Thursday, 16 January 2014

Digital predictions sandbox #3: big businesses look east to kick start their digital transformations

I’m in the process of developing some predictions for what will happen in digital in 2014 and thought that I’d post them here to get some wisdom from my readers! Some of these will be positive, some might be busting some myths about categories that have captured the zeitgeist. Now, more than ever, comments will be greatly appreciated.
 
Last time out, I wrote about the evolution of the digital camera market in 2014. On a somewhat different tack, here’s some thoughts about how a growing need to take a holistic perspective on digital will lead to large organisations moving into Shoreditch this year.
My prediction

By the end of the year, more than a quarter of companies on the FTSE 100 will have started or announced a dedicated digital team, based in or around Shoreditch.

The digital journey

Most large organisations have been on a 10 to 15 year journey with digital. This journey started out in the late 1990s, when businesses started having websites for marketing and to a lesser extent, sales purposes. At the same sort of time, field force functions began to use mobile technology to improve the ways in which jobs were allocated.

Digital started to become an efficiency and revenue enhancer. Progress has been gradual ever since. Better mobile data speed, device sophistication and integration have improved field force efficiency. Increasing penetration of the internet amongst consumers, the rise of search and social networking have all boosted the importance of digital as a channel.

Just recently some more progressive organisations are using the unique measurability of the digital world and its ability to combine and make sense of chaotic data sets to look at enhancing productivity across all aspects of the organisation, fundamentally changing the way they operate so that they’re ready for the next decade.


The thing is that digital has been seen as an enhancer for too long now. Since about 2007, peoples’ expectations and outlook have changed fundamentally in terms of what they want from a company as a user and an employee. So digital is core to strategy: it should no longer be treated as an upside, but more as a core part.

By stealth, organisations have begun to spend a lot of money and employ a lot of people doing digital stuff, without central oversight as to whether the money is being spent in the right way from a corporate strategy perspective. How do decide the relative merits of improved routing for lorry drivers in supply chain, a new mobile website, putting virtual assistants into retail stores and investing in process analytics is a really tough challenge and requires specialist skills and ways of thinking.

The need for digital teams

Another piece of wisdom that has been debunked is that wisdom of crowds. Crowds can definitely tell you lots of interesting things if you ask the right questions, but they aren’t a solution to the digital transformation.

It’d be great if all of your people took responsibility for evolution, innovation and change; spent their time analysing performance data and experimenting to improve performance. Let’s be honest. They can’t do that right now. It’s culturally alien.

Digital needs to be a major consideration in every aspect of the business. It can’t be distributed today because organisations lack the cultural sophistication. It therefore needs to be centralised under a leader (I’m unconvinced about the need for a CDO, Head of Digital etc… but that’s a discussion for another day) and put at arms-length from the organisation so that it retains the cultural values of its parent, but can attract the right talent to work with the main business to evolve commercially and operationally.

Why East London is key

One word: talent. Digital is about experimentation with new ideas, building them and measuring their impact. Often that means building technology. So you need creative developers, typically with mobile app and HTML 5 skills. There are only two places replete with those skills – San Francisco and London, specifically around the area variously known as Silicon Roundabout, Digital Shoreditch (and so on…).

A fascinating aspect of this large community is that it formed because start-up businesses and entrepreneurs wanted to work with other start-ups and entrepreneurs. There was no super-sized organisation that they clustered around, but a natural network economy. So access the ideas and skills in that part of London, businesses need to move there. They can’t attract people (even across town) very easily because the professional and recreational social scene in the area is so good and the access routes into it are quite specific.

It’s not possible to move a corporate headquarters to the area because the real estate doesn’t exist. Part of the charm of that part of East London is the melange of housing, retail and warehouse infrastructure from 150 years of London’s history. There aren’t many buildings with large floor plates and even though nearly 2 million square feet of new commercial space will be released in the next 3 or 4 years, it’s served up in small chunks, suitable for teams of 50 or 100, but not really for much more.

Implications

Large organisations need to centralise digital. They need to access the culture and talent that is common in London but best exemplified around Old Street. They can’t move in wholesale, so they’ll get leases for 100 or 200 seat offices that they’ll customise to look and feel recognisably like them, but with a touch of West Coast tech.

Last year, William Hill and Tesco both moved into the area. Sainsbury’s, through their Anobii acquisition have people there too, although not strictly as a digital team. Even Deloitte and KPMG have offices in Clerkenwell and Old Street, respectively. Unilever and other major international businesses are due to launch their own operations in 2014 and in my opinion, many others will follow suit over the next year to 18 months.

This is the start of a new phase of business in which the hubbing of skills in the right place and the right environment to make best use of their unique talents become the norm. Within 20 years the white collar workhouses of the late 20th Century will hopefully be consigned to the past. Businesses will be more distributed and the working environment will be infinitely more pleasant and human. Thank god for technology.

An appeal

Next April I’ll be running the London Marathon to raise money for the NSPCC. This is a great charity that does phenomenal work for children all over the world, so if you enjoy this blog, please make a donation here: http://www.justgiving.com/afroglives

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