The following article is in the Digital Enterprise, written by Dr. Xiaopeng An.
The starting point for answering the digital endgame question is that businesses need to redefine who I am. To become a competitive industry leader, you should become a customer operator, that is, be able to gain real-time insights, meet customer needs in real time, and pursue the ultimate customer experience. In order to become a customer operator, it must become a data operator, that is, based on a real-time ** + end-to-end + accurate data system, to realize the real-time decision-making system from the record system in the information age to the intelligent era, reconstruct the organizational form and build a unique competitive advantage based on data-driven.
The author of this article is Dr. An Xiaopeng, Vice President of Alibaba Cloud Intelligence Group and Executive Committee Member of China Informatization 100 Association.
01 Digital transformation is essentially an incremental revolution.
All enterprises are discussing what the endgame of digital transformation is, and there are many perspectives to describe the endgame. Before we dwell on this, let's look back at the beginnings of digital transformation.
Every industry has its own grandfather, who is the grandfather of the CIO?
The CIO's grandfather is called Max Hopper, who joined American Airlines in 1972 and is responsible for the development and application of the SABRE system for airline booking, and is one of the 25 pioneers in the IT industry who changed the world in 1992 by Computer World, alongside Bill Gates, Jobs, and Metcalfe.
Computerworld commented that "the most successful CIO who connects the market competitive advantage of enterprises with the construction of information systems", and the concept path of Max Hopper has had a profound impact not only on American airlines, but also on the digital transformation of the entire civil aviation and even the entire enterprise, which is also the goal of digitalization today.
Nicholas Carr, former editor-in-chief of Harvard Business Review, mentioned in "IT No Longer Matters" that in the 70s of the last century, American Airlines (AA) adopted a booking system - SABRE system, which was the second most complex real-time complex system in the United States at that time.
At that time, the top 5 airlines in the United States, except for People Express, all other companies used this system. Later, People Express went bankrupt and was bought by another company, and its CEO said in his memoirs: "Our biggest mistake at that time was to think that the IT system was irrelevant, but it was actually a matter of life and death for the company." Later, Nicholas Carr asked a question that is worth pondering even if it is a paradox: when all airlines use the SABRE booking system, what is the use of this SABRE booking system to enhance the core competitiveness of enterprises? He didn't think it worked.
Nicholas Carr asks a good question, we need to constantly ask ourselves, in a highly uncertain and dynamic competition, what is the use of digital technology to enhance the core competitiveness of enterprises? The takeaway from this story is:
Digital transformation is always an incremental revolution, and the competitive advantage based on digitalization is essentially a time difference dividend of technology.
The key to the problem is not whether you have ERP, whether you have a customer management system, whether you have a data platform, when friends have adopted the same system and built the same capabilities, these systems are meaningless to discuss the competition and survival of enterprises, the key is whether you have these technologies better and faster than your competitors, and then build a competitive advantage The time lag, digital transformation is a never-ending process of capacity improvement.
02 The logical starting point of digital transformation Resolve the uncertainty of complex systems.
Digitalization has reconstructed the decision-making system of consumers. The new consumer group is the online natives, who do not have an online life, and the digital space is the living space, and they are the first people to enter the metaverse.
How do all people make decisions today? Whether it's going abroad, buying a car, having a meal, or buying a piece of clothing, the decision-making behavior link is online discovery, online experience, community discussion, order purchase, and experience sharing. Today's brands are faced with personalized, real-time, scenario-based, content-based, and interactive consumption propositions, and consumers have more rights to express, speak, choose, and participate, which we define as the rise of consumer sovereignty. "Traffic Creation" says that what we lack is not users, but interaction with users.
The complexity of operations, the complexity of the chain and the complexity of production, the entire supply system is becoming more and more complex. Why are businesses driving digitalization?
People understand, analyze, and judge the internal motivation of enterprise digital transformation from different perspectives, and if we look at it from a higher-dimensional perspective, it is how enterprises face the uncertainty caused by the drastic change in demand, or a logical starting point of digital transformation is to resolve the uncertainty of a complex system.
