Digital Economy Dispatch #098 -- Has Digital Transformation Failed Us?

Digital Economy Dispatch #9825th September 2022

The joy of travel has gone for me. And I am not sure it will ever return. It is not just because I am getting old and bored of it. Having been on more planes and trains than I care to count, that would be enough. But more worrying is that the processes and procedures of going on a journey have become almost unendurable.

Here I am sitting in Dublin airport surrounded by what can only be described as “semi-organized chaos”. The recommended 3-hour arrival means that people show up early, queues build up, waiting times are long, and stress levels are at breaking point. Information about what’s going on is at a minimum. It is hard to find fresh food in the airport shops and choices are limited. Schedules are disrupted. Lack of available staff still seems to be an issue everywhere. It is an experience we’ve all had to go through recently. And it doesn’t seem to be getting any easier.

Digital to the Rescue

More worrying from my perspective is that I had hoped that digital transformation of the travel experience would be doing more to relieve the pressure. I can book my ticket online and download a boarding pass. I receive alerts about many aspects of my trip. I have apps that can tell me precisely where every plane is located in the sky. Yet, the process of getting from check-in to aircraft don’t seem to align around this data. Systems are disconnected. Everything seems annoyingly slow to adapt when something goes awry. Decisions don’t seem to be adjusted based on relevant information. Communication is haphazard and information sharing erratic.

Does this mean digital transformation failed us?

Even before the start of the pandemic, digital evangelists were bullish that finally the golden age of digital innovation had arrived. Availability of cheap, high quality digital technologies had pushed activities in deployment of digital solutions in every conceivable industry. Now, they said, we’d see the benefits of the confluence of big data, advances in AI, and the rising demand for new products and services around the world.

After the shock of the Covid pandemic, some of the loudest voices to be heard have been digital evangelists shouting, “I told you so!”, to anyone who would listen. They pointed out that the disruptions and uncertainties being experienced were best addressed through digitally-driven solutions. Even basic aspects of business continuity depended on a well-managed digital infrastructure. For example, forced into remote working patterns, the adoption of digital communication channels became a differentiator for organizations and an essential for families separated by the impact of rapidly enacted regulations and changing cultural norms.

As a result, on-going digital initiatives were celebrated as life savers for businesses of all kinds. Furthermore, long delayed and poorly funded digital technology deployment efforts suddenly hit the top of the list of priorities. This included buying new laptops, rolling out Microsoft Teams, fixing back-office reporting systems, upgrading websites, and much, much more.

Of course, digital adoption has been critical to survive the pandemic-induced chaos of the past 2 years. Without the ability to connect and communicate remotely, many businesses would have folded and those that remained would be severely weakened. We all learned to operate in new ways pervious deemed impractical, ineffective, infeasible, or inadvisable.

The Digital Reality Gap

Yet, in practice there have been significant challenges with the deployment and delivery of digital capabilities. The initial bursts of enthusiasm and rapid investment in digital technology helped many organizations muscle through the initial wave of disruption. Heroic amounts of technology-supported hard work filled many of the gaps. However, several deep-seated issues remain.

Digital transformation requires a system-of-systems perspective

First, it is becoming clear that locally defined and deployed digital solutions, however important, do not operate in a vacuum. Organizations are no recognizing that they can only survive and thrive by focusing on optimizing their value chains (how they distinguish their products and services to offer enhanced solutions to clients) and supply chains (how they coordinate with others to create effective products and services).

This calls for agreements, alignment, and synchronization across multiple parties. Something that often takes significant time and negotiation to complete. Standards must be in place. Joint operating models must be agreed. Incentives must be aligned. And all the supporting infrastructure has to be adjusted. Right now, the pressures to maintain business operations is making this particularly difficult. Increasing market volatility and rising costs in many industries are only adding to the challenge.

Digital transformation needs disciplined agile practices

Secondly, the past 2 years has brought huge uncertainty to our working and living patterns. Many of the plans and strategies developed pre-pandemic were based on long term statistical analyses of behaviours that had been slowly shifting towards a digital lifestyle. This was massively accelerated during the pandemic. Seemingly overnight, old patterns of behaviour were rejected in favour of new ways of operating.

