Transform today to thrive tomorrow: Leading a Bionic Transformation

Peter Kasahara Partner and Leader PwC Digital Services, PwC Switzerland 11 Oct 2018

Successful transformations may not be easy to achieve, but they are possible – given the correct tools and direction, you can carry one out in your organization.

It is our belief that transformation is a substantial change in an organisation’s capabilities and identity, in order for it to create valuable outcomes, related to its mission that it had not been able to navigate before. Using the word “transformation” might not be favourable to you right now, as mastering change becomes second nature to your people, rather than a change forced upon them.
Successful transformations are a long-term strategic process, not a means to an end; building transformation capabilities and organizational agility are in the foundation and constant companions throughout the journey to transformation.

Leading a Bionic Transformation

How do companies such as Amazon, Apple and Alibaba succeed and thrive in multiple industries? Whether it’s automotive, banking, nutrition, healthcare, media, retail, those companies lead the market, while others simply follow suit. Company leaders start to reconsider their resources and output, wondering what more they have and are able to offer in comparison. Investors usually turn their backs before those suspicions start to creep up on those leaders. Those companies constitute the largest and richest in the world, and by using that leverage, they will continuously grow and florish. In 2018, both Amazon and Apple were declared the world’s first trillion-dollar companies. Those industry giants are a hub for highly talented, innovative and ambitious human capital. However, that alone does not provide us with the reasoning of their industry-disrupting influence.

Companies such as Apple and Amazon, however, are not unique. There is a large number of companies worldwide, and at least 40 “unicorns” startups, with a market capitalization of US$1 billion or more, that bare similar characteristics. Such companies are renowned for their expeditious, exponential success. At this time, most of them are in the United States and China; however, it won’t be long before they are emerge elsewhere. We think of those companies as Bionic Enterprises: a title that encompasses a synthesis of technological and biological systems that induce exceptional performance and growth. A fusion of digital prowess, human innovation and strategic purpose are the mechanisms that provide those companies with unprecedented advantage to compete against their rivals. Think of them as the corporate equivalent of superhuman cyborgs such as Marvel Comics’ Iron Man.

Many companies have adopted the “Bionic” way of doing business. Some are already front and center in the market, but others are surely catching up. Some will result of consortia; others will profit from highly capable platforms. You can also lead a Bionic transformation in your own company, taking into consideration applying changes to your business in the following ways:

  • Transforming to a business model that responds to customer demand by any way necessary, rather than a business model that is based on the management of your supply of products or services.
  • Transforming your operational approach to one proceeding from knowledge that is a result of collaboration and sharing, not on the collection of pre-existing stocks of gathered information.
  • Transforming your competitive position to be built on platforms where a single winner dominates the system, not on a static landscape of competitors.

Underlying these three shifts of mind is an innovation in the sources of wealth that are set up and generated by companies – the first major shift since the Industrial Revolution. Those innovative, intangible yet prevailing assets are behavior capital, the consciousness and acumen that is established by recording ongoing activity. Cognitive capital, knowledge that is embedded into routines that digitally managed, and network capital, the human and technological affiliation points that are available to an organization. Once those three forms of capital are effectively utilized, you can successfully transform your organization.

 

Behavior capital: The collection, aggregation, and modeling of data, in a way that yields valuable insights. Sources of data have proliferated with the Internet of Things, an infrastructure embedded with sensors and other data-gathering devices. The assets generated from this data often take the form of digital models of real-world activity, revealing how people, machines, and systems have behaved in the past, how they are likely to behave in the future, and how that behavior can be influenced.

Cognitive capital: This asset gains its value from computability, the automation of cognitive tasks. Most companies have established great reservoirs of practical knowledge; now they can transfer that knowledge into autonomous entities, which can act on it at scale. As decision-making capabilities move into software, embedded not just in computer systems but in intelligent devices, robots, vehicles, and massive industrial platforms, an enterprise can operate at vastly greater scale. When this phenomenon is managed responsibly, it creates enormous value.

Network capital: Companies by their nature are hubs, connecting their customers, their employees, and those who generate information about their projects. When the Internet emerged, the value of network capital rose dramatically. Unlike broadcast networks, Internet-based networks can manage many-to-many communications: They allow participants to communicate not just with the central hub, but also with one another

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Not too long ago, transformation was the conventional response to organizational disruption. Organisations changed their operations to avoid being disrupted – or to cause disruption of competitors’ businesses. Today however, the objective of a transformation initiative is to re-establish a company’s identity in order to grow and advance in a bionic environment: carving out new ways to create distinct value, making capital of the Industrial Internet, in an unprecedented manner. Companies all over are taking part in this shift, and they are doing it quickly. Individual enterprises that are hesitant and resistant to making that change are bound to be left behind by their stakeholders; customers, competitors, employees and investors.

Towards a Bionic Future

The concepts mentioned earlier – the three modern alternative forms of capital, as well as managing functions based on demand, taking advantage of knowledge flows, and achieving a winner-take-all status – are tools that will help you establish your strategic identity. Many companies utilize those tools are the foundation for a successful transformation (see “The Four Building Blocks of Transformation”).

The vision you and your colleagues have is what really matters at the end. Transforming the business is only the beginning. No company in the market has a monopoly on the Bionic method of doing business. Moreover, best Bionic practices, exemplary behavior, cognitive and network capital still have room for improvement. You cannot guarantee reaching the top in a winner-take-all competitive environment, but you be sure that using the tools mentioned in this article, you‘d be well on your way.  

 

Contact us

Peter Kasahara

Partner and Leader PwC Digital Services, PwC Switzerland

Tel: +41 58 792 42 15

Paolo Pigorini

Partner and Leader of Strategy Practice, PwC Switzerland