Collaboration in the Digital Age: Digital Factories A Gateway To Agile Galore

 Modernizing the business without compromising its current operations. Here are key practical steps.

In today's rapidly changing digital world, businesses need to be able to innovate and adapt quickly. This requires a culture of agility and experimentation. Depending on the company's situation, the transformation model can vary. Some companies may be under such pressure that they need to completely revamp and reinvent their business structure. That will necessitate that they adopt a different operating model, enterprise-wide agile transformation for an example. However, for most companies, that will be a huge risk to take. The question therefore becomes, what are some practical steps that an organization can take to introduce this culture of collaboration. Is it possible to start small and run this model along side the legacy business? The answer is yes, this could be possible through a Digital Factory. A Digital Factory can help organizations scale this transformative culture by providing a dedicated space for innovation and collaboration.

What is a Digital Factory

A digital factory is a physical or virtual space where teams can come together to develop and launch new digital products and services. These teams are typically cross-functional, bringing together people from different disciplines, such as engineering, design, and marketing. They work in an agile environment, using iterative processes to quickly test and learn. A Digital Factory takes the the form of a start-up.

In the outline of this article the Digital Factory will be discussed as an Operating Model. As discussed in the previous article an operating model can be depicted by capturing the following categories:

1. Processes
2. People
3. Information Systems
4. Locations

For the purposes of this article one more category will be added and that is Management Systems.

Processes

The processes used by a Digital Factory vary depending on the specific organization and the type of products or services being developed. However, some common processes include:

• Scrum: Scrum is a popular agile framework that uses short sprints, daily stand-ups, and retrospectives to manage projects.
• Kanban: Kanban is another agile framework that uses visual boards to track work in progress.
• Lean Product Development: Lean development is a set of principles that can be used to improve efficiency and productivity. Lean becomes very instrumental for its MVP concept for product discovery. MVP can be a product with basic features but it can also be lightweight ways to test response from the market (Wizard of OZ, concierge, smoke tests, marketing campaigns etc.)

By adopting agile development methodologies and digital technologies, a digital factory creates and delivers products and services more quickly, efficiently, and effectively.

People

A business should deliberate about who should be allocated to the Digital Factory team. The team is generally split between the full-time core team (developer, QA, product owner, architect etc.) and control-function experts (legal, operations, risk etc.). The function experts will be fully committed to the team until such time the mission is accomplished after which they can return back their respective functions. This continuous circulation of experts per mission in the DF gives them a taste of the Agile culture and may ignite an Organization-wide transformation.

The org structure of a DF resembles that of a start-up company. At start-up stage, the structure of the organization is dynamic and flexible; optimal for experimentation, trial & error, and innovation. As the company grows and hits maturity it tends to assume a rigid hierarchical structure. This structure is built to optimize the core operations. However, the same structure kills the ability of the company to innovate and exploit new opportunities that may arise.  The DF is therefore an attempt to pump the creative juices back into a company. These products are initially developed to enhance and change the way business is done but can also be the first step to the creation of adjacencies.

Org Structure at Start Up Stage

Org Structure at Maturity Stage

Depending on company size and budget, a company might have multiple Digital Factories for each business unit or a Data factory that serves all the units. A DF is a small team made up of 10 - 15 members, 60% of which are tech. They exist for the purpose of building new products and solutions that will be adopted in the company - change the business. These products must be aligned to the company's strategic objectives. The DF is monitored by an operating committee which is responsible for setting missions, reviewing progress, securing and allocating budgets, and removing any impediments that may hinder the DF. The operating committee is crucially important as it models this cross-functional collaboration at the executive and management level

Information Systems

The systems software that a digital factory will require depends on the specific needs of the factory, but some common systems software include: 

• Operating system: The operating system is the software that manages the computer hardware and software resources. It is responsible for tasks such as scheduling tasks, managing memory, and providing file system access.
• Database management system: A database management system (DBMS) is software that allows for the storage, retrieval, and manipulation of data. It is essential for storing and managing the large amounts of data that are generated in a digital factory.
• Enterprise resource planning (ERP): An ERP is a software system that integrates all of the business functions of a company, such as accounting, manufacturing, and sales. It is used to track data and manage operations across the entire organization.
• Product lifecycle management (PLM): A PLM is a software system that manages the entire lifecycle of a product, from design to disposal. It is used to track data and manage processes related to product development, manufacturing, and maintenance.
• Business intelligence (BI) software: BI software is used to analyze data to gain insights into business operations.
• Cybersecurity software: Cybersecurity software is used to protect computer systems from cyberattacks. It is essential for protecting the sensitive data that is generated in a digital factory.

 

Location 

For a Digital factory to thrive, collaboration needs to be modeled in the work space. The physical space must be designed such that it stimulates inter-disciplinary conversations, creativity and innovation. This could mean the creation of informal lounges, eating spaces, visual aids and boards that are geared towards creating a space for people to easily relax and exchange information, more like how a start-up would look like.

Management Systems

Digital transformation is more strategic and holistic. It is not just about automating individual tasks, but about using technology to transform the way a business operates. This can involve changes to business processes, organizational structures, and cultures. The DF will therefore take on work that is more disruptive in nature as opposed to the normal bug fixes, new features & enhancements. DF's are established solely to drive the digital transformation agenda in an organization. This requires adherence to a set of management principles.

Clear goals

Companies should have a clear goal in mind when transforming their internal processes and customer journeys. This goal could be to reduce costs, increase revenue, improve customer satisfaction, or something else. By aligning on a common goal, management can prioritize the work that needs to be done and ensure that everyone in a DF is working towards the same objective.

Incremental Investing

As mentioned earlier the DF is supervised by the operating committee. The committee evaluates the success of missions based on their results, not on the activities or outputs that were produced. Instead of budgeting for projects over a long period of time, budgets are allocated in stages, similar to how venture capitalists do it. DF's generally employ the product approach (product discovery, product development, scaling etc.). At each stage, the committee reviews evidence of actual production based on the results of sprints . At each stage, a decision can be made whether to proceed or terminate the initiative. Therefore, it is of paramount significance that the project team shows progress at agreed-on milestones in order to get further funding.

Measuring the change

To change the way an organization works and keep track of what’s happening, its management systems will need to evolve, starting with KPIs. Nontraditional metrics focused on digital adoption, such as new customer registrations on digital channels or digital-engagement levels for a particular product or service line, are often more useful than traditional metrics like return on investment in tracking the progress of a digital transformation. This means that organizations need to focus on new ways of measuring success in order to keep up with the rapidly changing digital landscape.

Change Management

Due to the fact that a DF is a change-the-business team, the business must have a plan on how this change is going to be managed. The product approach by all means, avoids build-it-and-they-will-come and is only concerned with building products that the users/customers find useful. This therefore means that tech-adoption must always be at the top of the company's head as these products are being developed. This requires an organizational wide awareness of what's coming down the Digital Factory line and how to best position themselves for that change. Everything from MVP to collect feedback from customers, training, employing tech adoption specialists as part of the DF and communication at each deployment increment.