Stats and stats (... at least I'm honest)

Good morning and welcome to another issue of the newsletter. As I write this, it’s been announced that the EU has approved by the new Copyright in the Digital Single Market Directive, the FT has a summary here. To be honest, by linking that article in my newsletter, I’m unclear if I would be breaking the law once it becomes legislation in my territory. I guess we’ll find out in a couple of years or so.

Next week I want to get into some of the practical things you can do to start your own Digital Transformation process. But for now, on to this week’s Issue.

Up until now I’ve been focused on the historical aspect of Digital Transformation and how we got here from the early beginnings in digital technology, but this issue is a look at the current state of digital from a Caribbean context with a short overview from a global perspective.(1)

Digital in the World

When you look at the state of digital usage in the world in 2019, a few interesting statistics stick out when observing in relation to the population of the world, which in January 2019, was 7.676 billion people however, 8.842 billion mobile phone subscriptions exist, think about that for a minute. More than the world’s population has a mobile subscription — 115% to be precise. 

Social Media penetration is running at just under half the planet, with 3.484 billion people on social media, 45% of the world’s population. Around 3.2 billion use mobile for social media, that’s 42%, which is in line with the amount of Internet traffic attributed to mobiles at around the same percentage.

If we take a look at growth, we see the population of the world steadily growing by just over 1% since 2014, but Internet users have grown by 9.1% in the last year. Social media use, despite the scandals, is growing at 9% too, with mobile accounting for 10% of that growth. Clearly mobile is where most of the world’s growth is, even if the amount of unique mobile users is only growing at 2% since 2018 (that’s more than 100 million new users per year!).

Globally, daily time spent on the Internet is 6h42m in January 2019 on average, last year that was 6h49m so a slight decrease was observed. However mobile made up 3h14m of that time, an increase of 4.3% from 2018. Mobile is taking over Internet usage. I’m guessing that by 2020 mobile Internet use will make up over half of the total Internet usage in the world. It’s currently at 48%. That’s corroborated by the statistics that show a clear decline in Internet usage on computers and tablets from 4h32m in 2014 to 3h28m in 2019, nearly a quarter of a drop.

Digital Infrastructure and usage in the Caribbean

The Caribbean is a widespread and diverse region, so I have concentrated on the 16 islands and territories of the Eastern Caribbean and averaged out the statistics, highlighting exceptions when and where interesting.

Starting with some of the basic elements, Internet penetration across the Caribbean is at 51% as a percentage of total population. Mobile subscriptions are running at 74% of the population but some places show extraordinarily high or low rates of mobile connections. In detail, most places have a number of mobile subscriptions that is higher than the population, but two French territories skew the figures with very low rates; Saint Barthélemy at 35% and Saint Martin at 31%. Removing these gives us an average of 151% across the region.

Literacy rates are reasonable across the region, with an average of 96% literacy of the total population, which is critical for digital services, where reading and comprehension are primordial. Although, if we look at the wider Caribbean literacy falls to an average of 84%, which is low, but an opportunity for audio and video content perhaps?

The average percentage of mobile Internet connections in terms of population is 65%, which is translates to 36% of all Internet traffic. The rest is shared between fixed broadband connections and tablet devices using mobile (tethering) or wifi.

Internet growth is virtually zero, with only a couple of islands showing any growth, Trinidad at 6% for example, and Grenada comes in at the top of the list at 10%, not counting the incredible figure of 368% for Saint Barthélemy! Not sure if this is a late coming to the party or a symptom of another phenomenon. I’m intrigued and will investigate.

The most startling difference in the region is the split between post-paid and pre-paid mobile connections. The French West Indies (excluding Saint Martin and Saint Barthélemy) is heavily oriented towards post-paid, whereas the English West Indies is mostly pre-paid. Martinique and Guadeloupe have 64% and 56% respectively, of all mobile connections post-paid, with Saint Vincent and the Grenadines (91% pre-paid) and Dominica (92% pre-paid) having the highest ratio pre to post-paid. Bizarrely, Saint Martin and Saint Barthélemy both show 100% pre-paid, however I suspect this is a result of how Orange, Digicel and SFR structure their accounts in these islands, skewing Guadeloupe’s figures a little. Those islands, including Marie-Galante have historically been administered as part of Guadeloupe.

Observations and opportunities

So, in conclusion, mobile is where it’s happening! All of your Digital Transformation strategies should take this in to account. Mobile is a different beast, where attention is not intentional like a computer. Often you browse something on mobile because you are in a queue or have a couple of minutes at the doctor’s surgery.

Video is King. In a recent report by wearesocial called “We are Gen Z”, a sample of Generation Z were observed and quizzed on their Internet usage, amongst other things. One striking highlight showed that they tended to use video content not just for passive observation, but for active participation and learning.

“I wanted to buy a bike, but I couldn’t find the one I wanted and that I could afford, so I built it myself watching YouTube.”

The report stated “YouTube and Instagram are key learning tools, with the former acting as a source of knowledge and entertainment combined. This clearly is an opportunity for business in the Caribbean to reach out and connect with users across the region.

According to the main source for this issue, 54% of organisations report that social media is being used outside of the traditional departments of marketing and that this is an opportunity for Marketing to guide and influence the expansion of Digital Transformation in their businesses. Those without Marketing will find this new world more and more difficult to compete in if they don’t have a developed Marketing group in their organisation, particularly when other enterprises have aligned KPIs throughout their businesses to measure and react to specific business objectives like revenue, satisfaction and customer retention being implemented transversally.

