Now. Next. Beyond. If you don’t plan in three dimensions, will you be left behind?

Digital transformation is fundamentally a people challenge as technology will continue to move much faster than skills, culture and mindset can keep up with.

Bringing the now and next together productively is one of the fundamental innovation challenges. As Jim Collins, Chief Operating Officer, Agriculture Division of DowDuPont and CEO-elect of Corteva Agribusiness, observes: “Innovation and change is a requirement. It’s not a choice. You need a group out selling for today and a group designing for the future. You need to force those two worlds together to be a bridge. Building that bridge is the third element.”

A digital factory approach helps companies to bridge the now and next, achieving the end-to-end rapid and robust scaling that a holistic business transformation requires. Large companies must have the ability to “not only experiment continuously, but also plan, invest and scale up successful minimum viable products like a venture-backed unicorn,” says EY's Buchanan. This involves taking a page from the blitzscaling approach — prioritizing speed over efficiency in the face of uncertainty — which has propelled the growth of so many start-ups. Companies must tackle the many impediments to scale-up, such as funding, tax, legal and cyber considerations, people and cultural change impacts, and technology barriers.

The digital factory is the physical environment (or network of environments) that connects, aligns and activates corporate innovation and commercialization functions in the service of transformation. Like a bricks and mortar factory, it’s purpose is to scale innovation, quickly and repeatedly, by putting cross-functional teams into the right environment, and leveraging proven methods and tools to explore challenges from every angle, make decisions and execute.

The constituents of a digital factory can be physically distributed, but they must work together. The digital factory approach is typically some combination of the following six core components: 

Operating model, governance, people and culture

The digital factory approach enables faster scaling of business transformation in an integrated manner. But don’t forget the importance of people and culture. The governance model for a digital factory must be cross-functional. It should institute a continuous rotation of people through the various components of the structure. In the end, everyone in the organization must have a stake in the transformation for it to scale.

“Getting the organization behind the change and meshing the day-to-day with the transformational is essential,” says Serge Taborin, Chief Digital Officer of Capita.

Everyone in the organization must also have the skills, and more importantly the mindset, to scale transformation. Preparing for the next requires careful consideration of how skill sets will change — the digital factory provides important indicators. “Transformative change is used to focus on enabling leaders to lead the broader workforce, but today it also means big digital changes to the ways of working at the deeper levels of the organization,” notes Liz Fealy, EY Global and Americas Solutions leader for People Advisory Services.

Corteva’s Collins says that workforce and skill set transformation has been essential in the formation of the company, a “300-year-old start-up” recently spun out of DowDupont. He relates that while the company’s core skill sets remain agronomy, mechanical engineering and material science, they are rapidly bringing in more data and digital skills. “We’re hiring more drone pilots than agronomists,” says Collins.

Fielding the best team for transformation

EY’s Fealy recommends thinking of building an agile workforce in terms of a competitive sport. First, companies must get the right people on the playing field. This means aligning workforce recruitment and retention efforts to the company’s three- to -five-year strategy.

Then organizations must enable their people to excel: what training, metrics and rewards will be needed to elicit maximum performance and how do you enable the team to adopt the new ways of working?

Companies must also consider the workforce experience. The key to making the game enjoyable and creating a winning team resides in motivation. The best workforce experiences arise when individual purpose meets the purpose of the organization. In sum, the workforce strategy and the business strategy for what’s next are inseparable.

Key questions:

• Do your digital innovations move from the lab to industrial scale quickly enough? What factors prevent scale?
• How well are your innovation projects connected to the business and each other?
• What is your people and culture strategy to support your digital transformation?

Watch this video from the EY Innovation Realized summit  to hear from business leaders why they believe digital transformation is an opportunity to unlock greater human potential.

It’s essential to have a small group relentlessly thinking about future technologies, such as quantum computing, and how these might change the business. But the reality is that the future is impossible to predict at longer time horizons.

What companies can do in the present is to transform themselves to be able to respond to many different futures. That implies a level of flexibility that most organizations don’t have.  Even as the world outside the four walls of the company moves faster and faster, organizations themselves — their structures and operating models — haven’t changed all that much. Too often, digital initiatives are conducted within outdated enterprise frameworks.

Superimposing 21st century technologies over 20th century structures and ways of working is a recipe for suboptimal results and even failure. To become as fast-moving as markets, companies must become superfluid.

“As the pace of change increases, we have to be more nimble, more flexible and more adaptable to everything that removes friction around our movement of talent, capital and assets,” says Samuel Tait, Executive Vice President, Managing Director — Media Transformation, Dentsu Aegis Americas.

Borrowing the term from physics, superfluidity suggests a future state where organizations organize and operate with as little friction as possible, which, in turn, puts them in a better position to create value. Focusing on your company’s four key asset classes is a good place to start.

• Time: Time should be respected as an asset. Ideas to introduce more fluidity include establishing strict cadences for decision-making and ensuring that meetings have a specific purpose (linked to decisions) and have only the right stakeholders in attendance.
• Talent: Consider the place of and purpose for humans and machines in your workforce. Make your workforce flex to changing demand by using a combination of full-time and contingent talent. Overcome the viscosity of hierarchies by enabling cross-functional, autonomous teams.
• Capital: Develop a more continuous budgeting process, enabling your company to fail fast and pivot if needed. Segregate the “business as usual” budget from investments for the future and subject your innovation experiments to a different set of metrics.
• Hard assets: Explore everything-as-a-service models. Today, nearly everything can be obtained as a service via the cloud, giving the superfluid enterprise the ability to exit non-performing business lines and enter new markets more quickly.

Janet Balis, EY Global Media & Entertainment Consulting Services Leader, points out: “At the end of the day, we have a set of finite assets that sit at the heart of a company — our people, our time, our dollars and our technology. If we deploy these scarce resources effectively, we can create the right products, services and customer experiences to drive new business models and maximize value creation.”

Key questions:

1. How have you changed your organizational structure to facilitate greater collaboration and faster decision-making?
2. How are your critical assets positioned to solve business problems and create value?
3. How can your operating model prepare you to better face multiple disruptions?

Set in the context of a transformation in 3D, a digital factory approach can help companies meet the challenges of now and next by connecting disparate innovation efforts and quickly integrating them into the business.

As companies imagine the beyond, it is important to create the ability to respond to an uncertain future by becoming a superfluid enterprise that can adapt effortlessly to shifts in their market environment.

Watch this Forbes video from the EY Innovation Realized summit about how business models need to become more dynamic.

Key questions for C-suites and boards:

• How are you integrating now-next-beyond thinking into your strategy? Is your leadership prepared to manage across three horizons simultaneously?
• What has been the return on investment (ROI) on your digital innovation initiatives? How could it have been greater?
• How well suited is your talent model for the opportunities of the next decade?
• To what extent are you layering new technologies over old organizational structures?
• Have you considered how and when your markets will become superfluid?