Digital Transformation. The imitation of the real world.

The act of digital imitation is the act of digital transformation.

Our world is made up of a set of complex and dynamic systems. Collectively, these systems form our societies, economies and the external environment.

This series of posts will break down the characteristics and attributes of a complex and dynamic system.

We will methodically show how the characteristics and attributes of these systems and those of digital platforms are highly correlated. We will demonstrate how these real world systems are constituted of job collections, and how these jobs are digitally imitated by building digital platforms through the process termed “Digital Transformation”. 

Systems Definition

Let’s begin by considering some concrete examples of real world complex and dynamic systems:

• The monetary system
  
• The global manufacturing, supply and distribution chains
  
• The energy production, distribution and storage system
  
• The transportation system
  
• The health system
  
• The social sciences – i.e. legal, political, social and economic (each is a system)

Before moving forward, let’s define the word system as it’s used in this series of posts.
When we refer to a system, we are referring to an industry vertical, the collection of organisations that make up that vertical or a single business. They all represent systems of various sizes, the vertical being the largest size system, which is made up of smaller subsystems. A single business is then a small system, where its subsystems are its business units.

This equally applies to government bodies, not for profit, societies, funds, and mutuals.

Constituencies of a system – Job collections

Further to the above, a system is a composition of job collections. Collections of our jobs.

Our jobs break down into a number of business functions that we perform on a routine basis. These functions are executed by our individual and collective knowledge and the processes that we undertake. All processes can be decomposed further into a unique set of tasks.

Digital Transformation. The game of imitation.

We refer to the digital replication of any human performed function (job or general activity) as it’s digital imitation. The act of imitating, our or nature’s processes and activities, is achieved by the utilisation of software and hardware. These are the tools utilised to build the platform or the functional components of a digital platform.

The imitation of our world, is digitally reproduced when we undertake the process of building a digital platform, to replicate a job function, often referred to as automation.

The act of digitally imitating our job functions is the act of digital transformation.

There is a strong correlation between a real world system’s characteristics and attributes, and that of a digital platform.

The first is

• The functional equivalence achieved by the imitation of the job function, that the platform is designed to imitate

Second is in the similarities of

• Form and structure of the real world system (Org. Structure, business model, business services and management), when compared to the form and structure that the digital platform takes (platform architecture, app(s). or product function, its services and control) when imitating the real world system, i.e:
  
  • Platform architecture imitates Org. structure – both dictate, what and how services are structured
    
  • App(s). or product function imitates business model – both dictate the objectives and desired outcome of the business, which are ordinarily achieved by the systems functions
    
  • Platform services imitates business services – both support the internal system functions and/or dictate the interaction with a customer or external party
    
  • Platform control imitates management structure – both dictate system behaviour and directing course of events (interaction with the system) or supervise running services

Recall, we are referring to a system as an analogy of a real world business.

Form and structure also include operations, governance, and hierarchy; of the teams, departments, business units (the job collections or sub-systems), that collectively execute the systems functions, as a set of system services.

A digital platform imitates entirely the same, i.e. the form and structure of a system (business), with mechanisms for:

• Management
  
• Operations
  
• Governance and compliance
  
• Control and communications hierarchy (Org. Structure)
  
• Containers of business functions (teams and their processes) that are packaged into functional collections (business departments and units)

A digital platform, not only imitates job functions, but our entire business and operational models.

Digital imitation has no boundaries

The output of any digital imitation may be digital or physical.

For example, a digital driver’s license imitates a physical driver’s license, in serving the business function for which the license exists, via a user interface, i.e. the license app. or website.

The digital platform, that creates and makes available the license to a user, does far more than just provide a user interface for user engagement.

The platform imitates, all the job functions associated in the manufacturing, distribution and utility (the opposite end of the user interface), support and maintenance of the digital license.

Digital transformation is often and near exclusively, incorrectly, characterised as the digitisation of a business interface that a user engages with, e.g. the app. or website that presents the digital license. This interface is typically, the smallest part of all the job functions that have been imitated by the platform, i.e. don’t include the manufacturing, distribution, procurement, utilisation and maintenance or support (MDPUMS) of the particular business function.

The imitation of the MDPUMS job functions, represent the larger part of what the digital platform achieves (i.e. the imitation of the all the MDPUMS functions that are not seen by the end user of the digital license), when compared to the interface (an app or website), the user interacts with, e.g. when utilising a digital license.

The largest functional and economic benefit of the platform to the business is in the imitation of the larger set of (MDPUMS) job functions that have been imitated.

The end user’s benefit is the reduction of friction in the utilisation of the product or service, and/or the efficacy (effectiveness) of the product and service, i.e. number of functions, or sophistication of functionality (services) provided to the user.

This in turn, will carry forward an economic, utilitarian or emotional benefit to the user.

As another example, the output of an imitation, can also be something physical. For example, a 3D printed car part. In this case, a 3D printing platform, is digitally imitating the human job functions and/or the physical mechanical processes involved in manufacturing the part.

The manufacturing of the car part, in this case with an emerging set of technologies, e.g. Mechatronics, AI and 3D printing, also allows for the imitation of the system’s business functions, that previously would have been done manually or mechanically (by an unintelligent machine or human driven processes).

