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5 Imperatives for Developing a Digital Factory Culture

Editor's Note: If you are interested in becoming an expert on Digital Transformation, take a look at Flevy's Digital Transformation Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

Featured Best Practice on Digital Transformation

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Digitization helps boost revenue, enhance customer loyalty, and reduce costs.  Top digital companies not only improve customer journeys, they consistently revisit and streamline them.  A rigorous approach to Digital Transformation, referred to as the “Digital Factory,” demands a collaborative culture, agility, and controlled risk-taking.

A Digital Factory integrates the capabilities, processes, and inputs to yield quality deliverables.  These deliverables are mostly journeys—a string of interfaces to accomplish an activity; for instance, a new method to resolve issues with customers service or a new lending process.  The Digital Factory adopts new workflows to develop innovative products—utilizing leading practices like Design Thinking, Zero-based Process Reengineering, and Agile software development.

The working of a Digital Factory is governed by guidelines and standard operating procedures that outline the required objectives, controls, processes, and decision-making authorities.  How well a business implements a Digital Factory approach can make the difference between small improvements and real Business Transformation.

The Digital Factory approach galvanizes the business, motivates the people, and encourages innovation.  Such an environment attracts the best talent internally as well as externally, and delivers the required outcomes.  A Digital Factory assists in developing a new product or customer experience within a short time span and this impetus can then be channelized to scale up digitization across the organization over time.

However, achieving this requires setting up a Digital Culture that exemplifies the new working model, systems, and behaviors.  Developing a culture that supports the Digital Factory approach necessitates implementing the following key imperatives:

  1. Adopt the VC Mindset
  2. Get Creative to Attract Digital Talent
  3. Build Working Team Squads
  4. Create a Collaborative Workspace
  5. Foster an Agile Culture

Now, let’s take a deeper dive into the first 3 initiatives.

Adopt the VC Mindset

Just like venture capitalists, a Digital Factory culture warrants setting up clear-cut goals and indicators, and making quick and robust judgments.  Leading digital companies reserve a sizeable portion of their budget to establish a digital factory and dedicate separate office space for the unit.  For the Digital Factory to be successful, the investment decision to fund a product (e.g., a customer journey) should hinge on the effectiveness of the idea, a basic business case (not too detailed), and steady progress as per the approved project objectives.

Get Creative to Attract Digital Talent

To work effectively, a Digital Factory needs people with high-demand skills—e.g., Customer-centric Design (CCD), mobile app design, agile development, and data analytics.  People with these capabilities aren’t easy to attract.  To tackle this issue, organizations should develop a stable value proposition and exhibit a creative, agile, and entrepreneurial environment to the incumbents for them to prefer it over traditional firms.  Another way to do it is to hire “influentials” from the digital community to help source other key talent through their references.

Build Working Team Squads

A digital factory culture warrants deploying small squads of around 8 to 12 people to work on a project.  This dedicated, cross-disciplinary working team belongs to the digital factory but works with the business owners on a specific project.  The squad comprises people with expertise in user experience design, software development, IT architecture, and scrum.  The squad needs to have access to other teams in the company and can be complemented with professionals from other trades.

Digital Factory Management Practices

A Digital Factory approach and culture does not work on their own.  Implementing such a culture calls for defining and executing certain management routines, systems, and practices to embed the culture deeply into the organizational DNA.  These management practices include:

  1. Build with Purpose
  2. Invest to Drive Impact
  3. Develop a Change Plan to Integrate New Products
  4. Adopt KPIs for Digital Adoption
  5. Find Multi-disciplinary Leaders

Interested in learning more about the management practices critical for embedding a Digital Factory approach into the company?  You can download an editable PowerPoint on Digital Factory here on the Flevy documents marketplace.

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For many industries, COVID-19 has accelerated the timeline for Digital Transformation Programs by multiple years. Digital Transformation has become a necessity. Now, to survive in the Low Touch Economy—characterized by social distancing and a minimization of in-person activities—organizations must go digital. This includes offering digital solutions for both employees (e.g. Remote Work, Virtual Teams, Enterprise Cloud, etc.) and customers (e.g. E-commerce, Social Media, Mobile Apps, etc.).

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About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

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