The key challenge of the Digital Leader — Balance HIGH-END strategy with LOW-END Bits and Bytes

Organizations must understand the evolving digital galaxy and prepare to operate in it. The digital age offers an abundance of business opportunities and risks. The option of “sit and do nothing” will work, at best, for a short time. At some point, somewhere, others are already working on a business idea, a new digital technology or both, and those developments are liable to disrupt your organization’s current business model. It pays to be paranoid in this context. Furthermore, Organizations sometimes use the term “digital transformation” only because it’s trendy and evokes the image of an innovative organization. One of the mavens in this field, Rob Llewellyn, warns organizations about a phenomenon he calls “the great digital illusion.” “Change fixes the past, while transformation creates the future.” Engaging in simple projects is a good way to start cultivating capabilities, but does not provide the infrastructure for withstanding competitive pressure or for future prosperity. Herein lies the great challenge: doing both the high strategy and the daily grind of the digital. Mastering both the high-end strategic mindset and low-end bits and bytes mindset – this is the key to digital mastery. We tried in this book to review a wide range of aspects and issues relevant to digital transformation in order to ensure that readers are familiar with the background and theory required for action and results. And herein lies the great challenge: doing both the high strategy and the daily grind of the digital age. Mastering both the high-end strategic mindset and low-end bits and bytes mindset – this is the key to digital mastery. Bon digital voyage!

The Year of the Rat: Digital Quantum Leap

2020 in the traditional Chinese calendar is the year of the rat – or more precisely, the year of the metal rat. To extrapolate, let’s call it the year of the digital rat.

Consider the video below:

Rats run through mazes to find cheese. However, running through a maze takes time. There are dead ends. There are obstacles. By the time you find your way to the cheese, perhaps some other, more innovative rat has already found it and ate your share.

In their day-to-day operations, companies are often resemble a maze. That is, the operations of a company actually work hinder innovation, whether it’s inefficient corporate structure, middle management, burdensome protocols, or more typically in our experience, poor digital infrastructure. If a company does not have the resources to innovate at scale, they will fall behind and miss out on the cheese.  

When working with companies, we guide them in expanding their digital infrastructure to allow for a higher rate of innovation (see our article  more innovation calls for more infrastructure). 

Once the infrastructure is in place, the digital culture that takes hold is what will allow a company to make the necessary leaps and avoid the maze, like the rat in the video.

We are in the age of Innovating innovating, where companies must spend less time on implementation and more time on innovation. As the new decade dawns, we see this trend as only accelerating. 

That is the difference between a leap and a quantum leap. When speed is the critical element, small, incrimental jumps are not enough to keep pace.

Rat’s have been running through lab mazes for at least 150 years.  But at least one rat has noticed that it’s time for a change. And you can be sure he’ll be the one to get the cheese. 

Wishing all our Clients and Readers a Happy New Year.

Professor Yesha Sivan To Speak at Annual Kibbutz Industries Association Event (Hebrew)

Join us at the annual  Kibbutz Industries Association event “From Yesterday to Tomorrow,”  where Professor Yesha Sivan, CEO of i8 Ventures, will present on the subject of “The digital journey – A Case Study.” Please see registration details by downloading the brochure.

An Introduction to Micro Transformations: The Case of Web Site Harmonization

In this post, we introduce the concept of a micro-transformation, whereby a focused, walled process, is re-designed as part of a larger-scale digital transformation.

Imagine a global company headquartered in Israel with thousands of employees, relatively successful, respected in its field, which has experienced rapid growth over the last decade. 

However, something isn’t quite right. It seems several of the fundamental processes within the company do not match the size and aspirations of the firm. One such process is updating and maintaining the website. 

To begin with, the website uses outdated technology and most of the available energy goes towards maintenance. Some of the site has stronger content while the rest lacks. Departments are not using the same processes or terminology to move product into the web. Some sections are being  ignored and lack updates. The company is preoccupied with growing their market share (as they should be), and such a fundamental process is unconsciously left to its own devices.  

