Disintermediation - key to identify digital transformation opportunities

As discussed in my previous posts, digital is introducing newer simpler business models and changing the business landscape. One of the methods to identify new opportunities with digital is to look at disintermediation.

Let's start with the definition

disintermediation  /ˌdɪsɪntəmiːdɪˈeɪʃ(ə)n/

(noun) reduction in the use of intermediaries between producers and consumers

I would like to look at disintermediation from a perspective all of us, as consumers, understand - consumer retail. Let's look at a very simplistic view of traditional retail - look at the intermediaries involved from the point a product is manufactured to the point it reaches the consumer (bear in mind that the actual process is lot more involved - with warehouses, logistics providers, shipping companies etc etc . being involved)

First set of disintermediation in this space was with the online only retailers - biggest and the most influential being amazon made this more efficient with their no physical storefront models

The final picture in the series is where a consumer products company, be it a telco providing mobile and sevices or a FMCG company selling shampoos, reaches out and interacts directly with the consumer.

Disintermediation has bought businesses much closer to their end consumers - bringing in fresher insights about what consumers want and driving deeper loyalty.

Further proof of disintermediation at work, is the numerous successful product/service launches through kickstarter and other crowdfunding platforms.

Does this apply only to consumer facing parts of your business?

This concept of disintermediation can be extended to organisational silos which exists in large organisation.

• HR, for instance, can today get much closer to employees
• Corporate Strategy can be improved with inputs from rank & file
• Procurement savings can be identified and delivered by employees
• Factory workers can share best practices on manfucturing with other sites
• Retail stores can contribute to merchandising and launch plans

Technology has made it so much easier for us to identify disintermediation opportunities.

So, what can you disintermediate today? To identify opportunites, we can use design thinking, business model generation and other techniques to look at the value chain. But to execute on the value delivered by disintermediation, you need a strong suite of digital solutions.

In conclusion, watch out for disintermediation - this could disrupt your function or industry and be the basis for an opportunity to transform.

Originally posted at SAP SCN Blog

Idea to Execution Gap

Average person has about 50000 thoughts per day, according to an article I came across recently. Even if we assume that less than 0.01% of those ideas are related to things which could make your work/business better or more innovative, there is still about 5 ideas a day. Multiply it across the employee base of an organisation, there are no dearth of ideas.

Hence, would it make sense to hypothise that larger an organisation, greater the potential for transformational ideas? Why then do you see established large organisations stumble when innovations disrupt their market as seen by numerous examples like the Nokia/Blackberry downfall from being the leaders in the mobile space?

I would like to think this is due to the Idea to Execution Gap.

Consider the Strategy- Execution gap which has been long debated and is something lot of organisation realise as a problem area and a major reason for startup failures as well. There are a number of books, articles and even an MIT course on this topic. A few selected articles are listed below:

• Harvard Business Review,
• PwC,
• Jonathan Becher in the Sapinsider from 2010.

With idea becoming a bigger currency in the digital economy and the pace at which startups are disrupting industries (as discussed in my previous blog, I feel Idea to Execution Gap will play a much bigger role in the future success of businesses.

Addressing this gap can help organisation be more agile and relevant in the face of competitive forces accelerated by a digital and global world. 

Idea Economy

Why are ideas important?

• As discussed before, killer ideas with the right support can disrupt an industry
• Ideas not evaluated sooner can mean the difference between being a Nokia or an Apple

It is important to note that ideas without execution is hallucination. Also for an idea to be termed an innovation, it needs to find a customer willing to pay for it. Hence, the importance of Execution.

I am using a very broad based definition of Execution to mean taking the idea to market - be it

1. to internally to improve how you run your business more efficiently or
2. to introduce a new product/service to market
3. to improve collaboration with your suppliers or partners

and overall to be a leader in your market.

In my next post, we will look how technology can help you address the Idea to Execution Gap.

Originally posted in SAP SCN

Who leads Innovation driven Transformation - IT or Business?

Who is leading transformation both incremental and radical in your organisation? Does IT play a catch up role in these discussions or IT leading these discussions?

These are some of the questions that I've explored as part of interactions with customers, partners and colleagues across sectors and regions. As expected, the answers have varied depending on the maturity, industry and the currenthot topic/trend.

It is interesting that, over the years, the onus of innovation, as defined by coming up with an innovative idea (process, product, behaviour etc) which makes commercial sense and not just to do with new products/solutions, has shifted from the business to the technology teams.This has been brought about by the rapid evolution of technology innovations which are overturning the existing business models.

In the past, to be innovative in a particular industry knowledge of the business was paramount. This came from the business which was understood the value chain and key business drivers. Hence, IT was tasked to deliver the technology which supported the innovation. Also, IT wasn't well known for being agile and hence always ended up playing a catch up to the ever-growing list of demand from business.

Business Model Evolution & Technology

The rapid advances in technology driven by

• flexible, agile delivery models afforded by the cloud
• leaner technology landscapes with innovations like SAP HANA and
• easy-to-build consumer grade apps with MEAP(mobile enterprise application platforms)

have all contributed to IT having a critical role to play in business innovations. Software has become the glue which holds customers, partners, employees and the wider stakeholder community together .

Let's look at some of the examples of innovations which have overturned existing business models :

1. Could we have imagined Airbnb (set up in 2008) becoming the largest provider of room - taking up this mantel from the biggest hotel chain in a matter of 7 years? The critical aspect is that it has done this on the back of technology and without owning any of the rooms.
2. Could we have imagined Uber (founded in 2009) becoming the largest taxi company - again using mobile and location technology to great effect - without owning a single taxi?
3. Or Amazon, the largest online retailer (founded 1994) figuring in the top 10 of US retailers without owning a physical storefront?

SMAC (Social, Mobile, Cloud and Analytics) is playing a huge role in driving these and other innovations in business models. These and several other examples in the last few years have brought the focus on IT leading the innovation driven transformation. Organisation are looking at IT to help build a digital business which can survive and compete effectively in the new business landscape. 

The successful organisations are the ones which are able to bring IT and business together to paint a picture of future organisation/business model which taps into technology advances while staying relevant to the customers.

In my next post, we'll look at the idea to innovation gap which have to be tacked for any organisation to be an effective innovator. 

originally posted in SAP SCN