Why companies need to learn how to fail fast and cheaply
Digital is changing how consumers think and how they are demanding new products and services.
Retail banking is a great example of this changing consumer behaviour. While people are happy to set up a bank account in a physical branch, their ongoing needs to visit the bank erode, preferring to use more convenient digital services.
Now banks are experimenting with how they can deliver financial information ‘just-in-time’ to customers at their point of need. For instance, some banks are collaborating with retail organisations to trigger information delivered to the consumer’s mobile device such as their current account balance when they’re walking down the high street or letting them know where the nearest ATM is if they were at a cash-only market stall. This is useful information that the consumer needs to decide whether they are in a position to make that all important shoe purchase.
But digital transformation is not just impacting retail and banking sectors – it’s rippling across many industries. In the insurance sector, one of our clients is making use of its big data – cross correlating patterns and mapping that with meteorological and satellite information. It can then write algorithms to help it become more predictive in flooding areas rather than relying on historical flood maps. This means it can become more aggressive in the market and de-risk its quotations. These are just two examples where companies are writing software that will lead to new business models.
Continuous stream of innovation
So from now on, successful companies will need to have a continuous stream of innovation at a pace and agility that is ahead of these customers’ needs in the digital age. This requirement is enhanced if you believe, as we do, that every business is going to become a software business. But you can only do that if you take a refreshed approach to how you build applications, creating more agile, dynamic ones.
It’s about building a success model where speed is of the essence. Testing all the ideas without making huge investments, then testing them in an iterative way. Delivery of applications now has to be on a timescale of weeks and months not years to remain competitive. As a result, micro applications will thrive – releasing small innovations that can be built and tested and re-designed to meet evolving customer demands.
In short, to successfully digitally transform, organisations need to learn how to fail fast, and cheaply.
It’s something we’re trialling in our labs with clients – using an ‘extreme’ agile model to create, prototype and test ideas in just a couple of weeks, before receiving feedback, an initiative to foster innovation in our client work.
And if firms get their digital strategy right, our research found that CFOs estimate they could grow their company’s revenue on average by 10% (that’s over €1bn global annual revenue for a typical company surveyed).
So far there has been little advice given on how companies can actually grow their top line revenues through digital initiatives. This is why we have set out a blueprint in our latest whitepaper explaining how firms can practically achieve their digital potential supported by cloud and digital transformation.