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. Mini Module Gear Hobbing
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.
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.
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.
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.
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.
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.
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.
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.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
I'm a senior editor at Forbes, where I cover manufacturing, industrial innovation and consumer products. I also edit the Next Billion-Dollar Startups list. Before rejoining Forbes in 2016, I was a senior writer or staff writer at BusinessWeek, Money and the New York Daily News. My work has also appeared in Barron's, Inc., the New York Times and numerous other publications. I'm based in New York, but my family is from Pittsburgh—and I love stories that get me out into the heartland. Threads @amyfeldman7
Follow me on Twitter @amyfeldman
I'm a senior editor at Forbes, where I cover manufacturing, industrial innovation and consumer products. I also edit the Next Billion-Dollar Startups list. Before rejoining Forbes in 2016, I was a senior writer or staff writer at BusinessWeek, Money and the New York Daily News. My work has also appeared in Barron's, Inc., the New York Times and numerous other publications. I'm based in New York, but my family is from Pittsburgh—and I love stories that get me out into the heartland. Threads @amyfeldman7
Follow me on Twitter @amyfeldman
Robert J. Smith, BBA, MBA, MFA, Ph.D., is a business consultant and founder of Robert J. Smith Productions and Smith Profits. Read 'Smitty' Robert J. Smith's full executive profile here.
Forbes Business Council is an invitation-only, fee-based organization for successful entrepreneurs and business leaders.
Ihor Bauman, Founder & CEO at Workee. Read Ihor Bauman's full executive profile here.
Forbes Business Council is an invitation-only, fee-based organization for successful entrepreneurs and business leaders.
Kunio Hara is the creator of the renowned HO-ME-I-KU Method, an effective employee and executive education program for achieving success. Read Kunio Hara's full executive profile here.
Forbes Business Council is an invitation-only, fee-based organization for successful entrepreneurs and business leaders.
Currently the CEO of Synergy Life Science, Chris has 25 years of experience creating, distributing and supplying quality ingredients. Read Chris Gerlach's full executive profile here.
Forbes Business Council is an invitation-only, fee-based organization for successful entrepreneurs and business leaders.
Oem Measure Instrument Gear CEO, National Retail Solutions (NRS). POS, NRS Digital Media, NRS Pay, NRS Funding, NRS Purple, and NRS Petro: Helping retailers succeed. Read Elie Y. Katz's full executive profile here.