Digital Transformation using Parallel Operating Models

In many cases, organizations may find that their product or service is no longer in demand or has been replaced by something else due to disruption in the industry, often driven by digital technology transformation.

It can be more difficult for an organization that is already a market leader to respond to disruptions in its industry. Blockbuster, a former video rental business, was number one in its market but failed to adapt to the rise of online streaming and ultimately lost to competitors. Today, Netflix faces a similar threat from other streaming services.

Therefore, if your organization is undergoing digital transformation in response to changes in your industry, it is important to implement these changes while continuing to run the current business. If this is not done, there is a risk of disrupting the entire business during the transition process (unless, of course, the intention is to completely change the business model).

Additionally, other companies that have not been forced to make changes may be looking at digital transformation as a way to grow, build, and enter new markets. This is why the guidance in ITIL 4 Leader: Digital and IT Strategy are relevant, as it provides information on different types of parallel operating models that can be used during organizational change.

Where to begin with digital transformation?

Before making any changes, it is important for leaders to recognize the need for a new direction and have a clear understanding of the current state of the organization as well as a vision for the future. This vision should be specific and detailed, rather than simply stating a broad goal such as “transforming the customer experience”. It is important to identify the specific aspects of the customer experience that need to be transformed in order to remain competitive and successful.

Once you have a clear vision for the future, the challenge is how to implement changes while continuing to run the current business – a process often referred to as “changing the tires on a moving car”.

ITIL 4 Leader: Digital and IT Strategy provide information on four possible parallel operating models that can be used to manage this process:

1. Cannibalism
2. Erosion
3. Concurrence
4. Synergism

While most organizations may not use any one of these models in its pure form, they can serve as a starting point for developing a customized parallel operating model that is tailored to the specific needs of the organization.

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Digital transformation in Cannibalism:

In this situation, the intention is to completely change the existing business model and move to a new one because the current model is no longer viable. For instance, the French version of Yellow Pages (Pages Jaune) underwent a radical transformation in response to the decline in the use of business directories.

Erosion:

In this case, the goal is to gradually phase out the old business model over time. The existing business is still profitable, but it is not a sustainable model in the long term. As a result, two models co-exist, with the older one being gradually replaced by the new one. The New York Times’ transition from a print-based publication to a digital/subscription model is an example of this process. In a sense, Erosion is a less disruptive and more gradual version of Cannibalism.

Concurrence:

In the end, two separate business models will co-exist without interfering with or undermining each other. For example, a clothing retailer that has a physical store and also starts selling online can expand its market share without affecting its existing operations. Similarly, a company that is located in a specific geographic area can sell its products globally through e-commerce without needing to establish additional physical locations.

Sygnerism:

French cosmetics retailer Sephora started by selling cosmetics in physical stores, but then expanded to include an online presence that offered additional customer experiences such as virtual make-up testing. The company’s goal was not to replace its in-store operations with online sales, but rather to complement and enhance the in-store experience through the use of digital technology. In this way, the online and in-store operating models support and enhance each other, allowing the company to reach a wider audience and improve the customer experience.

ITIL 4 Leader: Digital and IT Strategy offer guidance and real-world examples to help organizations understand and choose the right approach for implementing a parallel operating model. By providing case studies and other practical information, the guidance makes it easier for organizations to understand the different models and how they can be used in different situations.

It also poses the following questions:

• What do you want to improve as a business?
• Which operating model would work best?
• How do digital leaders need to lead in these scenarios?
• How do you educate your peers about the options?
• How do you get teams on board and use agile management?

Having a clear intention and plan is essential for successful digital transformation. Simply waking up one day and deciding to digitally transform your business without a clear plan is unlikely to be successful. However, having the right knowledge and skills and starting off with a direction to follow allows you to adapt and make changes as needed, ensuring that you can successfully navigate the process of digital transformation.

Here at CourseMonster, we know how hard it may be to find the right time and funds for training. We provide effective training programs that enable you to select the training option that best meets the demands of your company.

For more information, please get in touch with one of our course advisers today or contact us at training@coursemonster.com