We began to work with this (real) company on what we term a micro transformation, using the conceptual framework we will discuss below. When the project was done, processes, responsibilities, and methodology were in sync. The website was functioning at a higher level, at a lower price. 

The Generic Problem

As a founder of a growing company, if, like Rip Van Winkle (or his equivalent in the Jewish tradition, Honi the Circle-maker), you were to fall asleep and wake up a few years later, the company you would walk into would be largely unrecognizable from its first iteration. You would notice the sparkling new offices, the new departments that were added, and the different ways of getting things done. Most of this is a result of positive, necessary change as the company scaled. 

But some of these changes, particularly when it comes to processes, are bloat and inefficiencies that have been picked up and passed down through the years, without anyone really noticing.

New people, mistakes, and neglect together comprise a silent game of broken telephone leaving the corporate structure partly inefficient. Despite zealously implemented standard operating procedures, templates and guidelines, the tendency is towards disarray. 

This phenomenon becomes most apparent, and most troublesome, in the division of labor within a given process. When a company is first forming, management will divide labor and responsibilities as evenly and consciously as they can. Without the mask of corporate anonymity, people are held accountable at all levels.

Yet, as new people and departments are integrated into the corporate structure, the division of labor will break down. Some will do more, some will do less, and as a result of diffusion of responsibility tasks (and in our experience, even entire processes) will fall between the cracks. 

A muddled hierarchy leads to undefined ownership of processes, and is thus a drain on productivity. Sorting through the tangled web is a colossal task requiring deep analysis coupled with delicate rearrangements within the organization. 

Micro-Transformation of a Web System

How can a company go about setting things straight? Through a process we term micro-transformations. A micro-transformation is a focused appraisal of a specific process (web harmonization in our case), and streamlining that process according to your chosen methodology. 

There are many methodologies of varying effectiveness; here is our model to micro-transform an organizational system, summarized in this chart:

The chart describes a model to analyze one business process, in this case web system harmonization, as an ordinal series of responsibilities, with levels 3-7 relying on next one below, and management and governance at the top. 

The business goal is a sleek user-end website to represent the company and generate leads. That website depends on content. Content depends of content generation. Content needs updated web infrastructure. And all this must be supervised by management, with governance making executive decisions.  

This method holds up a magnifying glass to a given process, allowing executives to begin the arduous journey of re-calibration. First identify the levels responsible (Level), then what that level needs to accomplish (Meaning)

Once the needs are defined, a thorough investigation of who provides for those needs today can be conducted (Current Situation). When the investigation is complete, decisions can then be made about who is ideally suited for each responsibility (Ideal Situation). 

From Micro to Macro: The value of Micro transformations as building blocks

The influence of one successful micro-transformation is not limited to the process for which transformation was done. Turning over stones always leads to something unexpected. 

By focusing on a localized issue, wider gaps in the company’s structure will inevitably reveal themselves. The second micro-transformation will therefore always be easier than the first.

Complete a few micro-transformations, and trends will start to appear. These trends allow management to pin-point specific problems affecting the entire organization (especially cross departmental processes), whether that be corporate culture, a certain software, an entire department, or even an individual employee. This methodology hands C-level executives the tools to make the necessary decisions which will increase efficiency and profitability across the entire organization.  

Moving from Digital Transformation 1.0 to 2.0 : Know the Difference Between “Regular” and “21st century” Digital

Many managers feel that their organization is already digital. Consequently, they don’t understand why they have to burden themselves and their organization with yet another journey of digital transformation. 

From their perspective, the organization has already implemented the required digitalization and there is less need for more. To support this view, these managers will note that their company has already implemented an enterprise resource planning (ERP) system, a customer relationship management (CRM) system, a supply chain management (SCM) system, and a business intelligence (BI) system, maintains an e-commerce website, and manages its social media accounts. 

In fact, this contention is largely justified – many organizations are indeed digital. However, digital transformation is not static, and the rate of new waves of “digital attacks” is only accelerating.

Digital 2.0

Most organizations have already completed what we call “digital transformation 1.0” and are now in the midst of what we call “digital transformation 2.0.” Digital transformation 2.0 means companies continuing to examine new technologies, improving their digital footing, and continuously adopting new business models at an increasing rate.

