This document summarizes a presentation on digital transformation and the need for organizational change. It discusses how the digital landscape has changed over 20 years with the rise of social media, mobile computing, and connected devices. It notes that current business models are disruptive and outlines 8 building blocks for digital transformation: culture, leadership, structure, systems, skills, staff, values, and continuous reinvention. The presentation argues that organizational change is necessary to truly implement digital transformation and adopt a digital mindset.

1. Everyone’s talking Digital
and it’s Dangerous
Henley Business School | 15 October 2015
David Terrar | Founder & CXO – Agile Elephant | @DT on Twitter
innovation | digital transformation | value creation | (r)evolution

2. “The illiterate of the 21st century will
not be those who cannot read and write,
but those who cannot learn, unlearn,
and relearn. ”
Alvin Toffler

3. Agenda
• The digital backdrop - 20 years of a world gone digital
• Why the current business landscape is so disruptive and what we
call the Digital Enterprise Wave
• Why organisational change is relevant, a look at different models,
examples and case studies
• Digital transformation defined
• The management shift that is emerging (and required)
• 8 building blocks for digital transformation

4. Hang on - can you explain
this new digital landscape?

5. "Move bits, not atoms."
January 1995

6. Forums – Usenet in the 70s, web based forums & bulletin board services start ‘94 – online journals ‘94
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Being Digital – Nicholas Negroponte – moving atoms to bits – published Jan ‘95
Wikis – Ward Cunningham installs first wiki Mar ‘95
Blogging – term “weblog” John Barger Dec ’97, “blog” used as noun and verb Peter Merholz Apr ‘99
Wikipedia – opens Jan ‘01
WordPress – first released May ‘03
LinkedIn – launches May ‘03
Flickr – launches Feb ‘04, acquired by Yahoo Mar ‘05
Facebook – launches Feb ‘04
iPhone – announced Jan ‘07, available Jun ‘07
iPad – launches Apr ‘10
Twitter – 1st tweet Mar ‘06, SXSW Mar ’07, Apr ‘07
Instagram – Oct ‘10
Snapchat – Jul ‘11
Tumblr – Feb ’07
WhatsApp – Feb ‘09
Pinterest – Mar ‘10
20 years of a World Gone Digital
The development of social media,
social networks and
mobile computing
YouTube – launches Feb ’05, acquired by Google Oct ‘06
Skype – launches Aug ’03, acquired by eBay ‘05, Microsoft May ‘11

8. Your business model
is under threat!

10. Necessity is the
mother of invention

11. Reinvention is the
mother of necessity

12. The Digital Enterprise Wave
ride it
or go under!

13. Infrastructure
Connectivity
Internet
WiFi
3G & 4G
Human Factors
Entrepreneurship
Crowdsourcing
Millennials
Economic
Outsourcing
Offshoring
Low cost

17. The Digital Enterprise Wave

18. The Big Shift
Cloud Social Mobile

19. The Digital Enterprise Wave

20. Emerging Technologies
Internet of Things
Big Data & Analytics
3D Printing
Artificial Intelligence

21. Everything will have an IP address
Gartner predicts 25 billion connected devices by 2020

22. The Digital Enterprise Wave

23. “Business as Usual” Thinking
Point Social Media
Solutions
Siloed Communities
Lack of Integration
Legacy Systems of Record
Business as Usual

24. The Digital Enterprise Wave

25. We need “Digital” Thinking
Digital and Social inside and out
Business Model Innovation
Systems of Engagement
Design Thinking

26. Strategy
Skills
Staff
“Shared
Values”
Structure
Systems
Style
Hard Systems
Soft Systems
 Integrates “hard” and
“soft” business
systems in a
structured way
 “technology neutral”
 Includes employee
engagement
 Proven approach
 Especially useful for
lessons in managing
major change
McKinsey 7 “S” Model

27. The Digital Enterprise Wave

28. The shift to Digital (Business) - what are we calling it today?
• Enterprise 2.0 → Social Business → Digital Transformation
• You need an ESN or social collaboration approach at the heart
• Cloud technology drives scale, reduces cost
• Mobile technology increases reach, penetration
• Analytics increases focus, impact
• It’s about much more than technology
Nexus of forces3rd Platform
Big wheel of Disruption

30. The Value Chain is being disrupted end to end

31. Probability of outcomes

32. “The greatest danger in times of
turbulence is not the turbulence – it is to
act with yesterday’s logic.”
Peter Drucker

33. Why organisational change?
• The evidence is mounting – to make digital truly work change
is necessary
• The key is change of Mind-set and Culture
• I worry about some current thinking on organisational
structure….
• We need “Evolution not Revolution!”

