Digital @ Scale. Swaminathan Anand

      New products and services are quickly tested in the market; the results are measured, and then further optimized if necessary. Budgets are tied to the achievement of interim targets, progress is analyzed in fixed cycles, and projects are immediately canceled if necessary – in short, the digital operating system. Chapter 8 explains how this works.

      The third level deals with consistent implementation, focusing on scaling and rolling out the transformation process to the entire company and its ecosystem. A twin-track IT structure is needed: day-to-day business where all the sensitive data is handled in the stable structures as usual, and agile IT systems for the fast-developing new projects. The biggest challenge at this level, however, is the rapid, company-wide installation of solutions tested in pilots – Digital@Scale, as explained in Chapter 9.

      Digitization begins with the strengths of the company. Companies that build their business models on outstanding customer service need to consider which new service offerings are made possible by digital technology. Companies that process large volumes of data each day should first look for big data solutions that allow them to offer new services to their customer base. For example, a networked health care model combines tried-and-tested communications technologies with new IT concepts. It’s a combination that’s already demonstrating its potentials. Thanks to big data, treatment paths can be personalized, while the smart evaluation of data enables predictive diagnostics, benefiting both physicians and patients.

      And companies such as discount retailers that focus on the efficiency of their processes have much to gain from the digitization of the supply chain. For example, sensors can be fitted to transported goods, and the generated data can be analyzed to help develop improved routes and more efficient supply chains.

      2.4 CARGO CULTS DON’T WORK

      The considerations sound simple. However, treacherous traps lurk in practice that are best illustrated using the example of the “cargo cult.” The term was coined by the recipient of the 1965 Nobel Prize for physics, Richard Feynman, to describe poor scientific method. He told his students an anecdote from the island of Samoa.

      During World War II, US aircraft regularly landed in Samoa, and the airmen would often share with the indigenous locals the glorious gifts of western civilization: Coca-Cola, Camel cigarettes, and Cadbury chocolates. Following the end of the war, the flights stopped, and the disappointed Samoans called for the return of the flights and their beloved cargo in what quickly developed into a cult. They built wooden aircraft and wore bamboo headphones to simulate radio traffic. However, it was all in vain, as Coca-Cola and the rest of the treasured cargo never returned. Although the islanders had recognized the phenomenon – the aircraft brought their coveted products – they had drawn the wrong conclusions.

      Many companies respond to the digital challenge in a similar way. They recognize the phenomenon, but react wrongly. These are our top three cargo cults of the digital world:

      1. Digital start-ups: Cosmetic exercises such as these are seen quite often. A digital start-up is founded a long way from the company’s head offices with a small budget and a couple of young employees. However, these halfhearted efforts are rarely able to have any influence on the established business model. This isn’t to say that we shouldn’t still learn and actively employ such structures. Just don’t expect start-ups like these to solve your digitization challenges for you.