What you need to know about digital business models
2022
This module introduces the overall understanding of business models for working with the other modules.
Agile method tool
Agile planning and management of change initiatives
Step-by-step guide
Output
Next step
maj 11, 2022
The module – in brief
In this module, you will learn what it takes to successfully implement and run a new service and business model. For this, you need to understand and navigate a range of organisational elements, and you have to be able to control the actual implementation process.
The implementation process
Implementation is taking something into use and making it work in reality. The value of new services, processes and business models only becomes real once they are implemented in the business and the organisation. In other words, they must be incorporated before they really add value.
Several types of implementation
Often, technical elements are also a part of the implementation process where new machines, new IT equipment or other kinds of new technology must be set up. Technical implementation is not necessarily easy and completely without challenges, but technical problems can be solved.
On the other hand, it can be a serious problem that one may overlook the effects of implementation on the business and the organisation. While technical implementation is fairly concrete, it can be harder to figure out what it takes for new services, processes and business models to be implemented successfully in the business and the organisation. Therefore, many companies fail to handle the business and organisational implementation, and this ultimately implies that a new service, process or business model is not really incorporated, and therefore, it will not work well in practice.
Just like when designing and developing services, processes and business models, it is an advantage to work iteratively and agile when implementing. That means working in small cycles where you constantly complete a task or a set of tasks, which in itself creates value, and where you continuously, from cycle to cycle, learn from your experience and adjust accordingly. This makes the implementation more manageable and flexible and creates results.
Implementation as an iterative process
When implementing new digital business models, processes, solutions or technologies, several elements in the company are influenced and need to be aligned in order for the business model, process, solution or technology to function successfully and position the organisation to achieve its goals.
In the following, a structured methodology for analysing internal organisational elements is presented, which is helpful to create an overview of the mutual effects that changes of implementation may cause, as well as to support the adoption of the new business model in the organisation. In addition, a tool for using the agile method is presented, which can be used to control the implementation process in a clear way.
The organisational elements of mutual effect
Seven specific elements in an organisation need to be in balance and reinforce each other for a new business model to be implemented and perform well. We refer to these elements as Ss of mutual effect. Analysing these elements methodologically provides an overview of the elements and clarifies the necessary change initiatives in connection with the implementation to avoid inconsistencies in the internal organisation.
“Ss of mutual effect” by EU-IoT project under license CC BY-SA 4.0
The Ss of mutual effect are topics that you have to consider if you want to prepare and position your organisation strongly for times of change. By using the methodology of the Ss of mutual effect you are able to examine the likely effects of future changes in the organisation and assess what it requires of the company to implement a new digital business model, process, solution or technology.
The seven elements are grouped as either hard or soft. The hard elements include:
- Strategy: the organisation’s plan for building and maintaining a competitive advantage over its competitors.
- Structure: how the company is organized (how departments and teams are structured, including who reports to whom).
- Systems: the daily activities and procedures that staff use to get the job done.
These hard elements are relatively easy to recognise, and the management can influence them directly. The soft elements are more difficult to recognise, as they are less tangible, and more influenced by the company culture. The soft elements include:
- Shared values: these are the core values of the organisation and reflect its general work ethic. The placement in the centre of the framework highlights that they are central to the development of all the other critical elements.
- Style: the style of leadership and management processes adopted.
- Staff: the employees and their general capabilities and roles.
- Skills: the actual skills and competencies of the organisation’s employees.
The Ss of mutual effect influence each other, and changes in one element can cause a chain reaction across the whole organisation. The methodology of the Ss of mutual effect offers a useful checklist to assess what it requires of the company to implement a new digital business model, process, solution or technology, as well as to examine and test the likely effects of future changes in the organisation.
Define change initiatives
Going through the Ss of mutual effect-elements will initially help you create an overview of how the company is currently working, i.e., before implementation is initiated and any changes are made. Then an overview is created of the desired future scenario, accounting for how the company strives to work when the new digital business model, process, solution or technology is fully implemented.
Finally, the current picture is compared to the future scenario and potential gaps and inconsistencies between them are brought forward, defining the elements that need to realign and the change initiatives necessary to move the company from the present to the future.