34. Core Building Blocks for Responsive Organisations
• Lessons from Human evolution
• Dunbar’s Numbers
• The rise of Heirarchies
• Pressure on today’s Organisation Structures
• Responsive Organisation models
• Military
• Civil
• A bit of Organisation theory
• Organisational Ossification
Organisational Structures

35. Chimpanzees and Bonobos
Chimpanzees and bonobos are two separate species within the same genus. They
are 99.6 percent genetically similar to each other, but have different appearances
and vastly unique social behaviours.
The biggest differences between the two are in how they govern their societies:
• Chimps are led by an alpha male and tend to maintain order through
aggression
• Bonobos are dominated by females and keep the peace through sex.
Both strategies have been equally effective at core Responsive abilities:
• Act collaboratively
• Information diffusion
• Tool use
Same Primates,
Different Cultures & Organisations

36. Machiavellian Intelligence Hypothesis - primates have large brains because they live in socially complex societies: the larger the
group, the larger the brain. Dunbar extrapolated this work to humans to predict limits to various relationship types
Close
Support
Group
Close
Friend-
ship
Group
Extended
Friend-
ship
Group
Casual
Friend-
ship
Group
Acquaint-
ance
Group
Can put a
name to
a face
Dunbar’s Numbers

37. Transaction Costs make companies redundant?
Organisations under pressure - Economics

38. Hierarchies
• Flexibility
• Lowest Cost
• Automate
Heterarchies
• Holacracy
• Wirearchy
• Podularity
• etc
Augmented Humans
• AI
• “The Singularity”
Responses today

39. Co-ordination, Communication, Flexibility, Fungibility,
Modularity and other aspects of Responsiveness are hardly –
key issues have always been:
• Volume of communication required
• Complexity of communication
• Time taken
• Requirement for knowledge transfer or storage
• Setup/teardown cost of each communication
• One way or two way, acknowledged or not
• Asynchronous or Synchronous?
Theory of Organisation Design – what really works?

40. Tradeoffs in network design
Hierarchy Fishnet Mesh Full Mesh
Nodes = 6
Links = (N-1) = 5
Max Distance = 4
Mean Distance = 1.6
Ave connections = 1.5
Nodes = 6
Links = 9
Max Distance = 3
Mean Distance = 1.25
Ave connections = 3
Nodes = 6
Links = N(N-1)/2 = 15
Max Distance = 1
Mean Distance = 1
Ave connections = 5
Underlying Mathematics of Organisations

41. There are tradeoffs in network design….
Hierarchy Fishnet Mesh Full Mesh
• Simple, Scalable
• Efficient & Economic to operate
• Rigid
• Fragile
• Data can be trapped, errors
amplified
• Most efficient fully resilient
configuration
• Increases complexity at far lower
rate than highly connected mesh
• Complex scaling issues
• Fully Resilient
• Fully Redundant
• Easy to reach anybody
• Easy to swamp everybody
Plusses and Minuses

42. taking responsibility individually and collectively
rather than relying on traditional hierarchical status
Hierarchy - Wirearchy
http://wirearchy.com/what-is-wirearchy/

43. Increase in links as number of people increases is geometric (n=2) in full mesh, linear for
hierarchy
0
1000
2000
3000
4000
5000
6000
7000
10 30 50 70 90 110
Hierarchy
Fishnet
Full Mesh
Links
People
Heterarchical structures have major scaling problems

44. For example Sociacracy (Holacracy is a type of this model) architecture is a hierarchy of
meshed cells, an attempt to derive benefit of mesh where it is most useful (small task
focussed groups) without the scale problems of full meshing
This is a type of “small
world” architecture
where most of any
person’s links are very
local, with a few long
distance (socially
speaking) links into
other groupsNodes = 36
Links:
• Full mesh = N(N-1)/2 = 630
• Hybrid = 6 cells + mesh = 99
Mean Distance = 1.25, up from 1
Ave connections = 5.33 (would be 35 in full mesh)
A hybrid hierarchy of heterarchies

