Innovation in 4 diagrams – 1. Digital Architecture

Every so often I need to take stock and outline where my thinking is at. This is one of those moments.

In the past few months my work increasingly has turned to helping my clients to plot courses through the need to make change happen to the services that they deliver to their clients and customers. Sometimes those are internal providers – IT departments, HR groups and so on – and on other occasions, it’s the things that those organisations provide to the outside world.

It is of course utterly oversimplistic to think that that challenge can be distilled down into four simple diagrams. I am not, it turns out, a big four consulting company.

But these simple diagrams indicate a set of ways of thinking, provide a framework for conversations, that I think is helpful, and I think my clients feel is helpful. So by articulating them and sharing them I hope they can be useful for other people too. And of course you know where to find me if you want to talk about how I might be able to help you more directly.

So, let’s start with a simple 2×2 Matrix that helps to explore why an organisation needs to think about innovating it’s products and services. The Digital Architecture framework.

Organisations essentially have two types of activity – those that are core to it’s purpose, mission or value proposition for clients, and those that are supporting the business, a cost of being. Some of these things are visible to the people for whom we provide our services, some of them are invisible.

The issue of visibility is crucial for two reasons. First of all, because in our experiences as consumers of the digital world, our expectation increasingly is of radical visibility. If Amazon can tell me the name of the driver who will be delivering my £5 package and how many stops he or she has before getting to me, why not the provider of services that might cost my business many hundreds of thousands of pounds? The absence of information today can be disconcerting or disorientating. Think to the last time you were on a train station platform and the indicator boards weren’t working.

But more fundamentally, for the consumers of our services – our customers, clients or colleagues – we can assign value to the things that we see, but it’s very hard to do so to things that are invisible.

So as we look at these four quadrants, a few things become evident:

Things that are core to our service but are invisible to the people who consume them should probably be made more visible. People want to see what’s going on (within reason). Your competitors will probably be making them available, and even if you think you are a monopoly provider, you may well not be as the concept of Shadow IT has shown to the average CIO.

The main thrust of innovation activity should be centred in the Core/Visible quadrant. You want to be creating new products and services, or transforming those that you already deliver.

Things that are invisible and supporting should be generally managed for achieving best value for money. Cheapest isn’t necessarily best, but you don’t want to gild lilies (or build things from scratch) in this quadrant. ERP systems exist for a reason.

Support activities that are visible to your service consumers are fascinating. If it’s not core to your business, why do you make it visible? Either hide it, or start thinking of it as core. An example of this is in the domestic energy sector, where traditional gas and electricity companies have traditionally regarded billing as a support activity, so outsource it into platforms like SAP and as a result have no differentiation and a fairly poor customer experience. New entrants into the market realised that billing was the main thing that they provided to their customers so invested accordingly.

A discussion about what your service proposition looks like can then be had with the 3P model, which will be coming next…