To keep pace with new technologies, the 2.0 model calls for significantly more resources diverted to digital transformation than 1.0. While on the surface this may be seen as a burden, it is absolutely necessary given the exponential rate of technological shift. 

The inflection point at which organizations are poised today. The choice is just to continue with digital transformation 1.0, or to follow the new developments and embark on a new wave, digital transformation 2.0.

The Giants Have Already Started

It’s no surprise that some of the largest organizations in the world already understand this, and have already constructed the relevant business models.

These are models incorporating “21st Century” digital as opposed to regular digital. For example, Amazon has launched a store without checkout counters or cash registers (Amazon Go); Domino’s Pizza is delivering pizzas with drones in a pilot project in New Zealand; factories are deploying an increasing number of smart robots; full digital banks are entering the financial market, focused on meeting customer needs; insurance companies are increasingly offering smart insurance policies based on pay per usage, and more.

Other examples of 21st century digital technologies include  the Internet of Things (IoT), cognitive computing, machine learning, advanced robotics, 3D printers, wearable computing, virtual reality, augmented reality, voice-operated interfaces, blockchain, and autonomous cars.

The disruptive forces that bring change are only accelerating, and thus forceful action is the solution. If companies want to mitigate the fallout, and even capitalize on it, they need to act.

If management claims the organization doesn’t need to implement new digital transformation because it is already digital, be skeptical, and ask them if a CRM for Barnes and Noble helped them?

More Innovation Calls for Much More Digital Infrastructure

In the above chart, we depict how both more “small-scale innovation” (AKA incremental innovation ala Kaizen) and more “medium-scale innovation” (AKA process innovation ala Michael Hammer) call for much more digital infrastructure. (Note that for simplicity we did not include the third level of large-scale innovation, which of course calls for much stronger digital infrastructure).

To elaborate, organizations see their competitors (both current and new) adopting new digital business models; their leaders realize that they must innovate to keep pace. Think, for example, about a traditional brick and mortar chain like CVS threatened by the entry of new player (Amazon) to their market

In many cases, digital is the external force that is pushing companies to innovate, and at the same time, digital is the force that allows organizations to initiate, groom and scale their innovation. 

Digital is both friend and foe. Creating a strong digital infrastructure enables a company to innovate at a faster pace. In a way, digital innovation at its core is a meta-innovative process that enhances the digital infrastructure and thus allows other forms of innovation.

How might this work? Consider a company which is looking to innovate in the way it interacts with its customers. A manager proposes using a new Customer Relationship Management (CRM) software. 

At a company that has a weak digital infrastructure, such a move could take months. Yet in a company with a strong digital culture and ability, where employees see the opportunity, are ready for change, and have adopted digital technologies in the past, this change can happen in days. In fact, an initial CRM system can be implemented overnight with cloud-based tools, that is fed by an already organized excel based data.

Companies too often see the digital force as a threat rather than an opportunity. Yet to thrive, companies must embrace digital — a simple attempt to “innovate” without it will not suffice. 

Digital technology has become a critical part of an organization’s ability to create a competitive advantage. Therefore, the right way to relate to digital technology is as a strategic investment. Management must use digital technology to reinvent and re-imagine their organization.

The bottom line: To enhance your innovation cycle (initiate, groom, and scale), enhance your digital infrastructure.

The Top 10 Risks of Digital Transformation

It’s well known that a digital transformation can save a business —  but digital journeys are mountain climbs, not morning commutes. That means there are pitfalls along the way which could derail your climb, and false summits which will leave you lacking motivation. Although there are dozens of such risks, we’ve adapted this list of the top ten from “Doing digital” by i8 venture’s Raz Heiferman and Dr. Yesha Sivan.

  1. Digital transformation will change your business, but focusing on the right level of change is key.

The organization should look at digital technologies as enabling technologies – that is, as technologies that allow it to act efficiently and effectively, and in step with the digital age. However, the organization should not ecstatically pounce on every new technology or business idea. Some changes can generate results that are relatively short-term, while other changes are more profound. The latter demand more time and resources.