45. Can military tactics be responsive?
"No plan survives contact with the enemy." - Field Marshal Helmuth von Moltke
(1800–1891)
Today's military thinking has to react to asymmetric warfare and very fast moving
events, and has moved a long way from traditional command & control:
network-centric warfare designed to flatten the hierarchy, reduce the
operational pause, enhance precision, and increase speed of command
Increasingly the senior people can only describe the desired direction, not the how
The commander’s intent describes the desired end state. - 1993 US Army Field
Manual (FM) 100-5
Lessons from today’s Military

46. McRaven’s Theory of Special Operations:
8 historical special operations cases analysed (including the Raid on Entebbe) derived 6
principles:
o Simplicity
o Security
o Repetition
o Surprise
o Speed
o Purpose
"a simple plan, carefully concealed, repeatedly and
realistically rehearsed, and executed with surprise, speed,
and purpose" - in three phases:
• Planning (simple)
• Preparation (security and repetition)
• Execution (surprise, speed, and purpose)
Asymmetric Warfare & Special Forces

47. OODA Loop - USAF Colonel John Boyd
OODA Loop – design for a Responsive Organisation

48. Peter Principle
In any organisational structure,
an employee will rise until they
get to their level of
incompetence.
• Promotion is driven by ability
to do current role not next
role
• Over time, all organisations
fill up with incompetent
people
• Some form of forced culling
required e.g. “up or out”
Parkinson’s Law
Work expands so as to fill the time
available for its completion.
• An official wants to multiply
subordinates, not rivals
• Officials make work for each
other.
E.g: increase in the number of
employees at the Colonial Office
while Great Britain's overseas
empire declined – it was at its
largest when the UK had no colonies
left
Pournelle’s Law
In any organisation,
the people devoted to
the benefit of the
organisation itself
always get in control
Those dedicated to the
goals the organisation is
supposed to accomplish
have less and less
influence, and
sometimes are
eliminated entirely.
3 P’s of Organisational Ossification

52. • Fairness to each other and everyone with whom we come in
contact
• Freedom to encourage, help, and allow other associates to grow
in knowledge, skill, and scope of responsibility
• The ability to make one's own commitments and keep them
• Consultation with other associates before undertaking actions that
could impact the reputation of the company
A Team-Based, Flat Lattice Organization

53. checks and balances to ensure
accountability, transparency and honesty

55. Organisational Change
• It’s not about changing the org chart – many
structures will work
• It is about mind-set and values:
– accountability, transparency and honesty
– checks and balances
– fairness
– freedom to encourage, help, collaborate
– taking responsibility individually and collectively
– empowering employees

56. Total Value
Created
Increase
Revenue
Average Sale £
Sales Volume
Reduce Costs
Churn
Operating Cost
• Deeper understanding of customer needs
• Conversation with customers increases
attachment to business
• Increased marketing penetration at lower
cost
• Faster lead generation & customer
onboarding
• Faster understanding of product and
customer problems
• Pro-active customer retention
• Fast information movement and higher
levels of collaboration drives efficiency
• Higher employee engagement drives
effectiveness
Close
link
Digital Business Value Creation
Depending on the business, the
impact of digital transformation
will vary – but will drive
significant value
Bottom line = value creation

58. “At the height of its power, the photography
company Kodak employed more than
140,000 people and was worth $28 billion.
They even invented the first digital camera.
But today Kodak is bankrupt, and the new
face of digital photography has become
Instagram. When Instagram was sold to
Facebook for $1 billion, it employed only 13
people. Where did all those jobs disappear?
And what happened to the wealth that all
those middle-class jobs created?”
Jaron Lanier

60. Digital Transformation – a definition
Digital transformation is the process of shifting your organisation
from a legacy approach to new ways of working and thinking
using digital, social, mobile and emerging technologies. It
involves a change in leadership, different thinking, the
encouragement of innovation and new business models,
incorporating digitisation of assets and an increased use of
technology to improve the experience of your organisation's
employees, customers, suppliers, partners and stakeholders.

