While leaders don't need an in-depth knowledge of technology, they do need to have a sufficient level of understanding of it – at least enough to have intelligent conversations and ask the right questions. And to appreciate the roles that different technologies can play in creating new business models and generating new competitive advantage.
In this episode I give a high-level introduction to five technologies that digitally savvy business leaders should be aware of.
A good deal of our business thinking is shaped by delusions, which are shaped by flawed judgments and errors of logic that distort our understanding of the real reasons for an organisation's performance.
In his 2007 book "The Halo Effect” Phil Rosenzweig revealed nine delusions that are commonly found in the corporate world, and I've taken the liberty of appending a tenth.
Every so often a new technology comes along that does rock the world. For example, we had the emergence of the Internet. Later we had hand-held devices like the iPhone, and now another revelation is Blockchain – which seems to have outgrown the original ambitions that its inventor Satoshi Nakamoto had for it back in 2008.
Put simply, blockchain provides a new way to store data and provide trust in that data's authenticity. It's a distributed ledger, or database, shared across a public or private computing network.
Let me elaborate a little.
Value management and benefit realisation are not new concepts, but with a clear focus on digital technology delivering business value, the need to manage value and benefit realisation is greater than ever.
While many in your company might be excited by the perceived value of innovative digital solutions, others such as the CFO and business leaders need to stay focused on business value that can be measured. Sweeping statements of digital transformation and nebulous notions of new value won't be enough to satisfy leaders who need to report numbers to their boards.
It's well known that the best-performing companies outperform others when they focus on achieving the expected value from transformation initiatives. And as you scale up your digital transformation, value management will become an increasingly integral part of the journey.
Measuring value helps position digital transformation leaders as business value creators in the eyes of the CFO and other business leaders.
Intel was one of the early adopters of value management and their IT Finance team - which managed the process - consisted of seven financial analysts and one manager for the IT project portfolio, and it devoted 20% of its time helping business sponsors and project managers estimate, track, and document project benefits.
The role of that team throughout this process was to provide business sponsors with methodologies for value measurement and then ensure that the measurements are actually undertaken. Intel made it clear that actual measurement work is the responsibility of the relevant business sponsor.
All project proposals first underwent a baseline evaluation of current business performance. Project sponsors were then involved in creating a “metrics plan” outlining which value dials will be tracked, how and when measurements are taken, and who is responsible for conducting measurements. The baseline estimates and business case assumptions for all projects were also recorded in what Intel called "the Business Value Tracker".
Results were then measured by the business sponsor at each stage gate during the development phase, and at regular intervals after deployment, for five years after the initial capital investment.
These measurements were used to update business cases and were also rolled up into quarterly and annual reports of the aggregate benefits realised.
Before these results were reported to the executive team, the project sponsor performed a “gut check” to certify that the claims made of value delivered were accurate and didn't include value that actually stemmed from external factors, such as a strong sales team performance or a competitor's mistake.
You might be surprised to hear that what I've just described was happening at Intel since 2005 or even earlier - and it was led by their CIO. But almost two decades on, many companies still don't have any value management processes.
Take a look at Intel's 2017 IT Annual Performance Report and you'll see their CIO focus on how innovation and digital transformation is generating business value. I've included a link to that report in the show notes.
So how do you manage value?
Well as with all functions critical to transformation - such as innovation, strategy and programme management - value management requires a process and structure. And a simple process for value management could involve;
First: Value Identification
Next: Planning Benefits Realisation
Executing the Benefits Plan and Evaluating Results
And forth Establishing Potential for Further Improvements
You need to start by identifying the value drivers that your transformation initiative can contribute to, then determine the current status of the value driver. Only by doing this will you know how your transformation is impacting the business.
Establish KPIs, benchmark them, then define the value potential. When your transformation is in-flight, forecast the benefits for the next two to three years, and begin to report return-on-investment as soon as you can.
With the right transformation choices and some basic value management, you can be sure to whet the appetite of not only the workforce in general but also that of executives.
In a digital world where data-points are increasing, it would be ironic if digital leaders couldn't capture and cultivate data to demonstrate business value.
For example, if you needed to prove the quantitative impact of a new app on the business, you might need to capture the data relating to customer behaviour to identify how, when, and where the app influences customers at each step of their journey.
Next - in the example of the app - you would illustrate how your app has increased customer engagement and satisfaction, and how it also might have led to improvements in operational efficiencies.
On the surface, these outcomes may seem qualitative, but by putting to work your new-found data, you'll be able to articulate measurable business outcomes that have significant meaning to the likes of the CFO and CEO. As a result, you'll win the confidence of executives and so increase the odds of securing approval of funding for more ambitious initiatives, when you're ready to scale up your digital transformation.