Practical information
Set aside 3-4 hours for the definition of change initiatives.
It will be a great advantage to include different key employees in this exercise. Firstly, because different people bring different ideas and points into play. Secondly, because employees in different job functions will create a more detailed and complete picture, and last but not least because the work process itself is an excellent way to create a common understanding of what changes the company is about to go through as well as why and how.
You will need a stack of plain white paper, a roll of tape, or another kind of adhesive, and some pens (one for each participant). In principle, the results of the analysis can be written directly into a blank document on a computer, but it is highly recommended to carry out the analysis on paper, as it is much more flexible and makes it easier to stay focused.
Step-by-step guide
1) Take a piece of blank paper for each of the seven elements and write the name of the element and the word “current picture” as the heading on each paper.
2) Start with an element that dominates your current business model, process, solution or technology. This is typically one of the hard elements, for example, strategy, which refers to the organisation’s plan for building and maintaining a competitive advantage over its competitors. On the paper with the heading “Strategy”, answer the following questions based on your current situation:
What is our strategy? How do we intend to achieve our objectives? How do we deal with competitive pressure? How are changes in customer demands dealt with? How is strategy adjusted for environmental issues?
Hang the paper on the wall.
3) Continue with the next hard element that logically comes next.
Structure: How is the company/team divided? – What is the hierarchy? – How do the various departments coordinate activities? – How do the team members organize and align themselves? – Is decision-making centralized or decentralized? Is this as it should be, given what we’re doing? – Where are the lines of communication? Explicit or implicit?
Systems: What are the main systems that run the organisation? Consider financial and HR systems, as well as communications and document storage. – Where are the controls and how are they monitored and evaluated? – What internal rules and processes does the team use to keep on track?
Then continue with the soft elements, and start with the one you find to be the most influenced by the current business model and defined hard elements.
Shared Values: What are your organisation’s core values? – What is its corporate/team culture like? – How strong are the values? – What are the fundamental values on which the company/team was built?
Style: How participative is the management/leadership style? – How effective is that leadership? – Do employees/team members tend to be competitive or cooperative? – Are there real teams functioning within the organisation or are they just nominal groups?
Staff: What positions or specializations are represented within the team? – What positions need to be filled? – Are there gaps in required competencies?
Skills: What are the strongest skills represented within the company/team? Are there any skills gaps? – What is the company/team known for doing well? – Do the current employees/team members have the ability to do the job? – How are skills monitored and assessed?
You can supplement with your own questions, based on your organisation’s specific circumstances and your own knowledge and experience. Some elements may not seem relevant, but still try to consider whether they are influenced by the change or if they could contribute somehow. When you have hung papers for all the elements on the wall, read them through to ensure that all connections and dependencies between the elements have been described.
4) It is now time to repeat the examination of the seven elements, but as opposed to the first analysis focusing on how your company currently works, you must now focus on the desired future scenario, i.e. after the implementation is complete and all changes are made. Take another seven pieces of blank paper and write the names of the elements and the word “present scenario” as the heading on each paper. Start with an element that has triggered that a new digital business model, process, solution or technology should be implemented. This is typically one of the hard elements or the shared values. Follow the same process of answering questions and hanging the papers with your answers on the wall.
5) Continue with the hard element that logically comes next. Then continue with the soft elements, and start with the one you find to be the most influenced by the new implementation and defined hard elements. Read through the new papers to ensure that all connections and dependencies between the elements have been described.
6) You now have a current picture, which is described within seven elements, and a future scenario, which is described within seven elements. Now take a third piece of blank paper for each of the seven elements and write the name of the element and the word “change initiatives” as the heading on each paper.
7) Within each theme, the present and the future are now compared, and on the sheet “change initiatives” you describe, element by element, which change initiatives will be necessary in order to be able to move the company from the current picture to the future scenario.
8) Read through the seven sheets of “change initiatives” to eliminate potential inconsistencies and ensure that they align with the shared values as well as across all the elements. Ask yourself: Are the initiatives consistent with our values? – How well does each initiative support the other elements? If your answers to these questions are satisfactory, the change initiatives can now be translated into an action plan for the implementation of the new digital business model, process, solution or technology.