Another statistic that may surprise you. The average user today has 8 different social media accounts and messaging services. You must bear this in mind when you are developing your digital marketing strategy to ensure you have consistency across those platforms by linking data and its usage. This is extremely difficult to doubt it will offer an advantage over your competition.

Next week, as promised I’ll highlight some of the practical things you can do to start your own Digital Transformation.

Reading List

 Marrying tourism and digital agriculture to benefit female farmers in Saint Lucia - CARICOM

These are the kinds of stories I hope to hear about more often. Something that is tangible and on a Caribbean scale. I’ll let you read the article, but suffice to say that this is real Digital Transformation on a practical level and something that hopefully after the initial trial period can be extended all over Saint Lucia providing a model for other territories to follow. Digital Transformation is inherently social, so feedback and knowledge sharing throughout the region will certainly benefit all.

Uber Freight is expanding into Europe - TechCrunch

This is a good example of digitalising supply and demand to drive efficiency. It’s using a similar model to the classic Uber rider-Driver dynamic, using trucks (and drivers) to pool their availability to hook up with logistics shippers. It’s certainly one to watch to see if the model can be applied in a Caribbean context where we’re all the more dependent upon imports and getting those from port to shops.

New mobile broadband pricing data reveals stalling progress on affordability - web foundation.org

There has been talk of a digital divide since pretty much the time the Internet got popular. Looking at the above analysis of digital in the Caribbean, where Internet penetration is at 51% when in Europe and America it is XX% and XX% respectively, there is real truth the saying. This report looks at the associated costs of Internet access and we can see that the poorest regions are in fact the most expensive. Looking at the FWI compared to the English speaking Caribbean, let’s take Barbados as an example, in Martinique a mobile subscription from Orange of 100GB per month including 20GB/year roaming in the US and Canada will cost you 69€ ($156 BBD) per month, in Barbados with Flow 200$ BBD per month will get you only 20GB of data per month and roaming only in the Caribbean, no US/Canada. Its not much better in Jamaica, with 69€ ($9800 JMD) netting you a little over 24GB per month.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter, it really helps.

Thank you for your support, have a great weekend.

1 All statistics were taken from Hootsuite and wearesocial’s digital reports (Datareportal)

Why it’s so fundamental to Digital Transformation

Good morning, from the eastern Caribbean, its sunny, warm and very dry here currently. We’ve had a couple of local brush fires with one getting perilously close to housing. Well, it’s Issue 7 already, and others are in the works, thank you for being loyal readers.

This week’s issue dabbles in a little theory — bear with me — it’s not as heavy as previous issues, I hope the illustrations will help you relate. Enjoy and let me have your feedback, it really helps.

Lastly, today is World Water Day, clearly water will become more and more of an issue in the world as we simultaneously increase our population and continue heating the planet. Digital Transformation can help optimise water usage and I heard of an experiment in Martinique by a local water authority, I'm gathering research to write about it in the near future.

On to the update.

Many of you will have seen or read about Facebook’s recent pivot to a more privacy-based social network entitled “Privacy-Focused Vision for Social Networking”. It is absolutely absurd to think this is a change to Facebook’s core product, which is, targeted advertising. This is a completely separate product strategy, with focus on messaging, and in some respects only continues the original purpose of WhatsApp before it was acquired by Facebook. Although, this being Facebook, many questions are left to understand what business model they will employ to gouge money from us… I’m sceptical, to say the least.

However, credit where credit is due, this is an extremely smart decision by Facebook for two reasons, and it serves as a lesson for smaller businesses on the road to Digital Transformation. Let’s take a look at each one.

Taxing and Crediting Strategies

The first reason is something that Ben Thompson coined as “Strategy Credit”. Facebook has, within a 3000 word post from its (I’ll let you insert your own adjective here) CEO Mark Zuckerberg, using its own product, gained attention of not only the tech media, but also the general media in a strategy designed to sway public opinion from the ghoul that Facebook ‘used to be’, in to the angel with a product that “cares” about your privacy.

The definition of a Strategy Credit is, “an uncomplicated decision that makes a company look good relative to other companies who face much more significant trade-offs”, as defined by Ben Thompson. Another great example is that of Apple’s strategy credit when talking about privacy. Apple’s efforts in AI and ML start and are processed on device with no personally identifiable data sent to Apple. That’s the credit that Apple can publicise as it actually costs them nothing because the system was originally designed that way from the outset.

The inverse is a Strategy Tax, whereby the company designing and implementing a strategy unwittingly reduces or otherwise cripples itself in perception and credibility. An example, and a real classic is what is known as the Osborne Effect. Adam Osborne, the CEO of Osborne Computer Corporation, announced that new generations, the Osborne Executive and the Osborne Vixen, were to be better, faster, cheaper than the current model, the Osborne 1. He was actually very honest and very accurate, but unknowingly to him, this “taxed” his strategy, because the bottom fell out of his current sales book because everyone suddenly wanted the ‘new’ thing and not the old one, which put his company in financial ruin in a very short space of time. So much so in fact, that the company went bust before the next generation machine was ever released to market, in turn killing completely the Osborne Computer Corporation and all its products. Incidentally, the term strategy tax was first coined inside Microsoft in the early 1980s.

