Chasing the Digitally Driven, Part 4
(Mark Dangelo is president of MPD Organizations LLC, featuring books, industry reports and articles. He is a strategic management consultant, outsourcing advisor and analytics specialist with extensive process, technology and financial results and is a frequent contributor to MBA NewsLink. He can be reached at mark@mpdangelo.com or at 440/725-9402.)
As presented in the first three parts of this series, profitable use of digitization requires far more than mere mechanics. Spread across nearly three years and approaching 7,000 criteria points, deployment of layered and increasingly complex digitization solutions requires more than a popular theme.
Like people, sometimes organizations do the right things for the wrong reasons. In an e-commerce world of B2B, B2C, C2C and B2G interlaced with pervasive Wi-Fi coverage, the march of structured and unstructured digital data grows at more than 100 percent compounded per year projected to reach 44 trillion gigabytes by 2020.
To adapt and use unchecked digitization solution sets (where digitized data is moving from 22 percent usable to 37 percent), pundits are increasingly recommending cross-industry operating model for existing financial services firms–incorporate innovation incubators, create software firm cultures, use an Amazon-like approach to serving customers (i.e., retail). It might from the recommendations that to be a viable financial services firm, you need to operate as anything but a financial services enterprise.
Empirical analysis shows they are correct–but not for the reasons provided, let alone the preparation necessary to create enduring foundational changes.
Moreover, some believe that there is no downside to digitization–just upside, and in most cases they would be correct. So, are we getting wiser? Are we better able to predict certainty outcomes with emerging solution sets? Is technology and its cultural integration becoming more transparent and predictable? Are we able to leap tall buildings with a single bound using layered digital solutions? (Just kidding on the last one.)
It’s Been a Long Time Coming…
Since early 2013, I’ve been trying to ascertain the secret sauce for digitization success and longevity. For nearly three years, I’ve assembled hundreds of artifacts and thousands of pages of published research, case studies and recommendations spanning academics, consultants, vendors and thought leaders.
However, as I attempted to assemble a common go-forward rationale, I realized that few ideas fit together and little of the solutions spanned more than a narrow range of applicability, or were just a macro blanket encompassing digitization inevitability. Additionally, I believe and contrary to current tenets, that digitization may plant the seeds for the next great “depressional” shift as cross-domain workforces, consumers, investors, corporations, data and technology permanently transform trade, purchasing, supply chains and an ability to repay (or participate) in any economic interchanges.
Digitization, the very thing that makes processes faster, data increasingly accurate and pointed and leaves consumers clamoring for more, could provide accessibility for foreign wars, cyber terrorism and unintended consequences that cannot be solved with central banker’s “extraordinary powers.” With a decade nearly gone since the start of the Great Recession and ensuing financial meltdowns, could we fathom how fast economic collapse would come with hybrid cloud solutions, data gathering, system interconnectedness and consumer power available with just mobile devices?
A Framework for Success
To promote digitization success, a repeatable yet expandable framework needs to be adopted to aid with development and adherence to digital roadmaps across a high-regulated industry such as financial services. This framework must be able to deal with “drill-down” requirements so that custom crafted solutions aligned with culture, capabilities, infrastructure and more can be achieved.
Figure 1 shows an adaptable framework that provides the foundation for action plans. Starting at the top, there are five functional divisions. These divisions can be broken into three segments–knowledge taxonomies, banking functions and digital categories. While concentration has centered on financial services capabilities, other industry models have been created for this approach, thus delivering repeatability and cross-industry adoption.
The model represents nearly three years of work, research and vetting into market influences and intellectual capital surrounding the very broad category of “digitization.”
What resulted during the past 11 months and assigned quantitative values are nearly 7,000 intersection points spread across 14 taxonomies (each with 14-26 sub-categories) and six grouping of digital impact segments (decomposed into 24 sub-impact zones).
Where some may label the breakdowns inconsequential or even unnecessary, they have resulted in a model where organizations are able to vet their strategies or intentions across granular criteria to determine how likely they will be successful. Moreover, if there are voids or challenges, they are identified in a bespoke assessment that can be used to determine dependencies, prerequisites, or even is some cases, money (and political capital) that should not be spent.
For lenders looking to transform their operations and enterprises, realization of concrete criteria and factors for digitization initiatives ensures that focus and prioritization can be provided for digital customers increasingly who are demanding advanced and interconnected solutions. Figure 2 is a macro rollup of nearly 7,000 points of intersection involving digitization and its adaptability. (Note: Each row is further decomposed 15-26 times spread across 24 vertical columns with each receiving a rating.)
As I recorded these empirically into cross-linked databases, they generated a repeatable set of processes (and outcomes) that can be custom tailored to an organization across any industry arriving at a “digitization index.” This repeatable model is not only advantageous for current and future states, but for surveys and custom generated internal controls that could be conducted with a “mobile first” approach and integrated with big data sources. Hence, it is a model that adapts to time and changing circumstances, while moving with firms rather than simply at the bequest of their high-priced advisors.
With development of models and criteria it reinforces that digitization is a journey–not a discrete destination or project to be completed and then checked off. If you think holistically, it is not difficult to see how this can be proceduralized–software, extensions, services, marketing, etc.
As a further example of the granularity that organizations need to adhere to as digitization maturity embeds itself into operational cultures at unprecedented paces, decomposition of the data taxonomy into further efficacy criteria shows impacts of scale, speed, prioritizations and rules of engagement. Figure 3 shows each sub-taxonomy within that data (and 13 additional segments) can be broken down further as needed to properly align with the enterprises goals and timeframes.
What this multi-year effort has shown is that digitization is a moving target that is often just associated with technology advancements. Digitization is not, as marketers sometimes ascertain, a lock-in by demographic segments (e.g., Millennials). So as we move rapidly forward in financial services with digitization initiatives that are no longer just simple projects, they require especially over the remainder of the decade a realization that banks and bankers are “swimming in the shallow end of a very enormous pool.”
In our next installment, we’ll discuss benefits and disadvantages of digitization orchestration.
(Views expressed in this article do not necessarily reflect the views or policies of the Mortgage Bankers Association. MBA NewsLink welcomes your contributions; articles or inquiries should be submitted to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)
