Digital Champion builds its unique advantage by integrating the four business ecosystems of customer solutions, operations, technology and talent.

These four business ecosystems are also the most basic business levels of enterprises, covering all aspects of enterprise activities, and are the basis for the promotion of digital value chain. Each ecosystem encompasses a range of internal and external activities within the enterprise and links them together through digital connections and practices.

  • Customer solution system (also known as business model and customer value level) : through personalization, customization, function enhancement, logistics optimization, revenue model innovation and design and application innovation, enterprises do their best to provide customers or consumers with distinctive products and services. In this ecosystem, external enterprises are also integrated into the solution, creating added value.
  • Operating systems (also known as solution support and value chain efficiency) : support customer solution systems through product development, planning, procurement, production, warehousing, logistics and service activities and processes. External partners involved in business operations, including contract manufacturers, logistics partners and academia, are all part of this ecosystem.
  • Technology systems: The ecosystem covers IT architecture, IT interfaces, and digital technologies, driving or supporting improvements and breakthroughs in the other three ecosystems. It involves key Industry 4.0 technologies such as artificial intelligence, 3D printing, industrial Internet of Things, sensors, augmented and virtual reality, and robotics.
  • Talent system: The support system covers enterprise capabilities and enterprise culture, including skills, thinking patterns, behavior patterns, contacts and skill sources, career development and other factors that promote digital transformation. We found that most companies, including those that have recognized the importance of being digital champions, lack a vision, strategy, and corporate culture to enable digital transformation.

By strengthening the capacity building of each ecosystem, digital champions will emerge, creating an organizational environment capable of seizing digital opportunities, and leveraging capabilities and digital leadership to push their digital maturity to unprecedented heights.

Characteristics of the ecological ability of digital champions

Digital champions are masters of integration and planning. They use internal and external partners and platforms to develop the ecosystem and integrate the four systems. They develop a clear and coherent overarching strategy around their value proposition and unique capabilities, and restructure their organisations accordingly. The ecosystem breeds the unique ability of enterprises and is the root of establishing the advantages of enterprises.

The construction of the four ecological systems should be considered as a whole. For example, it is not enough to design a customer solution system that is strategically relevant to the market. If the operating system does not have the capabilities, partnerships, technology and plans necessary to improve efficiency, then the enterprise will not be profitable and the business model will fail.

1. Digital Champion creates customer value by integrating personalized solutions and multi-channel customer interaction. They continue to refine their solutions to enhance multi-channel customer engagement, either directly or through third parties

With a network of internal and external partners, Digital Champion captures and integrates all relevant demand signals, accurately grasps customer needs and preferences, forms new customer insights, and develops novel personalized products and services accordingly. With exceptional customer awareness, Digital Champion is able to translate customer insights into compelling solutions that create customer value through a unique and customized combination of core products (analog, enhanced, digital) and complementary products and services.

Whether through sales and marketing departments or through third party channels (platform partners, resellers or data providers), Digital Champion works closely with customers through all relevant channels to improve their solutions. Such customer interactions typically span multiple market pathways: third-party vendor platforms, e-commerce platforms and applications, advanced customer service, data integration, analytics and services, etc.

With open platforms, partners and other ecosystem members can leverage the business models of digital champions: for example, selling products through pay-per-view subscriptions and omnishape retail (a mix of online and offline channels). Such external actors in the ecosystem include: product and service development partners, digital innovation experts, suppliers, IT providers, and various complementary product providers from the private sector or academia.

A sophisticated customer solution system can break down internal and external boundaries in an unprecedented way, creating value for all stakeholders. For some laggards, it will be difficult to catch up with the digital champions, who have invested a lot of time and resources in innovative applications to build an early advantage.

The survey found that 68% of digital champions adopted an optimized customer experience strategy to provide personalized products and services; 63% of digital champions have established more complex value chains with their suppliers, seamlessly linking their products with those of their customers in step.

Digital champions often form joint ventures or other partnerships with outside companies. Notable partnerships include:

  • DuPont, in a joint venture with Hebei Nongha Agricultural Machinery Group, has developed precision planters that precisely plant one corn seed on each mound
  • Google has a joint venture with AbbVie, a pharmaceutical company, to research diseases that afflict older people
  • General Motors is partnering with Lyft to build self-driving cars

Accurate positioning in the ecosystem is crucial for businesses. To demonstrate this, some digital champions place themselves at the center of customer solution architectures, where all participants interact directly with the enterprise rather than individually.