Going into each of the areas is beyond the scope of this post, but I will take a closer look at the first step in the process, which is value identification.
Remember that how well your business cases are prepared and presented will determine the fate of your digital use cases. So after your innovation and digital use case process, you need to create and get approval of a business case.
Those business cases that are approved can enter the transformation portfolio. And those that don't can be kept for consideration at a later date.
By building solid business cases, you’ll improve your ability to calculate the return on investment, Analyse risks and opportunities, Gain support from others, and increase the odds of getting approval to proceed with the transformation initiative.
So let's look at the key components of a business case.
The purpose of an Executive Summary is to get the attention of your audience by telling the story of your business case. You can do this by briefly stating the challenge or opportunity, describing how you plan to address it, which might include options. Then communicate what the return on investment might be if this business case is approved.
The purpose of a Business Need section is two-fold …
1. Opportunity Statement
Here your goal is to establish a sense of urgency for the opportunity or solution, describe why you’re proposing the initiative and what the business need is. Share the information from the digital use case which articulates why the company needs to do this now, and what the consequences might be if it doesn’t. Describe your understanding of the underlying issue using data and analysis. If those reviewing the business case don’t understand or agree with your description of the opportunity or problem, your business case will begin to lose credibility at this early stage in the document.
The second part of the Business Need section is addressed in a strategy statement. Which is to Explain how the initiative supports the company’s strategic objectives. You should be very well prepared to articulate this clearly.
Project or Programme Overview
Next, the Project or Programme Overview section should Help your stakeholders understand the value proposition and scope of the initiative you are proposing. You do this by providing a high-level description of the current situation, the value proposition ad the solution that will realise that new value. All of this can be pulled from the digital use case.
The purpose of the Schedule section is to present a high-level plan for implementing the project or programme. At a minimum, this should include the key milestones along a timeline. If the benefits of the initiative are released over time, show this on the timeline too. It helps emphasise the benefits and not just the time and effort required to realise them.
The Team section should illustrate the team required to make the project or programme a success. List the core team members required, along with the total number of full-time employees required along with their functions. Name the key subject matter experts required. You'll sometimes find that different business cases will be competing for the same experts.
A section on Other Resources should show the additional resources the initiative would need, such as office space, technology, and facilities, etc.
The purpose of the Impact section is to Highlight the benefits of the project or programme. You'll have already addressed benefits in the digital use case so you can use that information. Remember to include strategic, management, operational and functional or support benefits. Each of these will resonate differently with various stakeholders. Include both tangible and intangible benefits, and confirm the data upon which your numbers have been based. Your stakeholders need to be made to feel they can trust what you are telling them.
The purpose of the Risks section is self-explanatory. No transformation initiative comes without risk and it's important that you show your stakeholders that you have carefully considered what they might be, and how you might mitigate them. This doesn’t need to go into project-level detail. Simply keep the list of risks and mitigation plans at a level which is appropriate for your stakeholders who will be reviewing the business case.
You should include risks relating to costs and schedule, but also to capabilities, culture, technology, scope, quality. and anything else included in the six THRIVE principles.
Finally, you need to present the Financials, and the purpose of this should be to articulate the cost of the planned return on investment. You should include the total costs and benefits of your project and break down the costs into specific areas. This is simply to help your stakeholder get a feel for how you arrived at the total cost, which will help make them feel more comfortable because they understand more.
Use whatever ROI approach your stakeholders are familiar with in the company, but you can also include your own if you feel it adds value to your business case.
Finally, the approval section of the business case should be used as a record of who approved the business case. This might not seem important right now, but months down the line when issues arise, the sight of a key stakeholder’s signature could come in very handy!
From a value management perspective, the business case is just the beginning and you need people with the right skills to manage value all along the transformation journey.
The irony in many firms is that they devote a lot of time effort and heated debate to time, cost and quality, but there's often little if any attention paid to value or business benefits. When transformation is done to create value - which it should be - it's irresponsible to neglect the concept of value management.
And remember that value is not always about financials. Intangible assets such as brands, customer relationships, intellectual property and human capital have become significant value drivers in business. But traditional Finance metrics are not cut out to measure these.
Leading Finance executives suggest the need to identify new KPIs to accommodate the intangibles. This is particularly important when considering the fact that on the S&P 500, intangibles now make up more than 80% of corporate valuations. These new KPIs can then help transformation leaders understand how to measure the potential intangible outcomes of digital business transformation.
So while there are Financial Benefits, remember to also consider:
Quantifiable Benefits - where there's sufficient evidence to forecast how much improvement/value should be derived from the transformation.