The Osborne 1, courtesy of oldcomputers.net

Facebook’s Strategy Credit is its ability to say that it is secure and privacy-focused now, and that Apple is not. Facebook cited the fact that they would under no circumstances operate data centres in countries where the ruling regimes have sketchy privacy records, whilst not naming Apple directly, everyone knew they meant China and that they got a free dig at Apple. Apple has openly stated that it operates its iCloud services in China using the data centres and infrastructure of a China-based organisation (Guizhou-Cloud Big Data) which has strong links to the Chinese Communist Party and the government of Guizhou.

One last point, I touched upon in the early part of this discussion, Facebook and more specifically Mark Zuckerberg, use their own tools to publicise their strategy, choosing not to go through a PR firm or announce to the press. They have that much power and they know it, which is one of the reasons why the Strategy Credit move was a smart move. Remember this initiative is in addition to their core products.

Innovator’s Dilemma

The second reason makes me believe that Facebook is well aware of what is termed the Innovator’s Dilemma; whereby successful companies and business models can do everything right and yet lose market share or even completely fail due to new and unexpected competitors entering and eventually taking over market share.

This is a common threat when you are dealing with digital products and services. By definition, digital goods are easier to distribute and copy but more importantly, if your clients see a new product or service and that their sunk costs are sufficiently low as to avoid the sunk cost fallacy — I wrote about it briefly in Issue 4 : The Digital Transformation Model in detail:

The sunk cost fallacy explains why, when faced with difficulties to complete a given project, we have a tendency to stick to the original plans in proportion to the amount of time and money invested. That is to say, having already spent a ton of money on a project that is clearly destined to fail (where the evidence is there to prove it), the scope is often revised in order to finish a project, even if it isn’t the project.

The following graphic I made attempts to articulate this dilemma: 

The orange line traces the lifecycle of product A that has some success in the market, but as we can see product B, represented by the blue line, has started to gain some traction, but not currently enough to be on the radar of the company selling product A. As the revenue hits the peak and starts to decline we see that product B has gained more sales, so much in fact, that it has become a real threat to product A — this usually happens because it resolves the jobs to be done of product A, either faster, better or cheaper than product A — eventually overtaking product A to render product A obsolete and thereby cutting off revenue for the company selling product A.

Obviously, the best position to be in is that of the original innovator and the disruptive innovator in order to profit from the new product. That’s easier said than done. However, let’s look at an example of such a move.

In 2001, Apple Computer, Inc., launched a surprise product that could hold “1000 songs in your pocket”, the original iPod. Many years and generations later the iPod reached all-time sales numbers with nearly 54 million in 2008, as shown in the chart below. This was by far the most successful electronics product of its era.

Source: MySchizoBuddy - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=7047449

Apple realised that these sales numbers couldn’t continue forever just by iterating on the core product, so it set about producing a whole new product category, which eventually was released as the iPhone. The iPhone solved the innovator’s dilemma and its sales dwarfed those of the iPod, completely cannibalising the original product. In fact, during the keynote presentation — still one of the most remarkable presentations of a product — Steve Jobs even said it had amongst its three tent-pole features, the first being a wide-screen iPod with touch controls. The chart below illustrates this well. If I were to chart Average Selling Price (ASP), the difference would be even more flagrant, as the ASP of the iPhone is way higher than that of the iPod.

Source: Statista

Incidentally, it’s common to mistake iteration for innovation, it’s not! I should write about that in the future… Note to self.

Facebook has been almost as ruthless as Google when it comes to killing off projects that are going nowhere, Notify, Parse, Deals, Gifts, Offers, Inbox, to name a few. They have additionally been as ruthless in their acquisition of potential threats to their business, illegally so, some would say. Their acquisition of Instagram was to head off the very real threat of Snapchat, and the purchase of WhatsApp served a similar purpose.

If you don’t innovate, someone else will

So why is it so important in Digital Transformation? The sub-heading explains pretty much all you need to know. If you don’t innovate, someone else will, and they’ll pull the rug from under your feet when you least expect it.

If you are currently going through, or are about to start your Digital Transformation journey these are some of the concepts you need to understand. For further reading, I recommend the books by Clayton Christensen, the Innovator’s Dilemma and the Innovator’s Solution.

Reading List

What Customers Want from Your Products - Harvard Business School

A short, but concise article about the concept of jobs to be done. Although written in 2006, it’s still a good primer to understand the concept.

By understanding the job and improving the product's social, functional, and emotional dimensions so that it did the job better, the company's milkshakes would gain share against the real competition—not just competing chains' milk shakes but bananas, boredom, and bagels. This would grow the category, which brings us to an important point: Job-defined markets are generally much larger than product category-defined markets. Marketers who are stuck in the mental trap that equates market size with product categories don't understand whom they are competing against from the customer's point of view.

 30 years on, what’s next #ForTheWeb? - web foundation.org

An open letter from the World Wide Web’s creator, Sir Tim Berners-Lee. Despite the current climate, he remains positive, whilst simultaneously acknowledging the dangers. I think the web has so far been an overall positive for society and I’m hoping it will stay that way.

French-founded digital health startup Doctolib raises €150 million at a €1 billion valuation - tech.eu

Not all unicorns are born in the USA. A good example of Digital Transformation in practice is what Doctolib is. It solves not only the problem of discovery, which is essential for internet businesses, but it additionally reduces friction for patients needing to get to a doctor, with even a possibility to get an appointment that day. Doctor’s Surgeries also benefit from reducing their administrative burden, allowing them to concentrate on their value-add and not bookings and cancellations. To be truly successful, the platform needs to expand, and this funding should help them do just that. Their business model is simple, a subscription for the professionals and a free to use application for patients, ensuring demand is high enough to enhance supply.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the topic, I only request you ask them to sign up. Thank you.

