5 Points of Enterprise Failure

Updated: Jan 24, 2020

Any enterprise on this planet irrespective of whether it is a startup or incumbent needs to accept transformation as a part of the organizational makeup. Not doing so is a definite way of creating an exit out of existence. The rate and robustness of growth demanded by the environment is the reason that cannot escape the maturity of any enterprise leadership. However, research reveals that more than 86% of digital transformations fail to accomplish their goals and settle for mediocrity.

1. Clarity

Not what if things go wrong but rather what needs to be accomplished for things to not go wrong

Clarity is the first point of failure in most businesses. What to do and what not to do is a matter pondered enduring the life on this planet. While times have passed when the art of luxuriating on it was a matter of great social importance, the environment now demands nanosecond decisions at a micro level. But these decisions are of course guided by Principles and Practices that are defined at a macro level. Clarity is a must at the macro level to seamlessly cascade down for the operation of rules at the transactional level. No Artificial Intelligence or Machine Learning can correct the outcomes when the clarity on the construct of the abstract is missing. This is a primary cause for poor outcomes in digitalization and digital transformations. There must be a direct correlation between Logic and Rules in business as the illustration shows. Clarity needs to address the cause of business success through the process of Inquiry, Exploration and Discovery continuously.

2. Economic Significance

Not how much money one can make but how much value one can create

The second point of failure in enterprises conventionally counting the cash as opposed to focusing on the value that will derive the cash. The focus of investors and business plans is also on the exit strategies; not on the points of arrival of value. This reflects in the fragile sustenance of both established incumbents and startups. The definition of value has significantly shifted as we have traversed three industrial revolutions and are well into the fourth one. A recent McKinsey research plotted economic profit (the total profit after subtracting the cost of capital) earned by the world’s 2,393 largest non-financial companies from 2010 to 2014. The result shows a power curve that is extremely steep at both ends and flat in the middle. The average company in the middle three quintiles earned less than $50 million in economic profit. Meanwhile, those in the top quintile earned 30 times more than the average firm in the sample, capturing nearly 90 percent of all the economic profit created, or an average of $1.4 billion annually. Economic significance of a business model has to be understood and renewed dynamically as the market structures shifts; resulting in a portfolio that is connects Concepts, Culture, Capabilities and Configuration “renewably continuously”.

3. Ecosystem

Ecosystem is not just a random group. It must be an osmosis between communities of interest and communities of practice; creating and managing value and therefore demand

The essence of ecosystem at an industry level is sharing and collaborating across the universe of customers in realtime; including clients, team members, stakeholders, shareholders, business partners, vendors and societies in which an enterprise operates. And the significance of the extended ecosystem is connecting the seven stations of life including Environment, Governance, Health, Wealth, Education, Mobility and Technology. Enterprises must find a way to abstract and detail design connecting the two; within which an enterprise’s innovation would thrive. Enterprises have conventionally had a hard time connecting between functions and teams. The reason is they have never been able to see the enterprise play as a whole as an abstract and drive that logic down to the transactional level. The technology patches will now give way to connecting unstructured data with API’s and Restful Architecture. And this microservices orchestration must be leveraged for connecting the dots across the ecosystems. And therefore this economy is one that relies on Sharing and Collaboration.

4. Risk Assurance

Evaluating the risk of not doing something as opposed to the risk of doing something.

Risk cannot be avoided and cannot be ignored. It must be recognized and accounted for in the planning; not in the execution. The only way to do this is to move the mindset from insurance to assurance. The former is used to bail out one from a difficult situation while the latter actively works towards preventing a difficult situation. In the days of long time and space cycles of strategy and delivery the former might have worked but will not be a tenable payor in the more intricate short cycle economies where the variables are too many to hedge the bets. This is an economy that will necessarily be driven by innovation more than competition and therefore the definition of risk must be turned on its head to succeed. It is not the pipeline of customers but rather the pipeline of intellectual property that the enterprise must aim at creating; to stay relevant and thrive. Your struggle to survive will find no sympathy.

5. Digital Duality

Fusing the Physical and Virtual Engagements and Experience of Customers seamlessly

The internet is brimming with content about the future of work and the future of life. We are witnessing a giant slide into everything digital. But then there is a value for physical - whether it be for real or telepresence. One cannot take the place of the other for multiple reasons of failsafe, humanity and security. And therefore, the systems demand that universal connect with a digital identity that can traverse these worlds seamlessly; with the right authentication, authorization, privacy, permissions and privileges.

As it might occur, we are living at a time when everything we knew about how we operated as individuals, enterprises, societies, nations and planet is changing. There have been early starters or pioneers and followers who have anticipated this direction and started moving towards the future. Many of them have experienced the above points of failure; all or any one of them. It would be wise for all concerned, especially the laggards to learn from them. These can be extremely expensive; both from the perspective of economic costs as well as opportunity costs. It is critical to stop and examine yourself as the enterprise because this is the origin of your enterprise digital transformation journey.

archents is positioned to ideally serve you mirror this reality and help create a compass that can facilitate the navigation of your enterprise digital transformation journey with risk assurance. Connect with a specialist today.

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