Yann Gautier EMEA President of Appnovation.
Most major companies and brands recognize that their long-term survival hinges on how effectively they commit to digital transformation.
Faced with widespread disruption to consumer behavior and expectations, failure to integrate tech-driven capabilities has become an open invitation for more agile rivals and innovative startups to consign slow-moving organizations to the scrap heap.
Yet companies often need help to move the digital transformation needle from idea to implementation. High costs, cultural resistance, uncertain results and operational complexity are all potential barriers to change. Digital transformation is, therefore, often diluted, delayed or sporadically deployed.
Digital Factories
These challenges explain why I’ve seen digital factories suddenly become such a hot topic in boardrooms. While the concept itself is familiar, the model seems ideally suited to the rapidly-evolving business environment where companies now operate. This is especially true for sectors like fast-moving consumer goods (FMCG), where the pace of change post-Covid has become relentless.
Put simply, a digital factory is a kind of tech-powered hothouse and organizational model where digital experts from inside and outside the organization can probe the core assumptions that drive the overarching business.
The Ability To Test Ideas
Instead of being subjected to the same constraints as employees on the legacy side of the business, workers on the digital factory floor get to test original ideas and play with new tech. Through a series of agile sprints, the digital factory builds products or services that can be tested as a minimum viable product (MVP).
The beauty of the digital factory is that it forges the necessary transformation building blocks without becoming embroiled in an endless series of conflicts with the legacy business.
Continuous Delivery
Digital factories have proved especially effective in enabling continuous delivery—a key determinant in driving successful digital-era businesses. Continuous delivery improves quality, reduces technical debt and enhances speed to market and knowledge retention across the organization. Put all of the above together, and digital factories help companies to pivot, adapt and be more agile.
Developing Solutions
There is no real limit to the tasks a digital factory can undertake: A proof of concept for a new app or web feature, a new customer journey or a full website or app revamp are all within the factory’s capabilities. By adopting an agile mindset, factories can embark on anything from a two-week to a 12-month project while committing to releasing outputs at a regular tempo. The ultimate goal is to devise solutions that people can integrate at scale into the legacy business.
Five Lessons From The Virtual Production Line
The theory is easy to grasp, but how does it work in practice? Below are five key considerations for firms wanting to embrace a digital factory setup.
1. Deploy diverse skill sets.
Companies need to select a broad team of experts and actively embrace those that bring unorthodox skills from outside the organization. Typically, digital factories are built around a core team that has a clear grasp of the challenges facing the organization.
Feeding into this core team should be a mix of subject matter experts who bring specialist skills in experience, tech, delivery and data. These satellite teams help define and shape outcomes and deliverables through a collaborative relationship with the core team.
At a certain juncture, you should build a production team around the core team that is responsible for delivering future-facing products or services for the organization.
2. Embrace guided autonomy.
Digital factories need the freedom to fail, to experiment and to iterate without overbearing KPIs. But there also need to be guardrails.
At the outset, companies need to be clear about their objectives in setting up a digital factory. If the team on the frontline has no direction of travel, they are likely to end up in a commercial wilderness. So, it’s important that someone has arm’s length oversight of the process—the board’s representative, for example. A digital factory won’t be successful without buy-in from the most senior stakeholders and leaders, so there needs to be a balance between workforce autonomy and factory ownership.
3. Digital factories should own the product lifecycle.
A digital factory is more than just an innovation hub. While ideation is the first stage in the digital factory’s scope, the next stage concerns governance and delivery—namely, how to turn an idea into a product or service. The third stage sees the factory’s production team transform ideas into value.
If it is working well, this process happens in a rapid and friction-free way. By embracing an iterative culture, organizations can pivot quickly.
4. Digital factories must always be on.
Once a company is committed to a digital factory, it’s important to keep a core operation running at all times. But that doesn’t mean it needs to always be the same size or composition.
A digital factory’s superpower is that it can expand or contract based on demand. Some people might work there every day, while others attend on a more sporadic basis. Different cadences and alternative perspectives can benefit what is fundamentally a flexible development tool.
5. Digital factories need to be bespoke.
Digital factories inevitably vary company by company. Every board must set up its factory according to its own specificities that encompass its organization, culture, scale, specialism or digital maturity.
In the case of multinationals, they may choose to run parallel digital factory frameworks market by market with some kind of connective tissue running between them. The one non-negotiable is bringing in alternative perspectives from the outside.
Final Thoughts
Some CEOs will know in their gut that they need a digital factory to help with transformation, but others might ask how they will know if it is necessary.
I think large organizations with multiple stakeholders should certainly be looking seriously at the benefits a digital factory can bring.
You want to do anything to avoid that critical delay—the months or years it can take to turn an idea into a product or service—where agile competitors (or ankle biters) can act, stealing market share away from you.
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