Thanks for being a supporter, have a great weekend.

A lesson in explaining why you have to consider the whole chain and not just the part you control

Good morning. I hope you’re enjoying my newsletter, I would love to get your feedback as I think it would be great to continue the conversation on some points and additionally help me better align content to your desires. I’m planning to open a Slack channel in the near future — acting as a discussion forum. It will be invite-only for the moment, but if you’d like to be on this list drop me an email at thefutureisdigital@substack.com and I’ll get back to you.

On to this weeks issue, which is about the difficulties in Digital Transformation when we are only able to control or influence parts of the value chain.

Reducing waste

Paper, as we all know, is bad for the environment. Much research shows this which was a seminal idea for the application I analyse in this week’s newsletter.

For many places around the world and particularly in the Caribbean, many shops and supermarkets design, print and deliver prospectus magazines designed to inform us of special offers and incite purchases. It’s a marketing tool that has worked for decades and a practice that doesn’t show too many signs of abating in the near future. It produces much paper waste and requires physical delivery that itself has an impact on the environment via CO2 emissions.

Enter Iléco, an initiative in the French West Indies. Iléco was designed and produced through a startup incubator with the aim to reduce wastage of paper by digitalising those catalogues and making them available on mobile. An honourable and worthy cause. Only it is flawed, and it won’t make any significant difference anytime soon unless there is a fundamental change in the entire distribution process. Additionally, its format is less than optimal and prevents it from being the first block in the building of an aggregator.

Let’s take a look at the application and its components and why it is precisely these that will condemn it to failure in the long run.

The value proposition of Iléco

The application is essentially an index of catalogues, presented on your smartphone or tablet computer, whereby you choose the shop you’re interested in, to peruse the catalogue presented in a digital copy of its paper form.

We go from this — that’s 8 catalogues:

To this:

In the first image, I weighed the pile of prospectuses and measured it as 300 grams. I get a delivery like this around two times per week. That's 600 grams per week, 2.6Kg per month and startlingly, over 30 Kg per year! There are easily 100000 habitations on Martinique, so we’re talking about something like 3 million Kg per year thrown into recycling or straight to trash, 7.5 million Kg alone in the French West Indies. I dread to calculate that figure for the entire Caribbean and frankly, it’s a disgrace in 2019! 

Iléco itself boasts of a 14 times reduction in CO2 usage for an A4 sized double-paged catalogue, which is impressive and definitely where things should be headed. However, I still feel as though this is more rearranging the deck chairs on the Titanic rather than addressing the fundamental issues, but we’ll get to that shortly.

One of the most frustrating aspects is a jerky interface when scrolling which is a problem I’d noticed from the very early versions released to the public. Diving further into the application, it offers other functionalities, like a shopping list (things I'd like to buy) and, bizarrely, a list of things I’ve bought. Presumably, things go from one list to the other if you manually say so. I haven’t tried it. Adding things to the buy list is also a manual affair with, as far as I can tell, no way to get from a specific item in a catalogue to the list. Although not necessarily the fault of the application, it is undoubtedly a fundamental design decision that prevents this feature from being possible.

As I mentioned earlier, the catalogue is presented as a digital facsimile of the paper catalogue received in your postbox, essentially a pdf. To open a catalogue you click on the image and a web view is opened linking you directly to the representation of the catalogue on joomag.com. As a pdf equivalent, the assets are not digital and therefore unavailable for use in another context, for example, to click on an item to add it to the shopping list or open an order page. I suppose appropriately positioned hot links could be added to what is essentially an image to allow a callback URL link to populate the buy list. It would work but would be fiddly and unwieldy for the user, who would need to constantly move context from image to list and back again. For a handful of items it is possible, even if undesirable, but for a weekly shopping list, it is untenable and unacceptable. Additionally, given that most catalogues are around A4 sized, with text and images designed for that format, squeezing this down to popular smartphone dimensions leaves usability to be desired.

Critiquing the choice to use a third party to actually stock and present the magazines, Joomag is a digital publishing platform and stores the static images on their servers, they are based in California. There is no mention of where data is stored. Presumably personally identifiable data of those who created a profile is stored somewhere too. I’m not suggesting anything untoward, just that a lack of clarity is notable. From a business perspective using another's platform introduces a risk to the core product, in that a change in policy, functionality or cost by the third party places pressure on the developer, and that is utterly out of his control. Joomag is not free either, so someone is paying for it. It’s not clear to me who is paying, although I suspect that burden is being placed on the suppliers rather than Iléco, i.e., you buy in to put your catalogue on Iléco.

Other functionalities exist, like geofencing, that allow notifications when in proximity to shops with promotions currently running, however a stark warning about battery life — even when the application is not running — is given if you wish to activate this feature. For no apparent reason, other than to provide the maker personal data about its users (yes that's what Facebook gives you back for using their login API), a login option with Facebook functionality exists. Considering Facebook's cavalier attitude to your personally identifiable data, I’d like to see this removed. The terms and conditions don’t explicitly state what Facebook will do with this information, preferring to punt you off to the Facebook privacy page, which is about as incomprehensible as can be.

An Aggregator in the making?

In essence, Iléco is trying to become an aggregator, whereby suppliers are being commoditised to provide the digital product (prospectuses and catalogues) and users being enticed to the platform because it's better or easier. Iléco is attempting to solve the distribution and discovery problem, that is fundamental to internet aggregators.

I don’t believe it will work because an aggregator needs to provide benefit and clearly demonstrated value add for both sides of the value chain. I question its long term success in its current business model for several reasons. Let me explain in a series of questions.

Why would suppliers (shops and supermarkets) choose Iléco where they essentially isolate themselves even further from the customers, particularly if they are footing the bill?

Sure, you can argue they already do by providing the catalogues, and in a way that’s true. However, the catalogue arrives directly to the consumer and the only logo and branding you see is that of the supplier, your local supermarket or car distributor. With Iléco you first see Iléco’s logo and branding, having then to pass through to get to the catalogue you’d like to browse. This adds friction to the process, notwithstanding that the startup is slow. Aggregators are all about reducing friction.

I would bet that most brands would be working nail and tooth to develop personalised relationships, direct to the customer, profiting on the infrastructure and marketing capabilities of the brand as a whole, economies of scale, etc. In fact, several high profile shops are still not present in the list. Who in that chain would have more customer data to exploit, the supermarket or Iléco?

Additionally, it appears that Joomag provides a tool to directly upload your pdf for it to be converted into the format ready for publishing. This trivial operation is well within the technical abilities of the suppliers, which begs the question, why couldn't they provide exactly the same thing as Iléco directly?

Why would users go to this application? As I’ve noted earlier, the interface adds friction to the process, making it less desirable than simply browsing the already-delivered-to-your-door catalogue. And that there is the essence of the promise not being fulfilled. Despite promising a reduction in the amount of paper, it does nothing to stop the inflow of magazines to your letterbox every few days. There is no opt-out of paper deliveries, much like most banks have offered for years for their statements.

It doesn't appear as though any of the signed up suppliers have stopped or reduced the amount of catalogues designed, printed and then hand delivered to us. Even a basic incentive to stop receiving the magazines, which, admittedly would require significant investment and have complications like GDPR adding to costs and would need agreements with delivery companies to ensure that the wishes were respected (and deal with complaints when they were not, both for missed deliveries and deliveries in error), would be difficult to implement.

It was first distributed on the App Store and Google Play Store in 2017. At the time I predicted that it would fail to reduce paper waste. It has and still is failing because it doesn’t get to the heart of the problem by solving the “jobs to be done” as defined by Theodore Levitt, who famously said:

People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!

The job to be done is to provide a better, frictionless way to discover offers at shops locally whilst reducing the paper waste generated by the system it is trying to replace. It’s a worthy attempt and despite my sceptical analyses I believe the problem can be solved, but in my view, Iléco requires revisiting its interface and it requires a change in the value chain (incentivising a reduction in production and offering opt-outs for physical delivery to users) to ultimately be successful.

I've only briefly touched on what I think is its business model. I'd like to revisit the application in the future to try to understand just that. I'll put it on the list of things to do.

Reading List

Environmental impact of paper - Wikipedia

Further reading at Wikipedia, on paper production and its impact on the environment, from; air, water and land pollution in the production and de-inking processes required for recycling, to its carbon impact in transporting atoms around the planet.

CXC To Issue E-Certificates Across Region - CARICOM 

This is a good example of Digital Transformation having real impacts, reducing friction for all stakeholders. It’s an example whereby the provider controls the entire value chain and therefore has direct control over its development and usage. Glenroy Cumberbatch, the CEO of CXC, said: “From inception, our primary goal was to empower students to have ownership of their records and be able to share them in a secure way, with whomever they choose.” Other countries and regions would do well to observe how this is implemented and learn from our experience.

ECCB to pilot Blockchain-based Digital Currency - CARICOM 

I have mixed feelings about cryptocurrencies, believing they are more bubble than solid. I feel they are a solution searching for a problem. Their purported security has been shown to be compromised time and again and they are clearly used to help hide nefarious activities. But blockchain, I have an entirely different viewpoint. I think that blockchain provides some very interesting use cases that could revolutionise a number of operations within companies. This pilot will be interesting to watch. Bookmarked for revisiting in a year’s time.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, I wish you an excellent day.

It’s a journey, not a project

I hope you all had a good Carnival in your region. I know that here in Martinique it’s a pretty big affair with 5 days of festivities. On to this issue that gets to the heart of Digital Transformation. But before that I wanted to explain another component that is central in this subject.

Thanks for reading. Have a great weekend.

Follow up: “Someone is wrong on the Internet”

Listening to a podcast recently, one of the presenters mentioned that web apps were essentially down to Google. I immediately flinched and thought it would be best to explain how and where they came from, and in what context they are important to Digital Transformation. That’s what this issue is about. My thanks to Jean-François Nantel at the ESSEC Business School, for his invaluable input. Let’s get down to business.

Paradigm shifts

Much like the industrial revolutions we have been experiencing since, well, practically the birth of man, technological advances can be thought of in terms of paradigm shifts. Each shift brings about changes to the models of business and the usage of technology in business.

If we concentrate on more recent times, where technological advances have produced software, we note that software was often an afterthought to hardware. In fact the original Apple computers, the Apple I and Apple II, were first and foremost hardware solutions to burning questions in Steve Wozniak’s mind at the time. He designed ever more powerful and elegant solutions using the same or more limited hardware. Steve brilliantly made Apple computers colour, when others were still struggling to control monochrome computers at the same quality. But this revolution was contained in home computer land and didn’t arrive until later in business-land.

So what did business-land look like? I covered a large part of this in Issue 2:

Hardware

Hardware, as the name suggests, makes up the bottom most layer of the stack. Hardware is essentially the items that physically construct the IS in its entirety. Servers, routers, switches, personal computers, printers, terminals, mobile devices are all hardware regardless of their ultimate function.

Arguably, today in our cloud world, the server and its associated support hardware (routers etc.) are the most important elements of our information systems. Various categories of serveurs are in use, with the most popular being applications servers, directory servers, communications servers, communications servers, database servers, file servers, media distribution servers and more generically, web and proxy servers.

The democratisation of the server happened in the 1990’s. Something that happened on the back of the popularity of the personal computer, companies like IBM, DEC and Compaq (now HP) disrupted the mainframe and mini business by producing what were essentially souped-up personal computers that neatly fit into to businesses of all types and sizes, providing simple server-based functions for running the company.

This gave life to the Client/Server Computing model, where we see a distinction between the roles of each part of the system. Clients present results and help formulate demands, but the bulk of the work is done at the server-level. The acceleration of Intels processors only made this model more and more compelling, with even the smallest of organisations able to have a calculation power orders of magnitude higher than anything they had imagined not even a decade ago.

That article essentially covers paradigm shifts 1 and 2; from Mainframe and dumb terminal (paradigm 1) and Client/Server computing (paradigm 2). Client/Server was made possible because of the rise of personal computers which in turn allowed the development of thousands of specialised business applications (the Client part of the model) on the local device to use the back-end data bases on the Server.

Paradigm 3 and beyond is all about Cloud. The Cloud era ushered in the generalisation of Web Apps that enabled millions of business applications on both desktop and mobile. These were, and still are, being produced and adopted at ever increasing speeds. Largely because they require lower upfront costs and offer businesses the capacity to be up-to-date with minimum fuss. Updating a legacy Cloud/Server ERP application was akin to a 50-man expedition to the North Pole, expensive, slow, disruptive with almost no guarantees that it would be successful.

Web Apps

Although Web Apps are absolutely of the same ilk of applications in the Client/Server paradigm they are fundamentally different in implementation. At its most basic a Web App is a Client in the Client/Server model, running some code locally and searching for data on the big bad back-end server.

Where they are different is that the client evolved into being a disposable piece of software itself. No installation is required, no updating, no conflict management with other locally installed applications.

Web Apps became a reality with the advent of dynamic web pages, around 1995. Previously web pages were delivered as static pages from the server in basic HTML, Hyper-Text Markup Language, which was the way to format a text file, transport it across the Internet using http (see Issue 2) and display it on a client, often called a browser. Netscape changed all of that with the introduction of client-side scripting using a newly minted programmable language (Java) invented by Sun Corporation in 1999, called JavaScript. 

This allowed the dynamic inclusion of information and the validation of input by the user by running various scripts locally in lieu of re-sending a whole new page each time a change was registered.

Then Macromedia got involved and released Flash in 1996, to be subsequently bought by Abode in 2005. Flash was a revolution for the web in that it allowed not only for dynamic text but additional real media to be integrated to a web page. We’ve all seen those old splash screens saying “Loading…”, in the late 90’s and early 2000’s they were all Flash-based. But it wasn’t until 1999 that the term Web App was officially coined under the new Java Servlet specification. 

It is only after this point that Google enters the world, being incorporated in 1998. Google developed what has become the definitive web app, search, winning on technical merit and a business model aligned to extract profit from that value chain, Advertising. Everything else Google does is either a “moonshot” or a distraction.

Why Digital Transformation is different

The title of this issue correctly explains why Digital Transformation is different, it’s a journey and not a project or destination, if you will.

Traditional IT and digitalisation is predicated on the understanding of a simple or single need, researching the solution to that need, then developing a project to procure the right hardware, software and talent to buy, install, integrate and maintain. There is a clear beginning, a clear goal and a clear end, nobody in the project is unaware of these elements. In fact in most situations these goals a clearly defined in a specifications document and signed off by all stakeholders.

Digital Transformation more closely resembles a penalty shootout whereby not only the goalposts move, but the participating teams are constantly changing and the rules of the shootout are modified in relation to the who scored or not, when and how. That’s extremely frightening for a business as the risks of failing are high. However, as I’ve previously mentioned opportunity costs are to be taken into account too. What is the risk of doing nothing?

Where Digital Transformation goes much further than traditional IT, is in the implication and necessity to change over the whole organisation and the entire value chain, from suppliers, through production and operations all the way to sales and service. Simply keeping up with technological advances — newer faster computers, mobile devices, new applications be them traditional or SaaS and new management structures — is not enough.

As you’ve no doubt spotted the biggest difficulty for an organisation is the resistance to change, which is why I personally believe that Digital Transformation is essentially one big change management exercise. Bringing people with change management skills in to the organisation — even if on a temporary basis — is key to succeeding in Digital Transformation.

One thing is sure, without C-level support in your organisation, it’s going to be extremely difficult to successfully transform your company. Many C-level executives already have too much on their plate and are woefully under educated or aware of the implications of Digital Transformation. Fortunately some recognise this and appoint specialists in those positions. Often called CDO, Chief Digital Officers, they have the responsibility for (although not limited to), driving digital adoption, culture change, change management and value chain development for their business. Again, bringing in help from outside the organisation is beneficial when their remit is specifically targeting to Digital Transformation.

Reading List

Digital in 2019: Global Internet Use Accelerates - We Are Social UK

Regularly We Are Social and Hootsuite publish a comprehensive study on the state of digital in the World. 2019 is no exception, with fascinating statistiques such as;

..more than one million people coming online for the first time each day since January 2018

There are now 5.112 billion unique mobile users in the world, which represents a penetration of 67% of the entire world. Interesting, is that you can drill-down to individual countries, yes, including the Caribbean to get a snapshot of the importance of the internet and most importantly, mobile. For example, internet penetration in Western Europe is at 94%, the Caribbean lags substantially behind at 51% with only Sub-Saharan Africa behind, excluding South Africa. I highly recommend you take a look at your country to understand where people are on the internet and what it is they do.

Saint Lucia Tourism Authority Launches its New Interactive Website - OECS

The Saint Lucia Tourism Authority has launched a new interactive website with better ergonomics and better search capabilities. Users wishing to discover the island and what it has to offer can find out what’s going on — from events, tours, accommodations and eateries. It is more integrated than the previous website, allowing users to go directly through to booking excursions, etc. The site is trying to aggregate suppliers (hotels, restaurants, entertainment providers) with customers (tourists and locals). In order for it to work it needs to become ‘the’ place to go to learn about Saint Lucia, and that is a tall order when you consider the competition from the likes of Expedia, Airbnb and the already internet-enabled tour operators.

Calls for more investment in statistics systems, focus on literacy - CARICOM

From a Digital Transformation point of view, this call for more investment in teaching around the importance of statistics and the development of better statistics around the Caribbean is very encouraging. Data is the basis of good decision making, but that can only happen if there is competence to better interpret that data. Basic statistics knowledge can go a long way towards achieving that goal.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, Have an excellent day.

Understanding its components

Good morning, I hope you had an excellent week.

I was listening to a podcast and heard something that immediately made me think of this xkcd cartoon :

Source : https://www.xkcd.com/386/

I’ll be writing about that soon, it is all about web apps, but today’s issue is a follow up to Issue 3. If you haven’t read it yet go ahead and have a look, as this issue heavily leans on the information in that issue.

Thank you for reading. Let’s get on to this issue.

The Digital Transformation Model

As previously mentioned, Venkatraman and his colleagues developed a model for Digital Transformation in the shipping and logistics industry. Their model discussed 5 levels of transformation whereby the increase in the range of potential benefits to a business corresponded to the degree of business transformation implemented within the organisation.

To recap, the five levels are named as: Localized Exploitation, Internal Exploitation, Business Process Redesign, Business Network Redesign and Business Scope Redefinition.

Builtin to the model is an additional notion that at a basic level of exploitation, transformation is only evolutionary and limited benefits are accrued. It is only when an enterprise commences its Business Process Redesign that the level of business transformation and hence, its potential benefits become ‘revolutionary’.

Looking at each level in detail gives us an idea of not only our current situation in our own businesses but also helps us understand and develop a plan to move to the next level. This is strategic thinking. This is hard to do and I don’t wish to minimise its complexity in any way. Let’s take a look at the five levels.

Source: An Analysis of Digital Transformation in the History and Future of Modern Ports, Heilig, Schwarze, VoS, 2017

Localized Exploitation

The first level, localized exploitation, describes the decision most companies have started or about to start, that is, develop and deploy IT systems in a manner that can only be described as isolated. Examples are applications to track sales, internal messaging systems like Microsoft Exchange, applications that produce quotes and help print invoices. These applications are usually extremely focalised on the task at hand and are useful uniquely to the person or groups to whom it is their responsibility. The Sales Director would no doubt be uninterested in the specialised HR application in a direct manner, preferring to defer to the HR Manager to obtain information. They are first and foremost requested by and in large part funded by the heads of the various divins in the organisations, HR Manager, Sales Manager, Stock Manager etc. 

As a result, their benefits are limited in scope — to the department concerned — and not shared throughout the organisation. This type of deployment is considered as standard, with information systems being deployed simply, inexpensively with little to no thought of the impact outside the scope of the projet. Change is minimal within the organisation and in fact often, the type of systems are chosen precisely because they impact little to no change to the status quo. Returns are quick but severely limited. Change management is often ignored in its totality, and considered unnecessary as the system perfectly fits the current way.

It is here that Opportunity Cost should be considered. I’ll discuss this notion in a different issue.

Internal Exploitation

The second level, Internal Exploitation, is defined by the process in which organisation attempt to integrate the different silos of information systems and datasets with the aim to produce a ‘whole’. Integration is difficult, slow and often results in failures when starting out from a base that is not adapted to integration. Just how do you get the Accounts, Stock, HR, Sales systems integrated?

There are two types of integration, technical and business process interdependence. According to the model most enterprises spend more time on integrating on a technical level than on the business processes. This is understandable because of the sunk cost fallacy.

The sunk cost fallacy explains why, when faced with difficulties to complete a given project, we have a tendency to stick to the original plans in proportion to the amount of time and money invested. That is to say, that having already spent a ton of money on a project that is clearly destined to fail (where the evidence is there to prove it), the scope is often revised in order to finish a project, even if it isn’t the project.

It’s at this level we see the emergence of Enterprise Resource Planning (ERP) and Data Warehouse (DW) systems. These systems align business processes with informations systems at a much deeper level than at level 1, Localized Exploitation. 

Business Process Redesign

Business Process Redesign, as its name suggests, defines how businesses restructure their organisation to maximally exploit the capabilities of their information systems to achieve better outcomes. This is driven by an ongoing sentiment in the organisation that, despite the integration efforts that have been implemented at the level 2, the benefits of that integration are not fully realised and clearly something more is required to achieve more efficiency and productivity and usually, by extension, profit margins.

It is a realisation that simply superimposing information systems on existing and often dated business processes, does not generate the desired benefits easily. Emerging technologies create the tension for an organisation still using old principles. Examples are seen today in support systems. Organisations that have completed level 3 are often better and quicker at resolving queries using social networks like Twitter than through traditional channels as email and the telephone. Some are even explicit and tell you so when you are on hold for an agent, stating that you’ll get faster support if you tweet.

Business Network Redesign

Things start to get difficult (not impossible) and an order of magnitude more complex at the fourth level, Business Network Redesign.

Up until now, the organisation has been preoccupied with its own systems and processes in which it has complete control over its strategy and development. Level 4 requires us to think about the interactions outside the organisation. What has been up to this point, a local exercise, now turns in to a macro exercise whereby all stakeholders are included in the study. Business processes at this level, need to be fully integrated internally, but also externally with the necessary partners we do business with.

There is confusion at this step that simply standardising the communications protocols or the dataset definitions for document transfer is enough, false. An interconnection is required at the very heart of the interactions with the partners systems so that they appear to be one system within the scope of the project.

We see examples emerging from the traditional actors like Microsoft. Office 365 licenses can be purchased from the reseller directly using the resellers web ordering system, which is in turn directly linked to the distributor’s order processing system with ultimate coupling straight to Microsoft’s license delivery system. This is automatic and invisible to the end user who simple selects the software, pays and receives the right activation keys, all in a matter of seconds.

Business Scope Redefinition

The final level is often the most disruptive. Sure, it has negative connotations but disruption theory is important to understand in digital transformation. Simply because disruption will happen, it is a given. It will however, either be at your behest or someone will disrupt your business for you, and there you are in the danger zone. But I’m getting ahead of myself.

The Oxford Dictionary of English defines redefinition as :

Redefinition : noun, the action or process of defining something again or differently, example: the redefinition of the role of financial advisers

At this level, business processes are often eliminated, substantially modified or even outsourced to allow the creation and/or expansion of new business processes entirely based upon the specific capabilities of new and emerging technologies — Digital Transformation in short.

New Business Models, new Strategies are the hot topic when we discuss Business Scope Redefinition. What does a new business model mean? Simply put, new products and services are imagined and innovated within the organisation, that take advantage of the fact that it may now be possible to exploit and that the supporting business models need to be developed to underpin those.

When music was delivered on atoms, the subscription business model was not practically possible. When the technology to distribute music as bits emerged, the music industry — albeit kicking and screaming — developed new business models to better support that transformation. The music industry is now a healthy business and on target to equal or beat previous sales and income records of decades ago, thanks to the likes of Spotify and Apple Music.

Netflix did it too, but for different reasons. Firstly, music is actually a different entertainment proposition that operated in a different value chain to music. Music is much more ephemeral and driven by trends than films. Films are timeless and become the stuff of cult adoration more often than music. Second, during the time that Netflix was being built music had a massive piracy problem that forced the industry to cut off the oxygen to pirates (a futile exercise that didn’t work) only ceding eventually to Apple’s breakup of the bundle. The music industry was hellbent on selling albums — this was a package in economics terms — and not singles. People wanted singles. Films were never packaged that way, apart from special collector sets.

Reading List

Ex-Walmart exec says theft helped kill Walmart's cashierless checkout technology

A captivating look at how digital technologies and Digital Transformation can be the producer of an unexpected drawback. There’s even a law for that. Making it easier for people to just walk out of the store with products, er, did just that. The system worked perfectly but had no checks and balances to deal with the inherent ingenuity of humans motivated enough to not pay for goods. Theft is a fact of life in Supermarkets, ask any manager of a store, but this went much further. Read the article, it’s worth it.

Forget it, Data Science is not about IA, Machine Learning or data technologies

Big Data, AI, ML, Blockchain, I’ve got all the buzzwords. They are a meaningless as they are meaningful if incorrectly used or understood. The article is a good example of real world, practice advice for any organisation starting out in Digital Transformation and being overwhelmed. There is a real definition of Data Science, so don’t be too harsh, and Data Science is fast becoming a structured valuable discipline with Universities offering top notch qualifications in the subject.

Reduct - The power of video with the ease of text.

When we’re looking at Digital Transformation in organisations, we’re extremely cognisant of the opportunities and the information systems software we can deploy to make business better, but this article highlights one of the most fascinating aspect of ‘real’ Digital Transformation for me. This application takes an uploaded video and is then transcribed in to English and the output is of that transcription is now inexorably linked to the images. In other terms, as you play the video the text of the spoken word in the video is highlighted, and the magic element is that form this point you can edit video by simply cutting and pasting text or moving text around. That aspect I mentioned ? It’s taking a known way of doing something and turning it on its head to come up with a completely different way of solving the same puzzle, ensuring that there is benefit to the end user.

The Future is Digital Newsletter is intended for a single recipient, but I encourage you to forward it to people you feel may be interested in the subject matter.

Thanks for being a supporter, Have an excellent weekend.