  1. Investing in new technology is crucial for growth, but just because the technology is new, doesn’t mean it’s right for you.

The organization should carefully consider which technologies are appropriate for its business goals and for the challenges it faces, rather than blindly chasing every new technology. On the other hand, boldness and openness are two traits the organization needs in order to wisely adopt new technologies that can potentially change the way the organization does business. Failures are sometimes unavoidable during the process of innovation. Hence, the key is to recover from failure as quickly as possible and move forward.

  1. Consider where your organization is on the digital transformation Journey.

It is important that the organization be aware of its state of digital maturity and the elements affecting the success of the journey, including the organizational culture, the preparedness of the management team and employees, the readiness to adopt and encourage innovation, the quality of business processes, and the readiness of the IT division. All these dimensions are no less important than the technological dimension in itself.

  1. Not everyone in your company will feel comfortable with the digital Transformation.

Technology changes at a faster pace than organizations. Yet, an organization’s workforce remains an important component in the change processes, and not all of the employees are eager to embrace change. The organization must not ignore this challenge. Instead, it should invest in change management as an integral part of the digital journey and mobilize employees for the transformation process as early as possible.

  1. It’s no good having data if you don’t know what it means.

Organizations engaged in the process of digital transformation place data at the center of their business models. Some of them are astonished to discover how inundated they are with data that does not duly serve the organization.The new tools enable an organization to draw insights and create business opportunities from its reservoir of data. From data to insights is the fuel driving the digital transformation, providing new ways for improving decision-making processes in real time, and even turning data into a new revenue source.

  1. Digital transformation won’t grow your profits overnight. Embrace change as part of a wider growth strategy with measurable goals.

Customer expectations are a major driving force behind investment in innovation. Nevertheless, it is important that the organization develop reasonable expectations regarding changes that are achievable in the short term; it should view these changes as part of a long journey of digital transformation, remembering that change is the only constant in the reality dictated by the current digital age.

  1. Digital transformation should make your business more adaptable,but it won’t make it immune to competition.-

Implementation of digital technologies enables organizations to reach a wide clientele, enter new places more easily, and respond more quickly and flexibly to customer needs. All this with a relatively low investment of resources. Ultimately, however, the organization’s managers must ensure that the potential of digital transformation is translated into an actual competitive advantage – that the digital technologies boost its business agility and enhance the way in which the organization conducts business and connects with its customers.

  1. It takes more than just technology to encourage collaboration across departments and divisions.

The organization must foster collaboration among its business units and leverage digital technologies to make the boundaries between departments and divisions more flexible, even if they are located in different regions or countries. Sometimes, investments made by particular units can be successful, but the success is only local. The new technologies should improve and facilitate the development of new business processes across units, cultivate a culture of collaboration, and encourage and empower knowledge workers. 

  1. Your customers don’t think about your digital transformation, but they do expect it to happen.

Customers are rapidly and prominently adopting digital technologies in their lives. The organization should assume that customers expect it to respond accordingly, and even take the lead in introducing advanced digital technologies. Moreover, from the organizational perspective, it is important to always be cognizant of the fact that the digital transformation affects every part of the organization. Your competitors also understand this, and startups pose a threat to every organization, large or small.

  1. You can talk the talk, but make sure you walk the walk.

Lip service is not enough to ensure that the digital transformation will penetrate and take root in the organization. Organizations must internalize the importance of the phenomenon and be prepared to invest the necessary resources in technology and innovation to become truly digital.[/vc_column_text][/vc_column][/vc_row]

“The Digital Transformation Should Start from the Top” say Prof. Yesha Sivan and Raz Heiferman from i8 Ventures in their The Marker Article

