We know change drives innovation, and innovation in turn drives change. Over the past few decades we have seen every industry evolve through this virtuous cycle, trying to keep up with it by taking advantage of the key innovations on offer (industry x.0). We are now clearly in the decade of “Digital”. Earlier this month if you had listened to the Indian Finance Minister’s budget speech and wondered if there ever was another budget speech where the word “Digital” was uttered so many times, you are surely not alone. Being connected, both in our personal lives and in the professional context within the business and to its ecosystem, has become an essential to thrive and ride the waves of change.

As I meet and advise senior business and technology leaders across industries on how to operate in a digital context, I could not help contemplating on the sources of innovation and the rate of change in the business-technology context. Taking an architectural view of the business and technology, here is my take on where we will continue to see innovation and change.  I can imagine businesses repurposing more and more of their budgets and efforts on these areas, and so will the technology ecosystem of cloud providers, IT consultants, software, hardware, solution, and service providers.

• The Business layer and Data layer will offer the greatest possibilities and hence see greater focus by businesses seeking their unique differentiation; to be able to continuously innovate and compete in an increasingly crowded marketplace that will keep moving at faster pace.
• The Application layer and Technical layer will receive the next level of attention, with the emphasis being on achieving a solid foundation on which competitive differentiators can then stand.
• While you can argue foundations come first and then the nice stuff on top, businesses old and new have little time to do this sequentially. So all this will need to happen in parallel, adding complexity-driven change to be managed as well.
• The Business and Data layers will increasingly be characterized by reimagined business processes consciously implemented in a customer-centric and stakeholder-centric way in the form of products. What a business considers their strongest capability will become their product and the rest of the capabilities brought in by a collaborative ecosystem. Differentiated value will come from how best the business is able to harness the network effect, with organizational boundaries increasingly becoming thinner with its ecosystem. Organisational value from the past, the present, and the future will come together to create new value in real-time. Business capability in its raw form will be able to take advantage of a plethora of new technologies and devices to interact with the business’ constituents.
• The Application and Technical layers will focus on nimbler handling of all the newer and continuously changing integration needs, and serve as a conduit of the value that the business offers in increasingly efficient ways.
• Continuous organizational learning driven by data will permeate across all the four layers in an increasingly automated context, providing the much needed stability and automatic course correction in a fast-paced world.

While some of the best-in-class organizations are already on such a transformation journey, most businesses are just getting started.

What do you think? Would love to hear your points of view.

See also this week’s Challenge here, for a short case story of a mid-size firm’s aspiration to become more efficient.

Ramki Sethuraman