Reflection questions
- Which parts of your future scenario are the most important to implement first in order to quickly create value?
- Which change initiatives require the most resources?
- On a scale from 1 to 10, how well is your organisation positioned to achieve its goals?
- On a scale from 1 to 10, how well do the various elements of your organisation align and work together?
The above reflections help you to prioritise change initiatives based on a cost-benefit consideration and to understand the magnitude of change that is needed. If you would like further insight into the Ss of mutual effect, you can get inspiration from a short example of the methodology filled in by the fictional company X-Production. The example can be found in the module Internal validation and testing.
Output
The result of working with the methodology of the Ss of mutual effect is that, for each element, you now have:
- a clear understanding of how the company operates today before the new digital business model, process, solution or technology is implemented (the current picture).
- a clear plan for how the company should operate when the new digital business model, process, solution or technology is implemented (the future scenario).
- a list of necessary change initiatives that must be taken in order to implement the new digital business model, process, solution or technology successfully (necessary change initiatives).
This gives the entire organisation a common understanding of what the starting point is, what you are aiming for, and what needs to be done to get from the present to the future. Against this backdrop, you are all set to plan and take action on your implementation.
Additional resources
A range of tools exists to support companies in managing organisational changes, for example when implementing a new digital business model. Common to the available tools is that they aim to provide a guide to make the needed changes, navigate the transformation process, and ensure that the changes are accepted and put into practice. Such tools offer an alternative to the methodology of the Ss of mutual effect described in this module. Suggested tools to support change management include:
- Lewin’s Change Management Model by Kurt Lewin
- ADKAR Change Management Model by Prosci founder Jeff Hiatt
- The Change Curve by Elisabeth Kübler-Ross
- Kotter’s 8-Step Framework by John Kotter
- Maurer 3 Levels of Resistance and Change Model by Rick Maurer
- Deming Cycle (PDCA) by Walter A. Shewhart & William E. Deming
Agile method tool
Several variants exist of agile methods for implementation. Here, a lightweight tool, which is easy to use, is presented. Like other agile methods, an Agile board makes it easier and faster to create real value. Instead of focusing on a lengthy and complicated implementation process, where the value can only be harvested at the very end, the Agile board helps to break the work down into small, manageable tasks, each of which creates concrete value. This agile implementation tool is similar to other iterative methods that work with short cycles.
With the tool the Agile board, each task is described on a small card, which is moved from left to right through the different columns to illustrate the task’s path from “To do” over “In progress” and “Testing” to “Done!”.
“Agile board” adopted from Digital Business Models for the Future under license CC BY-SA 4.0
Agile Board
Print-friendly version of the tool in large format.
The individual tasks that are written on the cards and performed must be as small and delimited as possible. Hence, large and complex tasks must be broken down into smaller ones. This makes it easier and more manageable to prioritise tasks, keep track of the status of the individual tasks and complete the tasks.
If you would like to learn more about how to use the Agile board, you can find further inspiration for using the tool in the module Development Process.
Agile planning and management of change initiatives
All general change initiatives that are necessary for implementing the new service, process or business model are broken down into individual tasks. In this way, it is easier to assess what is required to implement a given change, and it is easier to manage the implementation. Each task is written on a small card, which is put on the Agile board and moved from left to right through different columns to illustrate the task’s path from “To do” over “In progress” and “Testing” to “Done!”
All employees performing a task are responsible for moving it on the board when its status changes. At regular intervals, a short meeting is held in front of the board for everyone working on tasks. At the meeting, the status of ongoing tasks and planning of future tasks are discussed. In addition, all employees who are affected in one way or another by the changes should have access to see the board. In this way, the board becomes a common picture of how the implementation is progressing.
Practical information
Print the Agile board in giant format and put it on a wall or draw an Agile board on a whiteboard or similar. You can also buy ready-made board sets, but this is not necessary.
Use self-adhesive paper slips or similar as task cards.