Measurable Benefits - where an aspect of performance is currently being measured, and it will be possible to measure how much performance will improve.
Observable Benefits - where by using a set of criteria, specific individuals or groups will decide, based on their judgement and experience, to what extent the benefit has been realised.
So you can see that there's a lot to do in value management. It's a transformation management discipline in its own right, but one that is often neglected.
Technology continues to amaze us doesn't it? This week I've been blown away experiencing Facebook's Oculus Quest virtual reality kit for the first time. Meanwhile Amazon's Alexa is already part of the furniture in my home. which brings me onto Conversational Artificial Intelligence (AI) and how we're on the cusp of an explosion in its adoption by transformational companies.
Voice as an interface liberates us from the toils of typing and reading. The way we currently interact with computers, other devices and the internet will soon become as antiquated as the idea now, of going to the library to find information.
Powered by artificial intelligence, voice solutions such as Amazon's Alexa are already providing the brain behind tens of millions of devices across the planet. And forward-thinking companies are already enabling their customers to control smart devices such as door locks, cameras, entertainment systems, thermostats, and lighting. This technology can enable companies to perform highly personalised interactions with colossal numbers of individual customers.
While most AI-related innovation has been in consumer-grade technologies, the companies that become early adopters of conversational AI will be giving themselves a head-start over their competition. New voice applications and platforms are really set to fire up the AI revolution inside forward-thinking enterprises.
Amazon, Tencent, Google, IBM, Microsoft and others have been investing in and developing AI technologies for years, but they and innovative start-ups (some of which the big players acquire) are the innovators. And the rest of us are easily able to take advantage of the tremendous opportunities that these pioneers create for us.
Conversational AI can fundamentally transform an organisation. It provides more ways of communicating with customers while facilitating stronger interactions and greater engagement. While the term “conversational AI” might sound cool, ultimately it all boils down to how you're able to innovate and take advantage of it for your business, customers and workforce.
Conversational AI is a set of technologies that enable computers to simulate real conversations. It's a subfield of artificial intelligence focused on producing natural and seamless conversations between humans and computers. And it enables people to communicate with applications, websites and devices in every day, humanlike language.
For users, it allows fast interaction using their own words and terminology. And for enterprises, it offers a way to build a closer connection with customers through personalised interaction and receive rich business information in return. Conversational AI provides companies with a direct line to communicating with and understanding their customers.
With two of the world's digital economy pioneers powering this shift - namely Amazon and Google - smart people are acknowledging the potential of conversational AI for both their careers and the companies they work with, and they're learning about it fast. They're the early adopters, who in a few years from now, will be ahead of the crowd in one of the most powerful emerging technologies of our time.
With around 100 million smart speakers already in use, analysts at Canalys predict the market will more than double again to hit 225 million units by next year. They also suggest that Amazon devices make up 50 percent of the share, with Google having 30 percent, and Apple trailing behind with just 4 Percent.
But from the solo entrepreneur to large multi-nationals, the ability to connect products and services to customers using the solutions that Amazon Alexa, Google Home, and others make available, is both easy and affordable. It's another powerful way to increase customer awareness and engagement.
Millions of people are experimenting with speech-based assistants, which means that speech-based platforms are rapidly displacing traditional web and mobile apps to become the new medium for interactive conversations.
These days, many of us expect 24x7 access to online stores, along with personalised customer support available instantly and on-demand. Advances in Natural Language Understanding and other AI technologies like machine learning are creating digital transformation opportunities that enable us to do just that.
Conversational AI enables organisations to build transformational voice-based solutions for customer service, digital commerce, and much more. You can lower costs of customer service, improve customer satisfaction and loyalty, and increase employee productivity and satisfaction. In short, with Conversational AI, you can boost your revenue streams, improve the customer experience on all sorts of devices and enhance operating margins across the enterprise.
This means being there for the user whenever they look for you, and that's the key! How can you be sure you’re there at all times and especially when it matters most to the customer?
Consumers are already using conversational AI platforms in place of email, phone calls and face-to-face communication to talk with family and friends. Younger people, in particular, tend to prefer messaging over other forms of communication. Messaging-based apps are the new mobile home page, particularly for millennials. And early adopter consumers are already using voice interfaces to make purchases. It’s easier, less intrusive and quicker than using older communication channels.
For Business, Conversational AI will change every aspect of when, where and how you engage and communicate with your customers. You need to be able to hold seamless conversations with consumers across whatever channel they happen to be using at the time, no matter where they are. And those conversations could be short one-off requests or responses. Or they could be part of a longer and more elaborate engagement with the customer.