The Marker magazine published the new article (Hebrew) by Prof. Sivan and Raz Heiferman. The December 2018 edition of the magazine is titled “The Israeli High-tech Book” and is dedicated to the growing and almost unbelievably vibrant Israeli high-tech with a huge number of brilliant entrepreneurs that made Israel the Startup Nation that it is, and one of the most innovative economies in the world. Digital technologies are changing everything we know – the ways an organization conducts the business, the way it manages the relationships with its customers, the way it manages its internal business processes, its innovation processes, its decision making processes. Products are constantly being digitized (cars, TV sets, home appliances, and aircraft have become digital and software driven–what we call digital product augmentation), and in some cases virtualized (music, books, maps, magazines, movies, and much more have been converted into digital products–what we call digitization.) Many products have been transformed into services (what we call servitization.) Physical places are converted into virtual places (shops, banks, and service offices are all transformed into websites and e-commerce, what we call virtualization.) In this new and chaotic business environment, digital transformation has become imperative to all organizations, regardless of the business sector they operate. If your organization doesn’t transform, some other competitor will mobilize the digital technologies to disrupt your business, and sometimes the entire sector (e.g., Airbnb, Uber, Netflix, Apple, Amazon, Facebook, Google, Alibaba, WeChat, and Tencent have all disrupted entire industries.) Organizations should understand that this transformation is one of the major and significant journeys they should embark on, and it will take resources, managerial commitment, and time to succeed. To be successful in such an organizational transformation, a top-down approach should be adopted. The board of directors and the executive management should be involved, committed, and lead the journey from its very first step and throughout the entire journey. In order to successfully lead such a significant transformation, Sivan and Heiferman provide a set of tips: adding digital-savvy board members; educating and training the board on the new concepts and models (e.g., new technologies like AI, ML, Big Data, 3D Printing, and drones, and new concepts like digital disruption, digital maturity, digital business models, transformation types, personalized customer experiences, and much more.) Other tips are discussing the new strategic opportunities and threats, visiting and learning from the new potential startups (by organizing hackathons, investing and M&A, innovation labs and more.)

The Four Forces Framework for Agilification: Prof. Yesha Sivan and Raz Heiferman from i8 Ventures on the New Framework

Gone are the days that an organization could plan for sustainable competitive advantage and build a five-year (or even three-year) strategic plan. The business environment has become ever-more chaotic, dynamic, and disruptive. Enter agility as the new capability to develop transient competitive advantages with shorter planning and execution cycles. Welcome to the age of “agilification.” This Advisor, published by Cutter Consortium is based on our article Agilifying You Digital Business – 6 Steps to Get Started published by Cutter Consortium on the issue of Cutter Business Technology, Vol 31, Number 7, 2018 and titled Architecture + Agile: The Yin & Yang of Organizational Agility. We focused on the important interplay among leadership, culture, business architecture, and digital architecture. You can download the full article from Cutter Consortium website (requires registration) at the following link:

“Agilifying Your Digital Business”: From i8 Ventures at Cutter Consortium (FREE Download)

We are happy to update that our new article “Agilifying You Digital Business – 6 Steps to Get Started” was published by Cutter Consortium on the issue of Cutter Business Technology, Vol 31, Number 7, 2018 named “Architecture + Agile = The Yin & Yang of Organization Agility”. This issue contains some articles dedicated to the many faces of agility. The issue of transforming the organization into an agile organization has become in the last couple of years a strategic issue. The business landscape has become very dynamic and competitive and organizations are having a hard time to establish their long term strategic plans. The new competitive environment forces organizations to move from the concept of sustainable competitive advantage to transient competitive advantage, a term coined by Prof. Rita McGrath from Columbia Business School in her famous book “The End of Competitive Advantage”. Our article presents 6 steps that we recommend organizations for their transformation into agile organizations:
  • Recommendation #1: Appreciate the Mental Challenge of Agility as “Building Flexible Buildings”
  • Recommendation #2: Develop & Share “Visions” of What to Expect from Agility
  • Recommendation #3: Build “Abilities”, that allow for “Visions”
  • Recommendation #4: Initiate “Actions” that Build “Abilities”, that Allow for “Visions”
  • Recommendation #5: Master the Interplay among Leadership, Culture, Business Architecture, and Digital Architecture
  • Recommendation #6: Shift to Deadline-Driven Smaller Projects
To get the article, subscribe to Cutter Consortium or download (PDF) by filling your email here: