BPM a year in review 2016

During 2016 we heard a lot about digital transformation, considered as the new Industrial Revolution 4.0, providing the catalyst for new business models, products, services and customer experiences that impact not only businesses but society overall. The societal impact will not reach the end of property or the end of financial flows or money but will increase the power of commons in a more open society.

Technology is playing an increasing role in everything we do, collectively with our customers shaping growth, disrupting industry landscapes and providing the catalyst for change. The ability to connect and manage all assets, products, employees and customers globally, like a network, has not really ever been possible or feasible, as well. Why is this important?  Because we are definitively in the era of the platform. We cannot optimize parts of the platform once we will sub-optimize the whole. We cannot be solely focused on social listening and incorporate it in customer and marketing management, we must listen and empower the commons to participate in the creation of changing business models and promote the efficiency of the ecosystem we belong. Recently, Tesla provided what is leading trough digital transformation. Sparked by a customer complain, that could not use the vehicle charging bays, in 6 days only, Tesla re-invented the service and induced efficiency and increased customer satisfaction as follows. As the Tesla example shows, digital transformation is about move beyond just thinking about our customers and start thinking like them, or if you prefer, put in your customer shoes.

6-days-for-a-new-idea

Business model change – time to market: 6 days

We designed the Supercharger network to enable a seamless, enjoyable road trip experience. […] we understand that it can be frustrating to arrive at a station only to discover fully charged Tesla cars occupying all the spots. To create a better experience […] we’re introducing a fleet-wide idle fee that aims to increase Supercharger availability. […] The Tesla app allows […] alerting them when their charge is nearly complete and again once fully charged. For every additional minute a car remains connected to the Supercharger, it will incur a $0.40 idle fee. If the car is moved within 5 minutes, the fee is waived.
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The era of the platform is contributing slowly to the end of asset ownership. But contrary of many views, similar of Ida Auken, member of the Danish parliament, this is not the beginning of the end of capitalism. The total cost of ownership will decrease, but will not be eliminated, money will continue to flow towards a consumption based economy and will be re-invested by companies to innovate and to create new products.
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Previously businesses models were designed to create a product, introduce in the market and, then customers bought it. That was the end of the era. Chemical companies are helping farmers to increase harvest regardless if the farmer relies on a IoT array of equipment or it communicate crop conditions using a mobile app, Healthcare providers changed their business model to extend life-expectancy by monitoring on real time vital signs, instead of reactive surgeries and post-surgery recovery. Today organizations are building in endless feedback loops – sensors in products, services, customer feedback from a variety of channels.
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Business model transformation requires the development of an open ecosystem that merges technology, people and business process that enable these feedback loops, and define an organization’s competitiveness and ability to change the entire landscape of the industries in which it participates.
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2015 entry and backward years can be found here.

BPM Conference Portugal 2016

This is the transcript of my opening act as Chair of the conference. In this edition, the event attracted on average 200 attendees, a breakthrough and important milestone.

This years edition theme is about Digital Transformation. I am not here to bring definitions about what Digital Transformation is. Definitions are, by definition, pretty useless, incomplete and valueless, hence, let me bring you real world examples what digital transformation is all about.

Let’s start by the banking industry

Some banks, there are some good examples just on the other side of the border, are leveraging on the power of Fintechs to expand the value chain. Fintechs are tech startups that are bridging the gaps, for example in trading operations and loan provisioning.

Today some banks are offering real end to end transactions, starting from the manufacturer that wants to collect the money as soon as possible, the transport companies and the manufacturer’s customer that wants to chase and track,
in order to prevent disruption in the supply chain. Today it is possible to share all the documents involved in transaction, that will determine if payment can be processed, broadcast merchandise tracking and predict delivery.

In loans the market is experiencing the loom of new business models like hybrid lending. Imagine your company needs equity and the bank does not to be exposed to risk. The bank can provide you, let’s say, 60% of the required equity and the company trough a network of venture capitalists, or equity firms can get the remaining 40%.

There is also Blockchain. Blockchain is changing the way we execute transactions in a way we do not need banks anymore. You can just wire money to other person. No one needs to have a bank account. Just Imagine the possibilities on how easy it is to process payments.

Let’s shift industry sector, like Oil and Gas or Utilities.

For reasons that I do not understand (I assume it is related with lack of industry knowledge) we constantly read articles in reference magazines about the power of digital business in retail leveraged on big data. Well, let me tell you are being deceived. The real power of big data is in manufacturing, utilities and oil and gas. Let me put you into perspective. People say Portugal have a population of 11 million. In Lagos, in Nigeria, live 25 million people, it fits twice the size of Portugal and some change. Now imagine in countries that produce oil, the thousands and thousands of kilometers of pipelines with thousands and thousands of pumps and other equipment and on each pump you can
control in real time the temperature, the pressure, the velocity, whatever. Now imagine you can predict based on operating conditions when the pump it is going to fail and you can prevent expensive repair cost (just think that most of this equipment is made to order and when it fails, it fails in the middle of nowhere) and the cost of non productive time.

This is what digital business is all about. This drives us to insurgency spot and asset  protection. Oil & Gas companies are very keen on militia do not blow up their pipelines.

Cyber-security

This leads to the development and implementation a new IT capability, context-awareness, by the realization of a Context Awareness System, a sophisticated surveillance technology solution that aggregates and analyses public safety data in real time, providing security investigators and analysts with a comprehensive view of potential threats and criminal activity.

To put you on perspective, I need to borrow this quote from Frances Stonor Saunders at a London Review of Books talk.

On the evening of 3rd of October of 2013 a boat carrying more than 500 Eritreans and Somalis founded out the tiny island of Lampedusa, in the darkness, locals mistook the desperate cries for help from the sounds of seagulls, the boat sunk within minutes, survivors were in the water for five hours, some of them close the bodies of the dead
companions at float. Many of 368 people who drowned never made off the capsizing boat and were drowned to the sea floor still on board. Among of the 108 people trapped inside the bow was an Eritrean woman thought to have 20 years old were, as she given birth as she drowned, her waters have been broken in the water, rescue drivers found the dead infant still attached by the umbilical cord

We are facing a dilemma on how cyber-security should be used for. On one hand these systems are used to fight and eliminate terror, protecting innocent lives to be taken, to protect company assets from being attacked and looted by contemporary pirates. We cannot make a so selfish decision about abandon and condemning thousands of refugees to death, because the same kind of Context Awareness System cannot be used in preventing people to die. The political discussion about where the refugees should be steered to Europe of send back to their failed state countries, it not an argument about the responsibility of protecting human life only in the case where terror is being perpetrated, except when people are escaping and running away from the same terror source.

Privacy

Once upon a time autonomy and anonymity were part of our self.

It is very interesting to analyze from a societal point of view, is how some people are deeply concerned with personal data access from 3rd parties, when such concern does not exist about how a bank account manager can understand our lifestyle just looking to the bank statement entries. Even so, many people are not particularly bothered by what faceless corporations or even governments can learn about them from our own data exhale. However, there is not a black or white resolution because today there are two kinds of people: the ones that have two selfs and the one that have three selfs. The first self is related with our personality, who we are, our outer self is our attitude that changes according to the behavior with whom we interact and our virtual self is a a wishful thinking what we want to be normally expressed in social networks which most of these faceless companies invest every bit of information we broadcast. Still, the lines start to blur when the virtual self blends with our attitude and we start to expose parts of our real behavior and thoughts. And still, you think you are protected, do you? By those smartphones with bio-metric authentication, like the San Bernardino phone John Macfee (from Mcafee anti virus) told he would break the phone for free and would last long. Well, you known how the story ended, the FBI handed over the device to an Israeli company that broke it.

This poses the challenge which is privacy by design. Is this new digital world how do you balance the trade off between learn from what your customers do and how do you protect their privacy. Do we own your data? Our we will give up our privacy and become transparent?

Machines are taking over me – I

In the past weekend, I watched one of the last screenings of the Steve Jobs movie picture. The picture starts with footage of Arthur C. Clark, at a (probably) 60’s datacenter explaining to the reporter that in a near future, humans will have in their hands a miniaturised computer which they will have access to information. By the effect of the minicomputer intrusion, Arthur also points that future society will become dependent and blended with technology. This kind of assumptions are the ones that mark the character of a futurist, that can predict and envision years ahead what we are becoming to be, not the other way around, as we, part of a jittery, mouth-full instant communication global community, started to assume that futurists are the ones that can predict what it is going to happen in the next 6 months, or next year.

During the last couple of months I been in contact with at least two hands full of financial institutions. In most of them, the business initiatives around social business, ranked on top of their transformation programs, once they realised that letting customers blow to the horn when they are angry, damages the reputation of institution, as well as, social media should be used to serve the customer. With this in mind, banks wish to have an upgrade of the brand new 360 degree view of the customer. Hence, in the CRM system, apart of the account statements, the financial products the customer subscribed, it will integrate his social media feed, with social listening and sentiment analysis features. There is nothing new on this, the novelty is the customer profile built around the what we know about him, taking into consideration the spending partners, the investments done, the risk profile, combined how he expresses in social media, builds who the customer is. Or not.

Technological advances have open the door in the emergence of services that perform financial advisory services. Despite there are some regulation barriers to comply, the financial personal assistance is here to stay. The financial assistant, leveraged among others by machine learning, high performance computing and natural language processing are able determine the best investment needs, your tolerance to risk and what are your goals to be achieved. However there is some room for improvement on adjusting to investment portfolio or your debt stack taking into consideration portfolio diversification or futures in economy growth or income fluctuations. One of the biggest barriers to break is the fact that customers operate with multiple banks and such kind of intelligent advisory services stumble in the lack of open interoperability. Last, there is an emotional factor, which is, the human lifecycle phase that dictates our inherent needs and wants. Someone that is heading retirement have very different needs from the ones that are starting their professional life. And some humans do not want to retire at all, despite there are in a certain age.

Luciano Fiordi, in his book called the fourth revolution, quickly points one of the foundational philosophical well-know distinction between who we are – let us call this our personal identities – and who we think we are – call this our self-conception. The two selves-our personal identities and our self-conceptions – flourish only if they support each other in a mutually healthy relationship. Things get more complicated because our self-conceptions, in turn, are sufficiently flexible to be shaped by whom we are told to be, and how we wish to be perceived. Hence, the dream that bankers have about understanding who are you and how they can serve you better, it is still far for reality. This should not only be a reflection point in the banking industry, as well as across the mass market verticals. For those industry sectors like retail that are in the forefront of understanding customer behaviour it could be interesting for banks to carry a join design experience on who the customer really is. There is still a very long road ahead how to better serve bank’s customers.

BPM a year in review 2015

When I look back to the year that it is coming to an end, this was the year which privacy played an important role when designing processes, interactions or customer experiences.

Many can tend to think that this was the year of the things – Internet of Things (IoT) – but I could not disagree more. IoT it is still on its infancy. There is an volume illusion due to the fact that the things are enabled by smart watches, fitness bands or smart phones, in order words, driven by the consumer and retail industry. The real value from IoT is going to grow from industries like, defense, oil and gas, utilities and manufacturing. These industries rely on assets full of sensors hat are spread across kilometers and kilometers around the world,  that were not yet connected or are connected in closed systems. Today, Oil and Gas companies are unveiling new possibilities on real time asset control and emergency response [1] that to become a reality it is necessary in some cases, to replace a myriad of outdated sensors and assure communication reliability. Other forthcoming enabling waves are related with the German government vision on Industry 4.0. In this approach, data is gathered from suppliers, customers and the manufacturing company and linked up in real time, where every part, every belt, every machine, every truck, every product is inherently connected. Hence, we are still at the beginning of reaching the full potential. Total connectivity by default takes time and money to implement.

In the beginning of this year, I wrote about my concerns of enforcing one of the key principles on privacy by design. In the social world we live in, does not requires explicit, informed user consent for any transaction using personal data. Well, it does, but works on the contrary, we are allowing by default that all personal data can be used by the companies we interact with to identify, track, correlate our activity, even the ones the user does not wanting, knowing or expecting it. In the referred post, I pointed the intention of the UK Government to:

Enforce a policy that blocks citizens access to encrypted software applications, in order the government can listen, read and extract what it considers to be relevant information to avoid security risks.

This proposition grew very quickly to an updated bill that will allow existing bulk-collection powers of the security and intelligence services. Such kind of new regulations made Apple to come to public assuming a position against such kind of overstepping by the watchdog.

We believe it would be wrong to weaken security for hundreds of millions of law-abiding customers so that it will also be weaker for the very few who pose a threat […] In this rapidly evolving cyber-threat environment, companies should remain free to implement strong encryption to protect customers.

On the other hand the European Parliament wants to enforce new regulation related with protection of individuals with regard to the processing of personal data and on the free movement of such data – which Google is so adverse to it. It can be read in the European Parliament document.

 The way in which consent is to be given by data subjects remains “unambiguous” for all processing of personal data, with the clarification that this requires a “clear affirmative action”, and that consent has to be “explicit” for sensitive data.

In this crossroads, I am not stating that we need to become dissidents or guerrilla fighters, but privacy lines are blurred and it is not a matter of having time to understand how to use technology wisely, when it enters and breaks our inner circle in a way we do not control it anymore a guiding principle that is eroding fast.

2014 entry and backward years can be found here.

[1] Disclaimer: At the time of this writing I am a Microsoft Employee and I was involved in the team that created this solution.

Creating the digital bank of the future

The three pillars of digital banking

Banking like logistics, manufacturing and retail companies are on the forefront of business model and operational transformation. This is related with the fact that these vertical industries are very coupled. Manufacturing companies produce goods that are shipped to retailers and consumed by customers. During all these handoffs, money flows on every touch point, the more difficult we make money transactions, the more ineffective the supply chain becomes and that comes with a price. Retailers, logistics and manufacturing companies are in constant optimization mode, bringing the rights products, the right quantity, in the right moment at a minimal transport cost. All these principles, are driven by managing lows, physical, information and financial. Manufacturing companies are working together with logistics companies in order to decrease the time it takes to plan to deliver, optimize deliveries, predict unpredictable events on real time, like strikes or methodological alerts and traffic conditions, detect fraud by the use of Internet of Things operational design and integrate supply chain operations like transport documents and invoices. Banks that assure financial transactions need to adapt as well, like manufacturing and logistics companies reinvented themselves driving the continued need for simplification, automation and innovation.

 

Empowering banks to be part of this integrated supply chain

Transformation means driving change in these three pillars:

Digital experience first by design
Make things easier and simple for the customer. It is not anymore about creating mobile apps to check balance or make transfers it is leveraging big data to recommend investment opportunities when there is a surplus in the account or to prevent default, when there are signs that the customer will not pay the loan because there are some overspending patterns that arise from all channel transaction history.
Digital workplace first by design
With the looming of self-organizing teams and mobile first customers, work and collaborate as a team from anywhere and on any device, to support banking operations and enterprise transformation projects.

Digital business model first by design
Make things different and generate new areas of primary income source, like pear to peer mobile lending. Accelerate competitive advantage by the Internet of Things, for example providing information to consumers where there is the nearest on-line ATM, implementing predictive maintenance on ATM and automated equipment which customers interact with.

Digital experience first by design
The rise, evolution, collision and merge of cloud computing, social media, mobile, analytics and things, as well as, communication technologies becoming ubiquitous, the fact that penetration of smartphones is growing even the emerging countries, as also as, the fact that users want to have the same interaction experience with companies, the same way they are used to in their personal life, changed the way operations are designed and performed.
The fact that humans have today access to more information that the companies, as also have to tools to make decisions and execute actions shifted the power of operation control to the society. In this new environment, customers are more technologically demanding than ever before. This also extended to workers and partners that for the reasons exposed above want to replicate their personal interaction experience in their working environment.
Consider the following scenario before the convergence of cloud, social, mobile, analytics and things. When a company wanted to get a contract award, the customer had only access to information that was provided by the companies that where competing for the request on quotation. This limited their choices and bargaining power. Today, customers are using full force ahead digital technologies to take power from institutions.

Customers can easily discover pricing, reviews, features, offer components, service level agreements and make a decision anytime anywhere in a way that when companies discover that the customer made choice to a competitor, it is too late to steal the deal. The customer already wired the money to a new financial institution.
The customer experience may be the most impactful area of innovation available to businesses today. With the rapid rise of personal digital technology, customers have become savvier and more demanding about how they want to interact through technology.
Image this scenario when you in the role of a customer are looking into your account balance and time and time again you notice that you have a surplus in your currents account and you don’t know how to do it. By default, the attitude of your banker is it will call you when your account is on negative, you have outstanding payments you cannot honor.

Sometimes the banker does not have a positive and proactive attitude to take care of your effort on create that money surplus that you can leverage on top of it even if it is for a short investment time period. Now image that instead of looking to your account profile page without an idea of what to do, you could get automatic recommendations about how to apply your money or get personal recommendations on investment options from your banker after he received a filed alert that cash is growing ahead of short-term needs or a previous investment is just about to reach maturity. This is just the beginning of virtual finance assistants.

 

What I learned from multiple conversations with banking institutions
The focus is on new digital business models. Re-imagining banking and create new value with highly-automated processes that beyond meeting the security, privacy and transparency expectations of clients, regulators and shareholders have embedded automated intelligence or collective intelligence – like for example risk community based assessment. Banks are starting to look to humans from the human lifecycle perspective, from our spending or investment habits our risk profile, combining these new perspectives in completely different business models.

Digital transformation can contribute to Social Irresponsibility

This is year we can sense and watch the transition to the massification of digital business and big computing analytics. From a system thinking perspective there are mindful discussions how to properly design the solutions that are changing how enterprises, governments, are operating, how social interaction technology are creating flat organisations, as also as, how humans are becoming lazy and distracted by the increasing confidence transfer to information systems.
Luciano Floridi, a Manuel Castells contemporary, calls this new age the infosphere, the combination of the internet and computer technology that is revolutionising our lives and work, and points out that in the same way, cloud, mobile and social put the power in the hands of the consumer, rather than in the companies we engage in, to become entrepreneurs and support a must needed self-economy, also it suggests that the revolution is as much about issues of morality, privacy, identity and meaning as it is about technology and what the new ecosystem can do, both for us and against us.

I used UBER for the first time 3 weeks ago, I was really interested to figure it out how the brokerage system works and the only flaw I found it is the lack of granular accuracy of the GPS that must be improved, particularly, when you are located in designated pick-up locations at airports, plazas, and multiple intersections (when used again the system, I notice this is definitely an improvement area). From a consumer point of view, it is cheaper than use a regular taxy service, with brand new, clean cars and polite drivers. Value proposition accomplished.

When you decompose internally the business model from the drivers point of view, it surfaces a different reality. In some regions, where drivers don’t have access to credit, they end up or driving someone’s else vehicle – like the taxy companies – that suppress 60% of the fare, Uber takes another 20%, meaning that in the end, the driver keeps only 20% of the remaining value. The driver must also feeds the fuel, hence what it takes as a result of his work is close to a meaningless figure. This is close to induced modern slavery isn’t it? Of course that driver knows it all, but he continues to believe in the dream of making trough, rather than stay in a unemployed condition, or working for a classic taxy company.

In the end, some new digital transformation ventures, can be very promising and tear down outdated business models that consumers are not willing to pay for it anymore, but when you look it deeper, it is just a market power transfer to the new entrants against the incumbents. The so called self-economy can aggravate the social inequality and responsibility of a business. Everybody is contributing to it.

BPM meets virtual reality

During the nineties, I was a fan of a TV series called Wild Palms. It had a sci-fi plot that among many other things, brought the rise of a new media concept, holographic television, leveraged on sitcoms that would bring true reality to our living rooms. A decade later, the movie picture Minority Report, which main character played by Tom Cruise, suffer from the disgust of a son loss, projected over and over in his messy apartment, holograms of small video clips when his son was playing with him when he was a little boy.

On the personal side, holographic input can be seen to combat human anxiety about the sadness of lack of physical touch when people are alone, something that is being amplified as the expansion of globalisation and communications technology that displace us from face to face interaction. On the business side, it opens new opportunities for innovation, particularly in an era where we are suffering from the Everything as Everything disorder.

Everything as Everything disorder can be characterised to try engineer in a single system the full multitude of agents and their behaviour that constitutes complex adaptive systems, full of communication flow, natural selection, adaptation and evolution that are part of origins of our existence. This disorder is blooming to a point that some that say the next enterprise architecture frameworks are going to be tailored by Internet of Things.  During a period of time, where options were scarce, frameworks like TOGAF could provide guidance to design enterprise architecture, but with the possibilities that are unfolding, the classic exercises of building the architecture blocks will prove to be impractical, because they cannot cope with the variety of constantly changing information systems requirements. Enterprise Architecture will step forward to a strategic level, helping companies to shape transformation initiatives, while on the operational side, self-organisation will emerge as a way of continuously deliver business change. This only possible if you as a manager inspire all the capacities of your employees. Creating goals that employees believe in and are passionate about it. Running organizations where everyone is a manager a leader and a servant.

Microsoft broke the boundaries when it introduced Hololens, bringing virtual reality as a new way to work and interact with information in a holographic platform. Google took the first steps a couple of years ago when brought Glass to the market and will probably pursue next advances as I understood the Glass project was a new way to perfect a product in a controlled closed market environment with their selected by invitation only customers.

An holographic platform abstracts what the humans always struggle against it: the rigidity of a computer interface and user experience that was designed based on the constraints of the technology used to support work. How many of you fight against non-sense clicks, user space we could not change or a sequence of steps that contradicts the way we want to work because the IT system did not allow it? A holographic platform, breaks all the rules how people access information, collaborate, design their own working environment that fits their needs. It becomes a fully personal working experience. It is possible to create the Process of Me, no more links and tights to process definitions to dependencies of application architecture and interfaces, It becomes a truly natural working experience where workers collate, manipulate, share embed information, augment knowledge where every single objected is linked and related to construct the workers storyboard, automatically.

Break the rules, create your blue ocean and seize of the innovation opportunity

Ross Brown took a huge step ahead when he introduced 3D design and simulation. If there is a drawback when a team is trying to improve operations is the inability to learn to see the results of changes that are being introduced in regards to space dimension. Design thinking techniques brought and advance on the possibilities to see and imagine operations on top of the cold simulation tools, but there is a difference between imagining a discrete set of role-play cards and watch and feel the reality.
We are towards the blend of personal and business interaction. In the near future, there will not be any more distinction between work flows and personal flows, because humans want to have the liberty of defining the way they want work independently of the IT platform system or methodology. It is curious how memory can play some tricks on us, as I stumbled in a short post written in 2011, called Nothing will be the same, where I pointed out:

The user does not need to know how it works. He is sure that will work because cause effect linkage in systems is build-in.

Ontologies providing meaning to the data manipulated thus no one needs anymore to learn the company domain and environment meaning and from it is connected stakeholders because is automatically translated into other business environment.

People will be over connected naturally without the need to request for connection.