This logical starting point also deeply affects the investment logic of digital projects. The digital transformation of enterprises often encounters a dilemma: on the one hand, the failure rate is very high, on the other hand, you must do it, if you have a project of 200 million yuan, the chairman asks whether to do it or not, what is the underlying logic of your decision? Between a definite gain and a "gamble", people tend to choose a definite gain. But between a definite loss and a "gamble", people tend to choose to "gamble", which is what Nobel laureate economist Daniel Kahneman calls the "reflection effect".
When you're not doing digital transformation, the risk of loss is certain. The main losses include:
One is that the market is out of focus, you don't know who the customer is, what the customer likes, and how the customer experience is?
The second is marketing aphasia, you don't know who marketing is talking to, where to speak, what to say, how to speak, and how effective it is?
Third, the system fails, and the speed of production, finance, inventory, and new product development cannot keep up with the needs of business development;
Fourth, management imbalance, front and back imbalance, left and right imbalance, upper and lower imbalance, virtual and real imbalance;
Fifth, growth has stalled, and the growth rate of enterprises has slowed down. Of course, there is no guarantee that all digital projects will be successful, and digital transformation is an innovative project.
Today we all talk about artificial intelligence, so what is the essence of intelligence? The essence of intelligence is the subject's ability to respond to changes in the external environment. With the classic "Cynefin Framework", all companies today need to look at their environment, so what is this environment?
One is the clear and obvious environment. We may be faced with a scenario that is very certain, clear, and has a standard answer, if I am a worker in a production line, I want to screw a screw on the production line, and when it comes to determining such a functional positioning, I can just screw it according to this standard manual. The way we solve the problem is if ......then。
The second is the complicated environment. Many times the world becomes more complex, give this system an input, the output is relatively deterministic, this system is understandable, controllable, there are ready-made toolboxes and solutions, we can find experts to provide solutions. The way we solve the problem is if ......then……else。
The third is a complex environment. This complex environment is unpredictable and unpredictable, not the existing world to find the answer, it needs to be constantly explored, and then perceived, analyzed, and decided. You need to have the ability to shoot first, then standardize, and continue to iterate to find your goal. The way people behave is probe......if……then。
Fourth, chaotic. In the most complex and uncertain situation, you simply don't have time to fully perceive and make decisions, and when a mudslide happens, your response is to run first, then observe, and then make decisions. The way people behave is doing ......if……then。
We are faced with uncertainty in a complex world, just like Tesla's partner Jb."Our greatest strength is that we don't know what we really don't know," Straubel said. "The essential difference from traditional industrial people is that, first, the basic assumptions of thinking about the problem have changed: there is no standard answer to the world you are facing, and you need to explore it; Second, uncertainty is something you can't change, and the only option is to embrace it.
03 Digitalization: Transformation and nativeness go hand in hand.
When we talk about the word "digital" today, it is followed by two key words: one is "transformation" and the other is "native". The so-called transformation is that enterprises continue to upgrade their product forms, sales channels, business models, operating mechanisms, organizational culture and even development strategies, starting from A to B, a place where the digital soil is more fertile.
However, many people find that when the enterprise transformation starts from point A to place B, a group of small enterprises with "digital genes" are emerging in B, a place where the digital soil is relatively fertile, and we define these enterprises as "digital native enterprises".
If the digital transformation of traditional enterprises is like a competition to learn to swim, with a group of coaches teaching you how to breathe, how to kick your legs, and how to turn around in the water, then digital native enterprises are born with a digital "gills", knowing how to use digital methods to make business decisions, product innovation, channel construction, and build their own online and offline integrated digital-driven business system.
Before we talk about "digital native", let's take a look at what is "native"? Native means "indigenous, unaltered by external forces, born as such; thinking, culture, customs, ecosystems, etc., brought by the native place". Native is native, it is the ability to implant genes, and it is self-taught learning.
Digitally Native Enterprise = Customer Operator + Data Operator + Evolutionary Organization + Growing in the Cloud. Digital native is an enterprise that operates, manages, innovates, and develops based on the new digital infrastructure represented by "cloud native", builds a new business structure and organizational structure, optimizes and reconstructs business models and decision-making mechanisms, and has the characteristics of rapid growth, sensitive response, and rapid iteration, and has become the vane of the times leading the digital intelligence of enterprises.