Throughout the implementation period, the Agile board must be visible and easily accessible so that the space in front of it can be used for short board meetings, here in the sense; meetings held in front of the Agile board.
All employees performing a task should attend board meetings, and they are also responsible for moving the task card on the board when its status changes. Depending on the intensity of the implementation work, you can hold a board meeting every day, every other day or once a week – but no less often than once a week.
In addition, all other employees who are affected by the changes in one way or another should have access to look at the board so that they can follow the work.
Step-by-step guide
1) Create an Agile board.
2) Collect descriptions of all the change initiatives that need to be implemented in order to have fully implemented the new service, process or business model.
3) Break down all the change initiatives into delimited sub-tasks that are as small as possible. The tasks must be defined so precisely that you can easily and unambiguously determine their status: Either a task is being performed or it is not. Either it is finished or it is not. A good rule of thumb is also that each task is so delimited that it can be performed within a maximum of one week. With a little practice, you quickly learn how to define small, delimited tasks, and you also quickly experience the value of working that way.
4) Decide how often a board meeting should be held, i.e. a meeting in front of the Agile board. Depending on the intensity of the implementation work, you can hold a meeting every day, every other day or once a week – but no less often than once a week. Set a fixed time for the meeting and set the duration to maximum half an hour. Make sure everyone is standing up at the board during the meeting. Board meetings lose momentum and enthusiasm if you sit down.
5) You should arrange the first meeting when it is time to select tasks for the board’s “To do” column. Remember that each task must be so delimited and well-defined that you can unambiguously determine its status, and remember also that you should be able to perform each task within a maximum of one week. On each card, you should write who is responsible for performing the task.
6) The remaining tasks that did not get on the board during the first board meeting can be hung on the wall to the left of the board. This is the total “task pool”.
7) Before the next meeting, everyone who works on one or more tasks has the responsibility to update the status of the task. This means that you have to move the task card to the column “In progress” when you start working on it, and then to the column “Testing” and “Done” as the work progresses. A task card must not be moved until the task changes status – for example, a task is only “Done” when it is finished.
8) At the next board meeting, the status of tasks on the board is discussed, and if there is work capacity, e.g. because some tasks are finished, further tasks are selected from the “task pool” and placed in the “To do” column. You should not put more tasks on the board than the employees can actually perform. It is the intention that tasks must always move in a flow across the board from “To do” to “Done!”. If tasks just hang around and wait, they have to be taken off the board – maybe they also need to be divided further into smaller sub-tasks before they get on the board again.
9) Throughout the implementation process, work is done in this way with tasks that are put on the board and performed. Discussions at board meetings about the status of tasks and about what new tasks are to be on the board create common ownership and overview. The requirement that all tasks must be clearly delimited and must be able to be performed in a maximum of one week also contributes to constant progress and results, while also offering flexibility along the way to adjust the course and what is prioritised.
Output
The Agile board is used throughout the implementation process to create an overview and prioritisation of tasks along the way.
A benefit of the Agile Board is that it is a relatively simple tool, which is based on the processes and work areas that you know and already work with. Hence, the introduction of the Agile Board does not require that you ‘refurnish’ all your processes, but instead, you can adapt your agile process to the situation and to reality.
By using the Agile board to facilitate the implementation of a new business model, you ensure a more controlled process, which includes visibility, prioritisation, involvement and openness in the process.
Next step
Through the module on Implementation, an overview has now been created of what it takes to successfully realise and run a new service and business model. A prerequisite for being able to complete the implementation process is that the entire business model has been tested for maturity, which was done in the modules Early usability testing and pretotyping and Internal validation and testing. In order to continuously follow the company’s digital development, it is recommended to use the tool DMAT regularly, which was presented in the module Pre-analysis of the company’s situation.
After completed implementation, most companies are well positioned to leverage the value that digitalisation offers. If you are interested in gaining inspiration and learning from practical use cases, you can visit our case studies that showcase best practices of IoT developments and deployments around the world. To exploit further opportunities of your implementation, you can also choose to combine knowledge from this site with other external resources such as domain experts who can help you to advance further in the digital transformation process.
