Digital Roadmaps That Work
By E.J. Kenney
It’s been said that planning is nothing more than bringing the future into the present, so you can do something about it now. But few of us know how to do that, let alone do it well.
Most established consumer products companies are exactly that – established. They were not born as digital native enterprises. Many are still finding their footing in the brave new world of digitalization, which is changing manufacturing processes, supply chain, retail, and consumer realms. But most still need to learn how to become digital in what they produce, how they operate and engage, and in how they think and plan.
While many consumer products companies have turned to innovation and digitalization as a source of growth, moving the business from the demands of today’s short-term goals to the aspirations of tomorrow’s longer-term objectives is easier said than done. This is the sticking point where most companies fall – some harder than others.
IDC, a global provider of market intelligence, found that more than half of European organizations that embark on a digital transformation journey get stuck in some sort of digital side road. In most cases, they create a “special projects” team for digital initiatives that is separate from the rest of the business, ending in deadlock.
So, how exactly are you supposed to create a sound roadmap to execute a digital program around a digital product platform? The answer lies in use cases and horizons. If you’ve ever heard of Horizon Thinking, you’ll be familiar with McKinsey’s The Alchemy of Growth, which created the three horizons framework. The framework shows a way to manage both current and future opportunities for growth in parallel. It gives a structure for companies to assess their potential growth opportunities without neglecting current performance.
Using this framework approach, IDC has now taken this one step further, providing their own three horizons methodology and applying it specifically to help consumer products companies create their digital future in a more schematic way. IDC’s Digital Use Case Map for Consumer Products spells out how to reverse engineer a roadmap to get your organization to reach its own unique corporate vision with short-term, mid-term and long-term objectives, that incorporate the types of use cases you’ll need along the way.
By placing the most advanced use cases on Horizon 3 (the long-term objectives), companies can plot the path of their future desired outcome in reverse by identifying which use cases need to be incubated into Horizon 2 (mid-term objectives) and deployed today in Horizon 1 (short-term objectives) to take them where they want to go.
For example, we can look at this reverse engineering approach for one of the key industry objectives: intelligent planning. As many consumer products companies look to optimize their operations, they will need to form a digital supply chain that is enabled by “cognitive” capabilities. This “cognitive supply chain” will need the ability to operate according to the “sense, analyze and respond” paradigm (Horizon 3) need to gain access to real-time data from the ecosystem (for example, suppliers, retailers and consumers) to feed into their deep learning modules (Horizon 2). But in the short-term, this means they must start optimizing operational and planning techniques today to better orchestrate the efforts of the different elements of the supply chain (Horizon 1).
Use cases like these should be an essential part of your digital roadmap. IDC identified more than 450 of them. They found that successfully executing digital at scale requires use cases with capabilities that can be easily transferred across the enterprise. Such use cases are a foundation to enable more advanced uses cases to build on by layering them into your mid-term and long-term horizons.
These use cases can be used to focus on business value, prioritize technology investments, facilitate innovation strategies, and identify when and where different executives need to get involved.
This approach lets you create a roadmap that is modular (as use cases can be swapped in and out), as well as scalable (by factoring in the next horizon of development). And of course, any robust roadmap needs to be extensible. As new technologies in your long-term horizon mature and go mainstream, they can easily be folded into the mix as required.
Of course, turning these roadmaps into reality is much harder than simply identifying which supporting use cases are needed to execute a strategic priority. Organizations also need to think about managing the development for each use case separately. This is best done in three distinct stages of the innovation process: ideate, incubate, and accelerate.
While no one knows for certain what the future holds, most of us know the strategic direction and pivot points we need to achieve. For consumer products companies, the combination of rapid evolution, coupled with a low-growth and margin-compressed environment, means you can’t afford to waste time stalling in a disjointed digital layby. This hands-on how-to guide provides clarity and completeness for the road ahead and a map of how to get there.
E.J. Kenney is Senior Vice President, Consumer Products Industry Business Unit at SAP.