Digitally native companies come from all walks of life, from those in the technology sector to those emerging in traditional industries. In the traditional automotive, retail, finance and other fields, a number of digital native enterprises are also being born.
Tesla is the world's largest automobile company by market capitalization, and the repurchase and conversion of Hema is 10 times that of traditional e-commerce. Hema builds end-to-end + real-time + scalable requirements, independently develops ERP + WMS + CRM integration system, and builds full-link digital capabilities, which is to redefine "fresh" with data + algorithms.
A digitally native enterprise in the technology space. For example, Snowflake, founded in 2012, went public on September 17, 2020 with a market capitalization of $70 billion, and at its peak of $100 billion.
After the AI model swept the world, some people will ask "why is there no ChatGPT in China?".If you want to really find the answer, the right posture to ask is "Why doesn't China have OpenAI?" Why doesn't China have snowflake?Why doesn't China have a palantir? "There are many reasons for this, but in my opinion, the most important reason is the new technology infrastructure built on the cloud, and they are all new organizations, new enterprises that grow on the cloud and on the new technology infrastructure.
These companies may seem unrelated, but they share a common success code, which can be summarized in three basic elements: customer operator + data operator + long in the cloud, in fact, these three core elements also define what a digital native enterprise is.
04 Digital Native Enterprise Customer Operator + Data Operator.
The essence of digitalization is two revolutions, on the one hand, it is a tool revolution that replaces physical and mental power, including CNC machine tools, robots, machine trolleys, CAD CE data centers and other products; On the other hand, data is a revolution in decision-making.
Decision-making can be divided into two categories: programmatic decision-making, which is made by managers; Non-programmatic decision-making, making decisions with the feeling and intuition of entrepreneurs. Digitalization can't solve the problem of entrepreneurs' intuition, but it can solve managers' decisions.
An enterprise is an organization that allocates resources and needs to build its own competitive advantage. The essence of competitive advantage is the efficiency of resource allocation, and how to allocate resources lies in scientific and accurate decision-making. The basis of decision-making comes from data, and when facing customer needs in the physical world, it needs to build itself into a customer operator, and at the same time, based on this operator to become a data operator.
All roads lead to Rome, but there are people who were born in Rome. The endgame of digitalization is to become a digital native enterprise: customer operator + data operator.
Digitally native enterprises are customer operators. This is an era of great changes in consumer demand. Personalization, real-time, scenario-based, content-based, and interactive are its main characteristics. In the face of drastic changes in demand, all enterprises must transform into customer operators. At the heart of "Operations" is customer orientation, global perspective, global optimization, and dynamic real-time. The keys to becoming a customer operator are:
Automated decision-making based on data + algorithms, 1. Real-time insight into consumer needs;
2. Be able to meet the needs of consumers in real time;
3. Provide the ultimate customer experience, which is a higher quality in the digital era, provide customers with personalized, real-time, scenario-based service experience, and even provide emotional value.
Digitally native businesses are data operators. By building a real-time data development and utilization system, the optimal allocation of data-driven resources is realized, the transformation from resources to value is completed, and the core competitiveness of the enterprise is finally formed.
How do you become a data operator?
Real-time data**; Data end-to-end; Data science is accurate. The most important point is that based on the above three conditions, complete the "thrilling jump" from resources to value, and build a unique data-driven competitive advantage of the enterprise.
Take an example to understand the new data-driven decision-making system: the production of an airplane, a car or a piece of clothing, the information of this order flows in every link of enterprise management, product design, process design, manufacturing, process control, product testing, product maintenance, etc. This flowing data forms the basis for smart manufacturing.
What is smart manufacturing? The core and essence of intelligent manufacturing is not that you have more robots, CNC machine tools, a** cars and advanced equipment, but in the flow of data in all aspects of the enterprise, whether there can be less and less people to participate, which is the most essential core of intelligent manufacturing. In the past, the production of individual parts required new processes and relied on human development capabilities, but now they are not needed, and the data can be processed, processed and executed.
Digitalization solves the problem of data presence and absence, networking solves the problem of data flow, and intelligence is the automatic flow of data. What is automatic? The meaning of automatic is that it can be done without human intervention. In the past, the flow of information was based on paper, today it is based on models that automatically flow at every step.