Apple is very good at doing this, and its huge team of app developers can create products and components directly for the iPhone and iPad. Deere’s precision agricultural equipment, integration technology and third-party company designs help farmers accurately measure the use and performance of water, seeds, pesticides, and soil enhancement products.

Other digital champions prefer to build customer solution ecosystems with the enterprise at their core, but with more open communication and collaboration among members.

Ford Motor, for example, operates at the end of a traditional supply chain, and its parts manufacturers have their own parts manufacturers, resulting in a multi-tiered customer solution ecosystem that requires frequent upstream and downstream collaboration. Chipmaker Qualcomm, which has its own centralized customer solution system and is an outside supplier to Ford, designs the communication platform between vehicles.

The survey found that more than 50% of the revenues of digital champions come from digitally enhanced or purely digital products/services (see Figure 9). About two-thirds of digital champions have built customer solution systems that can interact with external partners to create customer value. In the past, building an ecosystem that can coordinate many partners can be technically and integrally difficult. Today, digital champions have overcome this barrier by taking full advantage of their customer solution systems.

2. The operation system is the hub of the value chain of the digital champion, which can support the digital champion to bring more added value to the customers who participate in the operation of the supply chain, such as product development, production and distribution channels

These jobs in the operational system can be taken over by external entities such as suppliers, contract manufacturers, distributors, logistics providers and inventory managers, but they remain tightly focused on meeting the needs of the digital champions.

In digital champions, operating systems enable coordination and complete transparency along the entire value chain. It can connect different functions and partners in research and development, supply chain and service processes. The value of the high performance ecosystem is particularly in planning and execution, as it optimizes the beat time: that is, speeds up the pace of work so that it can consistently align supply chain execution (including production and replenishment) with real-time customer demand signals.

An important factor in becoming a digital champion is the dynamic relationship between operations and customer solution systems. The more mature digital enterprises directly obtain the design inspiration of operation system from the customer solution system. More than three-quarters of digital champions are mature in both ecosystems, and more than half are top performers in both areas, according to Elliott’s research.

The importance of this correlation is obvious: it can be observed, for example, in any company whose business model is based on customized products and timely shipping. To meet such urgent needs, companies must have fully transparent supply chains, strong execution capabilities and flexible production processes.

Digital title of products and services, changing the composition of the operating system will change and continuous improvement: new area need supplier or factory, warehouse and parts management need to be more flexible to better implement production plan in time, need an innovative logistics partner for our customers to provide more choice and convenience to one step ahead in the competition. The key is to constantly evaluate the operational system against performance indicators and the capability requirements of the business model.

Managing the operational system by an integrated planning and execution platform is qualitatively different from the past, when the relevant parts of the value chain were managed by a functional department. Instead of R&D, production, supply chain management, inventory control, sales, and marketing, the digital champion has an Agile team made up of internal and external members. These groups are formed for specific tasks and projects and disbanded when the project is complete. Working groups are charged with ensuring that the operational system serves the target solution, and are committed to resolving unilateral or multifaceted issues between the operational and customer solution systems.

Digital champions benefit from operating systems in five ways:

  • Instant response and flexibility: real-time response to the changing needs of end customers, rapid planning and execution
  • Transparency: Complete transparency of the entire operating system
  • Real-time data sharing: All value chain members view information at the same time
  • Expanding collaboration: organically develop partnerships with suppliers and others, and continuously deepen and synergize to meet the needs of value chain solutions
  • Connectivity: Seamless integration of internal and external product lifecycle management, supply chain management and customer information to achieve good connectivity of the entire value chain from product innovation to customer facing

Across all the industries surveyed, the automotive industry has the highest level of supply chain integration, with 18% of companies successfully applying real-time planning and collaboration in their supplier networks. This figure reflects the automotive industry’s well-established supply chain, which has worked tirelessly over the past few decades to improve efficiency, increase production, reduce waste and recover working capital through lean technologies.

3. The technology system covers IT architecture and interface as well as digital technology, and promotes and supports the continuous improvement and change of the other three systems

IT architecture is a key pillar for enterprises to fully implement and implement new technologies. Its main role is to support the operational digitization of standard business processes such as integrated business planning, manufacturing execution, customer service and product lifecycle management. New applications for such business processes are often built on top of cloud and data analytics applications with the highest data security standards, connecting the IT architecture to the user through an integrated platform, human-computer interface, user experience design, data network and integration layer.

