth is, customers experience a company, its products and services in their totality, not as a collection of functional specializations. A broad team consists of people from across different aspects of the enterprise. At Royal Caribbean, team members came from hotel operations, event operations, ship engineering, IT and other functions. At United Stationers, digital solutions required the contribution of product marketing, supply chain, supplier relationships, and more.

A broad team provides the breadth of knowledge and the depth of experience required to create a different digital experience that leverages existing resources, assets and capabilities to give digital solutions scale capacity and speed of implementation. Jon Stevens of CDW characterized the power of these teams in the context of digitalization. “Digitization forces us to go back to basics. Before applying information and technology, you need to know how things will work and how to keep them simple. Getting back to basics is critical in keeping operations lean, focused and simple.” This requires teams with a healthy amount of “legacy” experience to identify and make the connections between customer intent, information or facilities and current operations to deliver a different customer experience.

IT personnel figure prominently in these teams because of their expertise in communications, networking analytics and the customer experience. Companies should not, however, limit this role to technical experts. The business outcomes frequently require new combinations of jobs, roles, equipment, facilities and other elements that all have to work within the context of established processes, facilities and other resources.

A Diverse and Engaged Team Finds Opportunities in Emerging Digital Solutions

No one knew what a light bulb looked like before it was invented and no one set out to invent the Post-It™ note. These solutions emerged either from experimentation, deep understanding, an accident or a combination of all three. Likewise, it’s rare that anyone can predefine the design of their digital edge, or describe exactly how it will work before they have built, deployed and improved it.

Building a digital edge requires allowing digital capabilities to emerge and evolve as the teams diagnose, design and build the solutions required to achieve the customer outcome — captured by listening from the outside in. United Stationers started creating its digital capabilities based on sharing product information and descriptions with its reseller customers. Customers recognized the value of that information and the potential to band together and engage United Stationers to back them in competing for larger contracts. This created new digital solutions that emerged in addition to what was intended when United Stationers first began sharing the product information.

Similarly, Royal Caribbean’s digital capabilities started from looking at how technology could reduce chokepoints. Each chokepoint started as its own solution, such as using kiosks to capture facial information at check-in to facilitate boarding the ship. These individual solutions wove a digital fabric that allowed new digital solutions to emerge; for example, using the facial recognition information to route shipboard digital photos to passengers’ rooms rather than posting them on public bulletin boards.

Adopting an emergent approach creates the free space in which cross-functional teams can discover how the company will realize revenue and value from the emerging customer outcome. It also allows teams to recognize new solutions as the density of information and digital solutions increases. At CHLA, nurses initially left patient notes as typed text in a patient file for the nurse coming on duty at shift change. Eventually, the staff suggested that it might be more efficient and effective for the staff to use the video capabilities of their tablet devices to record a video memo of patient notes. That suggestion is only possible because it builds on the existing set of digitally dense solutions.

Organizations often resist emergent approaches to building solutions because they can be messy and difficult to control, and can easily lead to runaway projects. Planning on a solution to emerge can feel like pulling on a loose thread that will unravel the fabric of your organization and its systems. But an emergent approach is often necessary to create solutions that are responsible for creating new customer experiences and behaviors facilitated through digital technology that cannot be prescriptively defined. To avoid the potential mess, keep a constant and direct connection between the customer experience outcomes, defined while working outside in, with the digital solutions they are building inside out.

Designs for digitized capabilities emerge from connecting these perspectives. IONX, for example, would have limited its digital capability to developing tracking and sensory hardware. But the company knew that the real-time information needed for its digitized remote tracking devices was just as important. IONX’s analytics software, the links to commercial ERP systems and a cloud-based offering were also integral to delivering the outcome.

Discovery and design processes, though ongoing, are not always at the same intensity, since the enterprise learns and adapts to its digitized capabilities as it identifies new outcomes and experiences while working with customers. Appendix 2 contains a checklist to help assess the completeness of digital solutions and their fit with the customer experience and company value proposition.

Build Common Digital Platforms, Not Competing Digital Application Portfolios

The old adage in technology is to start small and scale fast. The question is to scale what? The traditional answer is to scale IT applications, increasing the size, complexity and cost of IT. Digital leaders are taking a different approach, evolving a digital platform rather than creating a portfolio of digital applications. The difference seems subtle but its implications can be powerful, particularly when creating a digital enterprise or digital customer experience.

It is possible to build and deploy individual digital point solutions to address specific needs. Find a problem; build an app, problem solved. These solutions get significant media attention, such as allowing people to pay for parking via a mobile phone or replacing paper airline pilot manuals with tablet devices. But while they create different digital solutions, they are only part of building a digital edge.