Based on "data + algorithms", the physical world can be described in a state description, cause insight, outcome** and scientific decision-making. "Data + algorithm" scientific research will deliver the correct data (the knowledge carried) to the right people and machines at the right time, and use the flow of information to drive the flow of technology, capital, talent and materials, and optimize the allocation efficiency of resources. In this process, the AI model is the shortest path for data to generate value, and the system plays more and more roles, and the efficiency of resource allocation will be further optimized and improved.
05 Traditional architecture is declining The data of digitally native enterprises grows in the cloud.
On a 100-year scale, we are moving from "electronative" to "digitally native". The term "electricity" refers to a variety of products based on the infrastructure of "electricity". Digital native is born in response to the new digital infrastructure represented by "cloud native". Today, the new digital infrastructure represented by cloud computing is roughly equivalent to the early stage of power development, and the systematization is accelerating in many aspects.
At present, the complexity of business systems is driving the migration of technical architecture, and the traditional IT architecture is becoming more and more difficult to adapt to the current complex business system, and only based on "cloud + middle platform + SaaS" can a new infrastructure be built. At present, cloud computing is in the stage of parallel public cloud and private cloud, but the future must be the stage of public cloud.
From the "traditional IT architecture" in the past, centered on process automation, the technical architecture is not uniform, the system construction is "full of chimneys", and the business response cycle is relatively long, it has evolved to today's new architecture based on the new digital infrastructure and the formation of a new architecture based on cloud-edge-end collaboration, centered on core competence servitization and data, and building new technical architecture and solutions for scenarios, which can quickly realize innovation and cope with uncertainty. The core value of this solution is one - intelligence. Intelligence is the ability of a subject to respond to changes in the external environment, and in an uncertain world, new technical architectures and solutions can enable enterprises to respond to changes in the external environment in a timely manner.
It is for this reason that many companies such as Wumart, Tesla, Midea, and Hema have built their own business systems and reconstructed their own software systems and solutions. For example, in January 2008, Wumart Group's ERP became the first lighthouse project in China's retail field, but in 2020, Wumart resolutely "demolished" this lighthouse and rebuilt a new system - multi-point DMALL OS.
When you want to become a customer operator, when you want to gain real-time insight and meet customer needs in real time, you have to make a painful and difficult choice: whether to rebuild your business system based on the existing software system or me-oriented.
Many times, industry leaders have to focus on me, rebuild a set of systems and solutions, which is a deconstruction and reorganization of the traditional software system, the core is to achieve the "scenario + role" of the solution through the "componentization + platform" of the software, specifically the original industrial software system is continuously decomposed into some microservice component libraries, whether it is our inventory management, order management, our CAD, ERP, MES execution, etc., These traditional software are constantly being disassembled, decomposed, and microserviced, building a microservice pool, and realizing interactive integration based on the platform, and re-assembling scenario-oriented and role-oriented into a new solution for specific problems. This path is a natural choice for industry leaders to continue to maintain their unique competitive advantage.
In this change of system deconstruction and reorganization, the most profound impression is the transformation of FAW. As the deputy general manager of Menxin, who led the transformation of FAW, he firmly embarked on the road of reconstructing the traditional system and self-developing the IT system, and took ERP and PLM as the breakthrough point to start a drastic change, promote the atomic deconstruction of the business unit, reconstruct the business process, change the organizational form, and build an agile system. It was a climb to Mount Everest, but FAW chose the most difficult North Peak.
To be a competitive company, especially a leading vendor, you should be a customer operator, with real-time insight and response to changes in customer needs. In order to become an operator, it should be a data operator, realize the decision-making system from the record system in the information age to the decision-making system in the intelligent era, and respond to the uncertainty of complex systems with a real-time decision-making system. The demand has shifted from improving operational efficiency based on relatively deterministic demand to uncertain demand and supporting high-frequency innovation. From improving internal management efficiency based on closed technology to improving customer operation capabilities based on open technology systems; from the one-time game of the past to today's symbiotic relationship; From giving a solution in the past to continuing to help customers succeed today, this is the trend and direction of digital transformation in the future.
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