Digital champions are skilled at expanding their technology systems, choosing to accelerate their digital strategy by partnering with external platforms, hardware and software vendors, rather than being confined to independent systems that have been developed on their own. Ultimately, such partnerships provide dynamism for innovation within and outside the corporate ecosystem.

Three points illustrate the importance of technology and its underpinning role in the digital champion’s customer solution system:

  • Digital champions have applied about two-thirds of major digital technologies. They take a global view, implementing and connecting these technologies across the enterprise and among strategic partners, laying out and connecting technologies across the enterprise, and building strategic partnerships rather than isolated technology applications.
  • Compared to digital novices, digital champions have higher expectations of efficiency gains over the next five years (10.5% vs. 16.2%) and continue to benefit by creating a virtuous cycle of smart technology decisions.
  • One-third of digital champions have deployed AI in all their functions, while 99 percent of digital newbies have not started using any AI technology yet.

They know exactly how certain technologies bring competitive advantage: speed, flexibility, customization, efficiency. The technologies they choose are critical to their operations and fully meet the needs of their customers’ solution systems. Digital champions continuously evaluate the technologies that underpin the entire value chain and push for implementation of technologies that are deemed important.

At least 90% of digital champions have implemented, piloted, or planned to use key technologies that are currently in vogue, including:

  • Comprehensive planning of the whole supply chain (100%)
  • Predictive maintenance of assets and products (96%)
  • Manufacturing Execution Systems (94%)
  • Industrial Internet of Things (97%)
  • Digital twinning, a virtual form of a physical asset or product such as a factory that can be used for digital planning, scheduling, and product development (94%)
  • Advanced Robotics (90%)

By contrast, the most common operational techniques, predictive maintenance (39%) and integrated supply chain planning (32%), were used by only one-third of digital newbies.

Digital champions are also keen to adopt augmented reality and virtual reality. These technologies use computer simulations to generate three-dimensional images or complete images that provide an immersive and interactive experience for the viewer. The use of augmented reality and virtual reality is also beneficial for maintenance, service, quality assurance, self-study and training. Digital champions use such technologies to quickly alert employees to changes in operational processes, or to inform employees how tasks can be integrated into digital workflows and assets.

Having seen the tangible benefits of new technologies, the digital champions are looking forward to the next level: especially in the emerging fields of artificial intelligence and robotics, where rapid advances in technology will significantly improve the advantages and bring big rewards.

Since technology benefits tend to be continuous, iterative and cumulative, digital champions have a greater advantage in improving efficiency through technology.

To benefit from this virtuous cycle, companies must build up their digital culture and skills, and explore the best processes and materials to make the most of advanced technology. While this is no easy task, with the right investment of resources, companies can find the most customized technology applications that best fit their value chain and operational needs.

Modern enterprises are confronted with the impact of mass information

Whether it comes from customers, suppliers, machine sensors, plant monitoring equipment, or automated maintenance programs, this is just the tip of the iceberg, and big data has been at the heart of many Industry 4.0 activities. Many tech-savvy companies are leveraging the potential of big data in multiple dimensions.

Despite the huge potential of these analytics activities, many companies do not see a significant return from continuous data collection. For the digital champions, this is where AI will play a key role.

The AI in use today includes digital assistants, chatbots and machine learning. There are four ways in which artificial intelligence works, each representing different forms of human-computer interaction:

  • Automation: Automation of manual and cognitive tasks, including routine and unconventional tasks
  • Assisted Intelligence: Assists humans to complete tasks faster and better
  • Enhanced intelligence: helps humans make the best decisions
  • Autonomous intelligence: the decision-making process is autonomous, with no human intervention and only automatic intelligence

This most basic artificial intelligence, enterprises can also make full use of big data. Machine intelligence can process large amounts of structured and unstructured data, manage and modify it, and generate analysis, evaluation, and applications. These outputs are already beginning to have a significant impact on vehicle development, smart homes, medical diagnostics and support, custom retail, supply chain optimization, and on-demand manufacturing.

Economic gains will come from productivity improvements through process automation (including the use of robots and driverless vehicles), increased quality and quantity of products through artificial intelligence, and increased consumer demand through personalization and better products and services.

Artificial intelligence is revolutionizing how digital champions operate and how businesses do business in the future. In digitally mature enterprises, artificial intelligence systems have been widely used, leaping beyond simple process automation to achieve self-learning and autonomy, and have had an impact on business, corporate culture, employee working style, human-computer interaction and corporate development strategy. The link between human resources and digital transformation is crucial, and the new digital environment will have a profound impact on the way businesses operate and the capabilities they need.