United Stationers could have taken this approach, building unique solutions to support specific virtual vertical businesses. However, the company recognized that the value of its digital resources rested in the information, not the applications. This led to the creation of its white-label services, offered via the cloud, and customized interfaces for those services at the point of the customer experience.

Organizations understand and are comfortable with a portfolio approach — it fits traditional IT patterns and lets business units and functions go it on their own. Creating a portfolio of digital applications creates a new issue as each group seeks their own point solution to their own problems — too many apps.

A digital platform is an information-intensive collection of commonly available resources, not a portfolio of application-intensive solutions. A digital platform is the collective environment supporting the customer experience. It is the one place that supports multiple solutions. Physically, a digital platform is more of an idea and concept than a “thing.” It represents a collection of digital resources, a common repository from which the organization can draw upon information, communications, interfaces, processes, facilities and equipment in delivering the customer experience. Figure 12.1 provides a generic illustration of the different architectures and elements within a digital architecture. A detailed description of each level is contained in the Appendix.

Figure 12.1. An Inventory of the Elements of a Digital Platform

A digital platform is unique to the organization. At CDW, account managers and the supply chain form the basis of the digital platform. United Stationers’ digital platform consists of product information, the supply chain, cloud services and the supplier network. For IONX, it is the physical sensors, telemetry, the communications network, the logistics modules and its logistics services. CHLA developed its digital platform based on meeting its patient outcome goals that requires clinical areas to work with common information, to coordinate resources and procedures, and to share information. Everything that forms the keystone for its platform is linked to the electronic patient record at CHLA. The patient is the focus of the customer experience, so it is a natural focus of digital capabilities and the requirement that everything connect to it.

This point is critical, as information becomes the basis for the customer experience, not applications, products or services. This gives a platform the ability to support multiple customer experiences from a single set of resources via common information rather than consolidated systems. At CHLA, the patient record and information such as test results, prescriptions, procedures and notes are commonly held and available to all clinical areas without requiring all clinical areas to force-fit their specialized needs into a one-size-fits-none unified solution.

The emerging digital platform accumulates as the organization builds solutions inside out in the context of its outside-in goals. Its ability to field new digital solutions grows with the platform because placing more things in common enables the company to assemble new solutions by building on what is in the platform rather than adding to a portfolio of individual applications. Royal Caribbean experienced this, discovering that the capabilities created as a solution to one bottleneck could be used to address other issues.

IT’s Role in Building Digital Solutions

The role of IT in business digitization has been a subject of debate. Some see digitalizing revenue and working with new channels as a business or marketing responsibility, with IT in a supporting role. That view is appropriate for organizations with underperforming IT. But for those with an effective IT organization, one that is able to make and keep its commitments, the evidence suggests that IT should play a greater role in creating a digital edge.

A study of more than 2,000 firms in the 2010 Gartner Executive Programs CIO Survey found connections between financial performance, digital effectiveness and IT effectiveness.1 Firms with effective IT organizations use them as a single responsibility center to generate synergies across the enterprise and produce a consolidated set of enterprisewide digitized resources, as opposed to allowing individual business units to pursue disparate strategies. These top quartile firms are 30% more effective in building digital assets than their peers. Organizations tasking IT to converge digital solutions have a higher percentage of their revenue coming from digital resources. Finally, these organizations outperform all other enterprises across four areas: return on assets, return on equity, revenue growth and cost-of-goods growth.

Use Figure 5.6 to set your digital strategy. An enterprise digital architecture covers the range of structures involved in a digital organization, regardless of their source. In talking about this digital architecture, Hung LeHong, vice president, Gartner Research, pointed out that it is important to recognize that parts of the architecture will not belong to or be controlled by the company. This point goes beyond simple notions of outsourcing or contracting with suppliers. For example, where customers previously carried out self-service activities on company-supplied equipment, they will increasingly perform the same tasks using their own devices or even third-party applications. A digital architecture therefore bleeds out of the enterprise’s four walls and into the consumer’s/citizen’s/employee’s personal architecture, particularly in terms of the structures involved in achieving customer outcomes — the interfaces, devices and channel architectures. Companies do not have to build these architectures, a benefit, but they still need to architect them.

Figure 12.2 Enterprise Performance and Levels of IT Involvement

Figure 12.2 makes a strong case for IT’s participation in building the digital difference, particularly when the IT organization is already highly effective. CIOs can best support digitalized business results by building effective IT organizations.

Creating a Digital Edge Involves Building Digital Capability Within the Organization

Digital technology touches every aspect of the organization, requiring a coordinated enterprise response, and that shapes who is involved in building new capabilities and how they work. Diversity is key to creating the type of solution that extends across functional and system boundaries. Teams work from the outside in and build from the inside out to evolve the solution while remaining focused on the overall goal based on a shared digital platform. A highly effective IT organization plays an integral role in creating that platform and realizing the business performance of digitalization.