Digital Business is everywhere and everyone is buzzing about it. But like a swarm of angry bees, sometimes all you want is for the buzzing to stop. Unfortunately, in the digital world, the buzzing is only likely to get louder and more persistent. And it turns out; the problem isn’t really the buzzing. It’s really a problem of figuring out what steps to take to do something about digital business that will have long lasting good effects.
But that requires a new mode of thinking, one former Gartner analyst Mark McDonald blogged about earlier this year. He postulated a new mode of digital thinking was needed from executives.
But can executives adopt new modes of operations to match their new modes of thinking?
Yes, with Digital BizOps.
The Principles of Business Operations Need to Be Updated
Business operations have evolved over many periods of technological advancement in history. Whether in the industrial revolution or the digital revolution, business practices have had to change to meet the requirements of the age. Many have postulated that the digital age represents a major shift in the way business will compete or even exist in the world of digital business.
In big shifts, we find there are great opportunities to grow a business. But we also must learn which rules of operation are key to competing well in the new business paradigms. Barnes and Noble had to learn this to compete with Amazon. Blockbuster struggled to learn this fast enough to compete with RedBox or Netflix.
The idea of Digital BizOps postulates that there are many new tools and disciplines for digital business operations that must be embraced. Among the tools and disciplines are rising categories like DevOps and industrialized cloud delivery among others. And, BizOps recognizes that there are new rules. The new rules of digital business operation are based on the premise that the ways we did things in the past may not be sacrosanct. We must be ready to change. And to do that, we must challenge our operational assumptions and we must be ready to adapt our operations to new realities on a regular basis. To do that, we must have an increasing number of what could be called “feedback loops” between internal and external people and processes. These feedback loops will allow users of a digital technology to help evolve the design and use of digital technology with appropriate speed to make a difference at the point of need.
In digital business, customers are more willing to try new options than ever before. New competitors may bypass you in a short time with little or no indication they were a threat until they show up on your customer’s doorstep. The need to add new features or capabilities to your products and services has to be done as frequently as possible – and; it all has to be done in record time.
The examples are legion and almost caracatures of innovation by now. Uber revolutionizes transportation, WhatsApp shakes the foundation of messaging and communications, Air BnB, well, you get the picture…
Since almost any business can become a digital business overnight, it speaks to a competitive need to react more agilely than historically possible. But this kind of agility can be a trap. In most cases greater agility can lead to greater fragility. As changes mount at a business level, the chances that mistakes will be made or that unexpected failures will happen because of a change becomes high. These are the red flags of digital operations.
Executives are familiar with the basic tools of business economics when it comes to optimizing a business for certain economic conditions. We have the budget cutting knife which every IT department fears. We have the people-launcher which reduces employees to economic chess pieces to be sacrificed in the name of downsizing. But where are the tools that allow us to explore new options rapidly, to consistently leverage economies of scale, or to change without the changes themselves causing negative disruption?
This is not to say that all business operations must change or be overturned. Instead, it is to say that some challenges of digital businesses must be supported by operational discipline rather than reactive initiatives like cost cutting. Digital BizOps identifies some of those operational disciplines. Speed, scale, efficiency, and overall agility all supported by digital machines and the software that runs them are now operational imperatives.
Define new types of assets
Typically business operations are about harvesting and increasing the value of assets both physical (fixed) and intangible. A building can be rented to create recurring revenue just as an idea can be sold on a royalty basis to create recurring revenue. While this also happens in a digital business, there is a new dynamic which potentially creates new types of assets – the blurring of the physical and virtual worlds.
We say that digital blurs the distinctions between the physical and virtual worlds in two specific ways. One is that physical characteristics can be pumped into the virtual world through sensors and the Internet of things. The other is through creation of physical objects from virtual representations directly through a 3d printer. These two directions of flow (sensor data in and 3d objects out) create what we call Transitional assets which will generate continuously changing physical or intangible assets that cannot be managed with the mechanisms of the past.
Fig 1: Business Assets
Transitional assets are ones which can form a bridge between a physical and an intangible asset. One might say that transitional assets are like money and stock, which can transition from one form to another and yet retain their value. These are usually called tangible assets. However, a transitional asset actually generates new value without sacrificing or transforming the value of the original asset. While one could use monetary assets as a means to acquire more valuable assets, normally one would sacrifice ownership of the tangible asset used to pay for the new ones.
A blueprint for a 3D printed shoe is a transitional asset. In most business operations this would have been called an intangible asset but in Digital BizOps it is transitional due to the creation of a direct physical result through automated means, not through a manufacturing process. One might ask how this is different from any design document that is used to manufacture a car engine or a child’s toy. In essence it is no different. But in practice, the digital nature of the blueprint, and the rapidity at which it can be changed and printed is unparalleled at generating physical asset value significantly faster than other types of design documents.
Contextual information gathered from sensors is a transitional asset since it is gathered directly from physical monitoring and is used to form operations and transactions that directly generate profit. One example is the use of wearable sensors like Fitbit, or a Nike Fuelband where continuous health monitoring is tied to social interactions, discounts, loyalty programs, and even health product transactions. The transitional nature of this sort of asset is to turn contextual information into human behavioral catalysts. Not only are the sensors assets, but their physical location, who wears them, the direction they scan, and how much data they capture are also assets. While the physical location of a store, or the direction it faces have always been assets to a company, just try turning that store around or moving it to a different location once a month.
These are the new ways of securing the value of assets that have not been available to most businesses in such volume and density. It’s not that sensors or contextual data are new. It is the density of their presence, or the volume of data, or the ability to use it in so many digital ways that speak to the transitional nature of them as asset.
Just as Bitcoin is redefining financial categories for currency, so too will contextual data be used in ever changing ways to redefine profit scenarios. Just as 3d printed sculptures are redefining what is art, so too will the physical plant of an organization be redefined as printing options grow cheaper and more complex. Transitional assets will allow the creation of new ways to account for the three mandates of business operations described in Production and Operations Management (Poonia): generating recurring revenue, growing the value of assets, and securing the assets and revenues of a business.
Decide to embrace the mechanisms of digital BizOps
So, what are the mechanisms to support a movement to digital BizOps? They include mechanisms to allow for more rapid experimentation, to perhaps take advantage of serentipity (unexpected opportunities), and to become much more agile and adaptive. The savvy reader will have noted the correlation of the phrase “BizOps” and the phrase “DevOps”. This is in part intentional to show an alignment between technology driven approaches and the outcomes in business operations digital business requires.
In part two of this three part series, we will discuss the effect of things like DevOps, digital marketing, cloud industrialization, and even crowd sourcing on a digital BizOps model as we introduce the concept of DevOps Economics.
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