Nowhere has this been more apparent than in working and travel patterns. The necessity for communities in large parts of the world to work from home and severely limit travel during lockdown periods changed many ideas and practices that had been prevalent throughout large parts of the last few decades. The impact on many organizations has been felt in almost every aspect of how they plan, manage, and operate their businesses. Adjustments had to be quick and extensive.

However, rather perversely, in many organizations that period of disruption was found to be a time of immense success in driving innovation, exploring new opportunities, and breaking through barriers that previously seemed impenetrable. As often experienced, crisis frequently leads to accelerated progress. Now, as the world readjusts, a great deal of uncertainty has been introduced.

Will changes in our ways of working over the past few months remain? How will society adapt to the on-going risks? Will hastily forged alliances and relationships between organizations grow or collapse? For many organizations this is bringing increased volatility, uncertainty, complexity, and ambiguity. Adaptable managed processes are essential to maintain the velocity of changes we will face. Few of these are yet in place in many organizations.

Digital transformation must be based on a resilient socio-technical infrastructure

Thirdly, the challenges of recent months have highlighted the importance of a renewed focus on building resilience across all aspects of an organization. In the current challenging environment, setbacks and problems will be inevitable. It is likely that the most successful organizations will not be those who avoid disruption but may well be those able to adapt and recover from whatever issues they face.

Much of the focus of resilience can be seen in how organizations are adopting digital technologies and infrastructure. For example, the shift to cloud-based services is well underway. Initially the primary motivation was to reduce costs by moving large upfront capital costs to smaller on-going, flexible operational costs (capex to opex). Now, cloud services are viewed more often as a way to improve resilience by designing well-architected delivery platforms that leverage the massive investments of BigTech companies such as AWS, Google, and Microsoft.

While this is important, an additional aspect of resilience also requires attention. For many organizations the most fragile aspect of their business is the people. The past 2 years has taken a heavy toll on workers at every level in the organization. The uncertainties and insecurities of working practices made working life more difficult. Job specifications have been redefined. Workloads have been unpredictable. Hybrid working patterns have had huge impact on home life.

Consequently, in discussions with senior leaders in many organizations, the human issues of resilience frequently appear highest on their agenda. They will demand more and more of our attention during the continued uncertainty as we adjust to the longer-term impacts of the pandemic and other world events. Greater focus will be needed on the human impacts of digital transformation on today’s workers and on tomorrow’s staffing needs.

The Certainty of Uncertainty

We live in uncertain times. And there is no doubt that digital technology has been critical to help us through these difficulties. But somehow, I often feel let down. Digitizing individual elements is not enough. I want everyday experiences to be digitally transformed to be better and more aligned. Yet, there seem to be 3 things that are holding us back: Disconnection of systems across key value chains; Inflexibility to manage rapid adaptation to changing conditions; and Ignoring the complexity blocking richer Digital-Human interactions.

Digital Economy Tidbits

All Software is Open Software. Link.

Over the years there have been many debates about the value and challenges of open source software. So it was very interesting to see the latest research data from Synopsys:

As reported in Lawfare, the conclusions are a little worrying:

An April 2022 industry study found that 97 percent of software contains some amount of open source. Open-source code was found in 100 percent of systems related to computer hardware and semiconductors, cybersecurity, energy and clean tech, “Internet of Things” devices, and internet and mobile app software. And it is not a negligible amount of open-source code—78 percent of the code reviewed was open source. Most concerningly, 81 percent of the codebases containing open source had at least one vulnerability, with an average of five high-risk or critical vulnerabilities per application that remain unpatched.

Starbucks details its blockchain-based loyalty platform and NFT community. Link.

Blockchain has its critics….and on the other hand…..we see Starbucks release its first blockchain solution. This allows its customers to both earn and purchase digital assets that unlock exclusive experiences and rewards. An innovative step forwards….or a gimmick?

The idea to enter into the world of web3 makes sense for a company known for taking advantage of emerging technologies and making them more approachable and easy for consumers to access. In years past, Starbucks introduced Wi-Fi in its stores to encourage customers to spend more time during visits. It also pushed the idea of mobile wallets long before Apple Pay became ubiquitous. And it made mobile ordering the norm well ahead of the COVID pandemic, when other restaurant chains picked it up.