It's not just a chance for companies to differentiate themselves in a crowded marketplace, but it also provides an incredible opportunity to acquire valuable data about the voice of the customer. To understand what customers are looking for, to engage with them on any device or service, and to deliver a personalised service to every customer. Not just to high-value customers.
Customers will soon be managing a significant portion of their relationship enterprises without interacting with a human, and while many will be quick to point out that accuracy is currently a challenge in this space, let's not forget that all technology takes time to mature. As with all technology that's now widely adopted, Conversational AI will become an integral part of business in the not too distant future. At least for those businesses that'll still exist then.
Gartner has said; “Conversational AI-first” will supersede "cloud-first, mobile-first" as the most important, high-level imperative for the next 10 years.
While tech titans like Apple, Amazon, and Google are engaged in the conversational AI race, the opportunity for the majority of large and small businesses to take advantage of the brilliance of these titans is tremendous. And the only thing that stands in the way of that is the mindset of corporate decision-makers.
Of course, as with many technologies, data privacy and security are important considerations for conversational artificial intelligence. But that's now as commonly understood as the need to secure and insure the homes we live in. It goes without saying, although as with home security, some take it more seriously than others.
Let's consider some of the simple use cases that companies could take inspiration from, to dip their toe into the world of Conversational AI. To do that I'm going to talk about some of the opportunities that Amazon Alexa already makes available.
Meetings make up a lot of many peoples' working week, but from booking a meeting room to getting conferencing equipment to work, the experience can be frustrating and a time-waster for everyone.
Alexa for Business simplifies meeting rooms for your employees and works with your existing conference room equipment. You can use Alexa to book a room by saying “Alexa, is this room free?”, and “Alexa, book this room”. You can instantly start your meetings by saying “Alexa, join my meeting”. And you can use Alexa devices instead of speakerphones in small conference rooms.
It'll make the way many people book meeting rooms and run meetings these days become an inconvenience of the past.
Alexa also lets your employees be more productive throughout their day. It can manage schedules, keep track of to-do lists, and set reminders. It can schedule one-to-one meetings between colleagues, move and cancel meetings, and dial into conference calls, so people can stay focused on more important tasks whether at home, at work, or on the go.
You can build custom skills that add a voice interface to applications such as Salesforce, ServiceNow, or any of your custom apps and services and create rich, personalised voice experiences that redefine the way employees get work done.
And imagine giving Alexa access to your team's Jira application in projects. It can easily read out items due today, and items closed yesterday, etc.
If you're in vendor management you’ll typically be working with different vendors on a day-to-day basis. With voice technology ordering supplies, setting up cleaning schedules, receiving or sending invoices, etc. could all be triggered by an effortless ‘Alexa, order 500 Nespresso capsules’.
This is really just scratching the surface. Within three to five years, advances in AI will make the conversational capabilities far more sophisticated, which will pave the way for new ways to transform how companies do business - both internally with their workforce and externally with customers.
While many of Alexa's tens of thousands of skills are around fun and games, the possibilities of a voice interface attached to the free web allows the imagination to run wild. For innovators, it's one of the most exciting playgrounds of our time.
As professor Everett Rogers taught us in his "Diffusion of Innovations" theory, there are innovators, early adopters, the early majority, late majority and the laggards. Which group will you be part of for conversational artificial intelligence?
Enterprise architecture, business, technology, innovation leaders would be wise to prepare for Conversational AI and the significant new business opportunities and challenges it'll present.
Ford has integrated Amazon Alexa in its newer cars, allowing drivers to do things like check tire pressure, and fuel levels from their homes.
Starbucks uses ‘My Starbucks Barista’ which allows customers to order and pay for their food and drinks by speaking.
And there are many other examples of how forward-thinking companies are already taking advantaging of Conversational AI.
Many companies are still struggling with cloud and mobile, and they'll find themselves falling even further behind if they fail to participate in Conversational AI, which is likely to be one of the most significant platform paradigm shifts of the decade.
So how can you integrate your products and services with conversational AI?
How can you exploit the data generated from conversational AI?
How can you improve operational excellence with conversational AI?
How can you enhance your workforce performance and satisfaction with conversational AI?
How can you satisfy your customers with conversational AI?
And how can you create new business models using conversational AI?
To implement conversational AI, you'll need to redesign your customer experiences around two-way natural language dialogue, which helps foster a better relationship with the user. And it'll typically involve a blend of technologies such as speech recognition, natural language processing, chatbots and artificial intelligence.
There's a lot to consider, with new ways of thinking and innovating. But adopting this Conversational AI is neither difficult or expensive. I've already done it myself.