Transform Or Be Trapped
In 1995, when I was working with the gas pipeline industry in the US, we developed tools for gas pipeline inspection with enhanced sensors, and also included digitisation and the use of artificial intelligence (AI) for defect detection and classification. It took the gas pipeline industry several years, despite having digital tools, to give up printed spools of inspection data that operators would manually scroll through looking for defects. Even when digital records were adopted, the use of operators to scroll through hundreds of miles of pipeline data (now in a digital format) continued. The challenges and excuses were many. The speed of adaptation did not pose existential problems in those years to incumbent companies as there were no native digital challengers.
The exponential growth of computing power and connectivity has led to a democratisation of digital that is driving new definitions of business scale, scope, and speed. Designing new companies for digital is a much easier job than reinventing incumbent industrial companies for digital. Incumbent companies are often trapped in competencies, ecosystems, talent, and metrics that were developed for the industrial age. In his book, The Digital Matrix: New Rules for Business Transformation Through Technology, Venkat Venkatraman calls out and explores these industrial-age traps and the transformation models to make companies future ready. He speaks authoritatively to his readers and offers practical bite size steps to accomplish significant transformations.
At the core of the book is a 3X3 matrix, which includes three sets of players and three phases of transformation. Three sets of players include industry incumbents, tech entrepreneurs, and digital giants. The three phases of transformation include experimentation at the edge, collisions at the core, and reinvention at the root. The book primarily addresses industry incumbents and how they can explore, partner, and lead a transformation across the three phases of transformation.
Venkatraman, a Professor in Management, and Chairman, IS Department at the Boston University Questrom School of Business, gives several industry examples to help his readers understand how to first observe and then invest while experimenting at the edge, how to co-exist and then morph when digital collides with the core, and finally how to frame and solve when reinventing business models at the root.
The author also articulates actions through three winning moves involving reframing business models, partnerships, and talent. He goes a step further to synthesise his recommendations into nine rules and a step wise approach to utilising the rules for digital transformation. Embedded in his rules is a strong recommendation to absorb and adopt the power of AI to complement human talent in defining organisations of the future.
The Digital Matrix, is a valuable resource for leaders of incumbent companies to help them rethink business models, organisational structures, partnerships, talent, and technology leverage as they lead digital transformation of their businesses. Venkatraman collates a wealth of industry examples to learn from, and he condenses valuable management thinking to guide the journey of digital transformation. What would have been even more powerful is for Venkatraman to have shared first hand examples of the implementation of his methods. It is in the actual implementation that the challenges emerge. It is important to learn from failures of industry incumbents who tried and failed in their digital transformation journeys.
The public knowledge of large incumbent companies positing to have transformed digitally does not necessarily depict the true or complete picture available to insiders. Having said that, Venkatraman provides a timely advice that all companies are digital companies and that all employees have a role to play in transforming their organisations for success. The Digital Matrix, crucially, offers a path forward for digital transformation where there might have been only confusion before.
