{"id":1089,"date":"2020-05-28T12:03:01","date_gmt":"2020-05-28T12:03:01","guid":{"rendered":"http:\/\/janbosch.com\/blog\/?p=1089"},"modified":"2020-05-28T12:03:10","modified_gmt":"2020-05-28T12:03:10","slug":"digital-business-automated-at-heart","status":"publish","type":"post","link":"https:\/\/janbosch.com\/blog\/index.php\/2020\/05\/28\/digital-business-automated-at-heart\/","title":{"rendered":"Digital business: automated at heart"},"content":{"rendered":"\n
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Image by Gerd Altmann from Pixabay\n<\/figcaption><\/figure>\n\n\n\n

Digitalization is fundamentally enabled by three core technologies: software, data and artificial intelligence. The common denominator, which is inherent in a digitalized business, is that automation is at the heart of it. Digital technologies allow for automation to a much more significant extent than traditional technologies. We see this reflected in companies: whereas in traditional companies, humans are supported with automation, in digital businesses, automation of the core business processes has removed humans from the equation (almost) entirely.<\/p>\n\n\n\n

One of the key reasons for the high degree of automation is that \ndigital businesses typically employ continuous, rather than \ntransactional, business models. This means that there\u2019s a continuous \nrelationship with the business of the customers, continuous delivery of \nnew value-adding software, data-driven insights and AI models and \ncontinuous monitoring and logging. Activities that we might accept doing\n manually once or twice per year rapidly become subjects for full \nautomation if they need to be conducted monthly, weekly, daily or even \nmore frequently.<\/p>\n\n\n\n

In a digital business, all core business processes are to the highest\n extent automated and controlled in an automated fashion using \nquantitative performance data. In fact, we can conceptualize a digital \nbusiness as consisting of three circles of activities. The core circle \nconsists of the company\u2019s core value delivery business processes. For \ninstance, for an e-commerce website, this includes the presentation of \nitems, recommendations, managing orders and taking payments. These \nactivities have no human involvement and are completely automated. In \nthe case that core value delivery processes can\u2019t be automated fully, \nsuch as warehouse tasks, the humans tend to be instrumented with data \ncollection and subject to the same quantitative performance management \nas the automated parts. The first circle is concerned with operations \nand activities that support operations.<\/p>\n\n\n\n

The second circle of activity involves human actors who use \nquantitative data for analytics and experimentation. The main focus here\n is to measure the core business processes and to tune and optimize \nthem. For instance, analytics may show that items that are recommended \nto customers by the recommendation engine are selected and bought in \n0.15 percent of the cases. As the industry average is higher than that, \none of the activities in this circle might then be to experiment with \ndifferent recommendation algorithms using A\/B testing to evaluate \nwhether the engine\u2019s success rate can be improved to match the average. \nThe second circle is concerned with tactics that improve the performance\n of the operational core. It\u2019s important to note that activities in this\n circle don\u2019t have to be performed by humans. It\u2019s entirely feasible to \nhave a system run autonomous improvement activities that focus on \noptimizing the core business processes. advertorial \n<\/p>\n\n\n\n

Finally, the third circle is concerned with those business activities\n that are strategic in nature. As strategic activities tend to be about \ninterpreting trends and predicting the future, it can be challenging to \nquantify them. Typical for activities in this circle is that the focus \nis on the purpose of the business, the role it plays in its ecosystem \nand the way it seeks to differentiate and complement itself towards \nothers.<\/p>\n\n\n\n

The three circles of activities are different from each other not \njust in terms of automation and use of data, but also in the cycle time \nand operating speed. The operations circle runs, by its very nature, in \nseconds, minutes and hours. The tactical circle operates in days and \nweeks, whereas the strategic circle tends to operate in months and \nyears.<\/p>\n\n\n\n

Of course, one can find huge amounts of automation in traditional \ncompanies as well. The main difference with digital businesses is the \nunderlying mindset and approach. A bit exaggerated, in traditional \ncompanies, tasks are performed by humans unless it\u2019s too expensive to do\n so. In digital companies, tasks are automated and performed by systems \nunless it\u2019s unfeasible or prohibitively expensive to do so.<\/p>\n\n\n\n

It\u2019s easy to forget how far automation and digitalization can take a \ncompany. In many SaaS companies, the vast amount of business value \ncreation (as in 99+ percent) is conducted fully automatically by systems\n rather than humans. The funny thing is, however, that in my experience,\n even in SaaS companies, the majority of management attention is \ndirected towards humans and human processes, even if these represent a \nvery small slice of the business.<\/p>\n\n\n\n

Concluding, I find it helpful to think about companies in three distinct circles of activity, ie delivery and operations, optimization and experimentation and, finally, strategy and innovation, that have completely different characteristics, cycle times and success metrics. In my experience, many tend to mix up the activities in the different circles, which leads to confusion and sub-par performance. As a leader, take a step back and reflect on your organization, map the processes and activities to the three circles and identify where there are mismatches that you can address. Going digital is challenging, but the alternative is to remain a traditional company and risk being disrupted.<\/p>\n\n\n\n

To get more insights earlier, sign up for my newsletter at <\/em>jan@janbosch.com<\/em><\/a> or follow me on<\/em> janbosch.com\/blog<\/em><\/a>, LinkedIn (<\/em>linkedin.com\/in\/janbosch<\/em><\/a>) or Twitter (<\/em>@JanBosch<\/em><\/a>).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Digitalization is fundamentally enabled by three core technologies: software, data and artificial intelligence. The common denominator, which is inherent in a digitalized business, is that automation is at the heart of it. Digital technologies allow for automation to a much more significant extent than traditional technologies. We see this reflected in companies: whereas in traditional … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":"","footnotes":""},"categories":[15,8,10],"tags":[],"_links":{"self":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1089"}],"collection":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=1089"}],"version-history":[{"count":1,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1089\/revisions"}],"predecessor-version":[{"id":1091,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1089\/revisions\/1091"}],"wp:attachment":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=1089"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=1089"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=1089"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}