4. The talent system is the basis and support for the operation of the other three systems

The impact of digitization on strategic direction (solutions) and performance (operations) can reflect the situation of talent system. By evaluating these factors, an enterprise can determine what kind of personnel structure and skills are needed to move up the value chain and operational performance.

The key to the talent system is to include internal and external people, i.e. internal employees, freelancers, contract workers from digital agencies or talent pools, on-demand labor platforms, and employees shared with partners on joint projects.

Only companies with a clear digital vision, strategy, and culture can drive and truly benefit from the digital transformation.

Digital champions invest heavily in training and developing the skills needed for a digital environment, and successfully build a digital culture. To assess whether the organization has succeeded in building a digital culture and maximizing the benefits of its talent system.

Digital champions give us some ideas in four areas:

  • Skills: Employees have a variety of skills and flexible working styles. The enterprise has strong data analysis, human-computer interaction and technical support decision-making ability. It has a variety of formal channels to improve employees’ digital IQ.
  • Thinking mode and behavior: the characteristics of the enterprise, including digital thinking and vision, entrepreneurial spirit, new leadership style, open attitude towards science and technology, the culture of tolerance and learn lessons from failure, creativity and innovation ability, curiosity, digg group discussion atmosphere, flexible budget, quick decision making, problem solving oriented.
  • Sources of contacts and skills: The enterprise integrates internal and external cross-functional teams, obtains labor from the network platform or talent pool on demand, obtains resources from hackathons, catalytic converters, digital institutions, research institutions and universities, and tends to work in an agile way. Digital champions tend to be hybrid companies that develop flexible teams within traditional hierarchies, while their brand and recruitment strategies reflect their digital maturity. Establish talent development programs with tertiary institutions to acquire and master the required skills.
  • Career development: Organizational structure that leverages talent systems in multiple ways: evaluation, reward, and compensation programs that encourage innovative and digital creativity; flexible work arrangements and telecommuting where necessary; free time for continuous improvement of business operations; and support real-time employee feedback.

59% invest heavily in training their digitally transitioning employees, 52% see failure as part of the development process, and 52% have flat structures and fast decision-making processes.

Digitalization and intelligent automation will greatly affect the mix of workers and future hires as productivity increases and wealth increases. In addition, digitisation and automation will significantly reduce operating costs in mature markets, allowing factories in developed regions such as the US and Europe to compete against Labour arbitrage from emerging markets.

Sixty-two percent of the companies surveyed said they expect manufacturing to return to the domestic market and expand production in the next five years because digital factories are more efficient and have lower operating costs. At the same time, 38% of companies say they want to expand overseas production, but we think the main purpose is to be close to where the customers are, so that they can be highly customized and responsive to consumer preferences, which is a hallmark of the Industry 4.0 concept.

The digital factory is equipped with a host of advanced technologies: robotics, augmented and virtual reality, digital twinning, the Industrial Internet of Things, and the ecosystem it operates in also includes a host of open communication and interaction. As a result, skilled workers who can operate and program complex equipment and make quick decisions about changes in product lines, designs, and input to partners will be in high demand.

As the demand for skilled workers grows, new ways are needed to access STEM talent and offer customized training programs in digital concepts and abilities. In part, this will create a mismatch between supply and demand for skilled workers, causing wages for this group to rise from already high levels. At the same time, 54 percent of the companies surveyed believe digitization will not affect the length of working hours.

In this new paradigm, the business drives IT solutions, with the technology department addressing precisely the needs of the business department. At the same time, because the tools needed are easily accessible and aligned with strategic objectives, decisions can be made through data at all levels. For Digital Champion, this talent system ensures not only the flexibility of market access solutions, but also the flexibility of building digital platforms within customer solution systems and operational systems.

In the digital workforce transformation process, new talent recruitment and existing workforce assessment can be boiled down to a simple question: Is he/she the best person to accelerate innovation? To get the best candidates, digital champions look to every major source of skilled workers in the digital world: joint ventures, mergers and acquisitions, freelancers, consultants, colleges, poaching, and even hackathons. At the same time, Digital Champion has also developed training programs to upgrade employees’ skills to meet the increasing demands of the digital environment.

Digital champions know that becoming a digital leader requires a deep understanding of how the new generation of employees learn and what they expect from their jobs. Our analysis found that companies that offer a high-quality education, challenging assignments, flexible work arrangements from a distance, and more career transfer arrangements through a variety of training and skills development programs are more attractive.