64. Leading Digital

65. What is your level of Digital Mastery?
- generate 9% more revenue
- create 26% more profit
- 12% higher market valuation

67. “Digital Darwinism is unkind to those who wait”
Lesson 1 – Transform Business Models And Engagement
Lesson 2 – Keep The Brand Promise
Lesson 3 – Sell The Smallest Unit You Can
Lesson 4 – Know That Data Is The Foundation Of Digital Business
Lesson 5 – Build For Insight Streams
Lesson 6 – Win With Network Economies
Lesson 7 – Humanize Digital With Digital Artisans
Lesson 8 – Democratize Distribution With P2P Networks
Lesson 9 – Deliver Intention Driven, Mass Personalization At Scale
Lesson 10 – Segment by Digital Proficiency Not Age
http://www.slideshare.net/rwang0/201504-disrupting-digital-business-short

69. • One of the largest bookmakers in the UK
• 80 year old company undergoing a major culture shift
• Adopting a lean start up model
• Product teams include people who used to be in marketing, IT, product
management
• 4-6 week new product cycles
• Touch the customer within weeks – used to be 2 years

70. with
• 76,000 employees now collaborating
• Sharing knowledge and expertise through 7,500 purpose built
communities
• 30% active users posting 10 collaborative notes per week/per
user
• Better knowledge sharing leads to faster response times and
more wins
• Reducing response time in some cases from 2 days to 45
minutes
• Operational efficiency gains by reducing internal e-mail overload
by an average of 60%
• Saving an average of 2 hours a day per employee
Atos "Journey to Collaboration" / Zero emailTM program
Winners Of The 2014 Groundswell Awards
(Business-To-Employee Division)

71. What are the building blocks?

72. Culture
eats Strategy for lunch

73. Leadership
mindset, teamwork, vision, purpose, openness, sharing

74. No One Size Fits All

75. End to End Solution
Strategy
Skills
Staff
“Shared
Values”
Structure
Systems
Style

76. Continuous Reinvention

77. Get Creative
make innovation, thinking, experimenting
a natural part of your working practice

78. Balance – Inside and Out
not just the customer experience,
but employees, suppliers, stakeholders

79. Design Thinking

80. The 8 Building Blocks

81. References
Not for reading – just for reference
http://en.wikipedia.org/wiki/Nicholas_Negroponte
http://en.wikipedia.org/wiki/Being_Digital
http://adjuvi.com/what-is-digital-business-is-it-e-commerce-the-collaborative-economy-or-apis-yes/
http://www.industrytap.com/everything-internet-will-be-14-4-trillion-market-by-2020/3054
http://www.zdnet.com/article/25-billion-connected-devices-by-2020-to-build-the-internet-of-things/
http://www.zdnet.com/article/the-new-cio-mandate/
http://www.jaronlanier.com/futurewebresources.html
http://www.gore.com/en_xx/aboutus/culture/
http://www.johnlewispartnership.co.uk/about/our-constitution.html
http://wirearchy.com/what-is-wirearchy/
http://blog.medallia.com/customer-experience/ceo-top-pyramid/
http://www.ibm.com/smarterplanet/us/en/centerforappliedinsights/article/social_insights.html
http://socialbusinessjourney.com/2014/02/25/social-business-cookbook-soft-version-for-all-culture-hackers
http://www.themanagementshift.com/
http://www.amazon.co.uk/Leading-Digital-Technology-Business-Transformation-ebook/dp/B00NE6MG0Y/ref=sr_1_1?s=books&ie=UTF8&qid=1416926793&sr=1-
1&keywords=leading+digital
http://spartinaconsulting.com/our-services/culture-leadership-values
https://www.flickr.com/photos/marine_corps/6032659138
http://www.compendian.com/2014/12/do-you-provide-a-one-size-fits-all-approach
http://gapingvoid.com/2011/07/28/permanent-state/
http://themindunleashed.org/2014/10/understanding-flow-eight-steps-enhancing-creativity-productivity.html
http://scn.sap.com/people/community.user/blog/2008/12/31/knowledge-management-in-crm
http://dschool.stanford.edu/fellowships/2013/10/23/a-design-thinkers-cheat-sheet/

82. David Terrar
Agile Elephant | techUK | EuroCloud UK
p: +44 (0)1727 866309
m: +44 (0)7715 159423
e: david@theagileelephant.com
w: www.theagileelephant.com
skype: david_terrar
twitter: http://twittter.com/DT @DT
linkedin: http://www.linkedin.com/in/davidterrar
blog: http://theagileelephant.com/blog
& http://medium.com/@DT
innovation | digital transformation | value creation | (r)evolution