In order to realize the transformation, Digital Champion evaluates the current situation of its labor force, promotes top digital talents and pays attention to the development of other employees, constantly introduces new labor force into the organization according to the existing ability shortcomings, and speeds up the construction of digital capacity and the cultivation of new and old employees.

5. The key to becoming a digital champion is to organically integrate the four ecosystems of customer solutions, operations, technology and talent, and fully cooperate with various partners

In the process of constantly improving capabilities and improving systems, enterprises will experience four stages of continuous maturity:

  • Stage 1: digital novice – functional departments still haven’t got through
  • Phase 2: Digital Follower – Business Practices are closely linked by functional nature
  • Stage 3: Digital Pioneer – with cross-functional business practices, operating systems closely linked to technical systems and talent systems
  • On the way to becoming a digital champion, companies need to do both “addition” (building capabilities in a specific ecosystem) and “subtraction” (promoting the comprehensive integration of the four ecosystems).

To this end, Elliott proposed a set of blueprint to establish and improve the four ecological systems, a total of six stages:

  • Conduct internal system evaluation to explore the path to success

The “road to success” refers to digital strategies that break free of old constraints and embrace new capabilities: “What can we do now that technology and user behavior have changed that we couldn’t do in the past?”

The first step to change is to take a thorough look at your organization. Companies need to conduct internal assessments to find out how to succeed in the digital future. Business leaders study market developments, competitor movements, customer expectations, changing ecosystems, regulatory changes, and technological advances to determine the attractiveness of the value proposition to customers, their operational and technical capabilities, and the skills of their employees. In addition, it is necessary to analyze the company’s own shortcomings and summarize past experience in achieving growth and business goals.

  • Develop the ecosystem vision and value proposition

Combined with the analysis in the first step, the business leader needs to develop a vision for the ecosystem and make the goals of the business concrete. In this process, enterprises determine how to position products and services, what kind of value proposition to offer customers, and how to provide personalized solutions through multi-channel customer interaction.

  • The concept of building a complete ecological system and the strategic cooperation model

In this process, business leaders need to design a holistic concept that covers all four ecosystems. Starting with the customer solution system, identify the best partners to work with and decide whether to build or acquire new capabilities, which capabilities will be built in-house, which capabilities will be built through partners or other means. Then, based on the decisions made, build an operational system that meets the relevant requirements.

Subsequently, the technical system and talent system are established to provide support for the customer’s solution system and operation system. Companies need to build a comprehensive framework that includes interfaces, relevance, connectivity, technology, and data to ensure smooth collaboration between different ecosystems. Ecosystems need to work with each other to develop structured and open communication, enhance the digital maturity and culture of the organization, foster solutions and operations along the value chain, and foster a virtuous cycle of continuous improvement.

  • Establish ecosystem management, investment and decision-making committees

Before starting the iterative design and implementation of the ecosystem, a clear “ecosystem management” process needs to be established to provide guidance for the design and implementation. These processes, overseen and implemented by senior management, involve setting priorities and major milestones, approving design and implementation outcomes, and making investment decisions. A committee could be appointed to oversee the transition and make sure it goes smoothly.

  • Build ecosystem capacity through iterative design and implementation

Based on clear goals and ecosystem design schemes, enterprises create various ecosystems as channels to achieve these goals. There are two main types of activities involved. The first is to quickly complete the iterative design and implementation of ecosystem capabilities. This type of team works fast and smoothly on a project-based basis, disbanded when not needed, and is responsible for building future customer solutions, operations, technology, and people systems.

Collaborative patterns should be included in the design process, linking the resources needed internally and externally; Digitalization should be free to connect and collaborate with partners, suppliers, factories, logistics providers, contract manufacturers, consultants, task forces and permanent employees.

  • Grasp the results of the comprehensive integration of the ecosystem and reinvest in sustainable expansion

With the completion of the four ecological systems, enterprises have fulfilled the strategic requirements and can make full use of the new value chain. Business leaders oversee new practices and processes to ensure that digitalization continues to drive improvements and efficiencies across ecosystems, enabling the perfect combination of external partners and internal partners to deliver higher customer value. On the way to the digital champion or in the process of maintaining the position of digital champion, with the improvement of the ecosystem, the enterprise should keep the investment in the four ecological systems, and continue to develop and mature.

Source: Fan Long Notes

By Geissbauer, Long

Disclaimer: The article was forwarded on IDCF public account (devopshub) with the authorization of the author. Quality content to share with the technical partners of the Sifou platform, if the original author has other considerations, please contact Xiaobian to delete, thanks.

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