The digital imitation of any real world system, can produce either, a physical or digital output.

Task encroachment – Imitation. Automation. Transformation

The imitation of any given job function, by a digital platform, does not necessarily imply the complete reproduction of every process and activity that is undertaken by human labour or mechanically (by an unintelligent machine) to complete that job function. The imitation may only be, a part, of any given job function, i.e. a unique task (part) that makes up a process of a job function.

If all parts of any job function, can be well described, and given any positive rate of technological advancement, it can be extrapolated that by incremental capability development of a platform, all parts of any job function can be imitated.

In aggregate and by association, all parts of all job functions can be imitated.

This is constrained only by time, and the rate of technological advancement.

Operational Excellence

The digital imitation of business functions allows for the reduction in procedural steps, and/or the ability to scale and execute with greater efficiency.

This brings about functional optimisation, resulting in the reduction of cost, time, and importantly, the reduction of complexity in operating a business effectively at scale.

Continuously improving the digital imitation of a businesses’ functions, leads to either incremental capability development (number of business products or services), or a greater level of sophistication of existing functions (better business products or services). This allows for greater effectiveness of the business.

When effectiveness is coupled with efficiency, and is applied to every business function, of an organisation, it leads to operational excellence of the entire organisation.

Operational Excellence is the ability to operate an entire organisation as efficiently or effectively as possible. This is achieved only by building and running business platforms that digitally imitate business functions of all operations of the entire business.

Digital imitation. Business process automation. Digital transformation. All are analogies of each other

The building of a digital platform to imitate (replicate and/or augment) human enacted or mechanically executed, processes and activities, is what we refer to as “Digital Transformation”.

Digital Transformation is undertaken to continuously improve the operational capability of the organisation. Continuously in this case, is to aspire, to operate the organisation with excellence. An aspiration, underpinned by continuous effort to achieve excellence, becomes cyclical, if the rate of technological advancement is positive; as technological advancement will always create room for additional improvement.

The greater the rate of technological advancement, the greater the room (headline revenue growth or reduction in bottom line operating cost) to imitate additional functions of business. i.e. improve operations, differentiate services and products, and/or disrupt business functions (innovate), and by association, dislocate entire business models and their verticals.

In the year 2020, we are in the midst of the fourth industrial revolution. A technological revolution, where the rate of technological advancement is arguably higher than it has ever been before in human history.

Innovation. Differentiation. Scale.

Operational efficiencies and increased effectiveness of our businesses result from the development and enhancement of digital business platforms.

Operational efficiency is what allows an organisation to find further capacity to augment new business functionality or reach for greater levels of product and service sophistication.

This is because both complexity and risk are removed from the organisation as a product of operational optimisation. This allows leadership teams the capacity to look forward and over the horizon, at why and what may be possible, put capital at risk and therefore undertake programs of genuine innovation, research and development.

When operational excellence is meticulously pursued, it provides a self reinforcing feedback loop, allowing an organisation to accelerate the utilisation, or more importantly, the development of emerging technologies in the form of a business platform. In turn, creating vastly greater economic, utilitarian and social value.

In this case, the term technologies does not refer only to the esoteric representation of the term. For example, in the development of a new database technology, but rather, because the act of imitation applies equally to all systems (industry verticals and its businesses), it refers to the development of new or advanced business functionality. For example, the utilisation of artificial intelligence, crypto. and blockchain to augment or replace the human trading of financial instruments and management of associated risk with a business platform, that potentially is an order of magnitude more capable than a single or group of humans.

The technology being built is the business platform for trading. i.e. the imitation of the trading functions. The technology built in this case, is the imitation of a trader and is what gives the platform its value. This unique technology (trading) forms a part of many business functions,e.g. the procurement functions (buying and selling) of a general clothing or grocery retailer, and can either be commercialised and sold, or is a competitive advantage and incremental in the continuing pursuit of operating with excellence.

The pursuit of Operational Excellence via digital platform development then lends itself to business differentiation, innovation and the ability to cost effectively scale any business. Effectively in this case also covers complexity associated with governance, compliance and regulation, which is also imitated by a digital platform as covered earlier. 

Platforms of business. The development of “Products” that digitally imitate holistic business operations.

Digital transformation is the process undertaken to create or enhance a digital platform which imitates or augments what we all do in the real world. The act of digital imitation is the act of digital transformation.

This is achieved by the utilisation of various tools. These tools, can be current or emerging technologies, that are utilised to build a specific business solution and its accompanying digital platform; the business platform. A business platform that imitates, augments or advances a business function, is referred to as a product. A product that imitates a new or existing part of the businesses’ operation(s).

A platform can be one holistic product or an amalgamation of many products, i.e. a set of applications, each one a product, each one imitating a business function. A platform ecosystem is created when these applications are connected via the utilisation of a communication network that allows for all the products to interact with each other.

For example, a platform for automating medical diagnosis. This would form a business solutions’ platform for the health system, and would be built as a collection of products, each replicating a speciality in medical diagnosis. The ecosystem of products when networked together create the diagnosis (business) platform for the health system, i.e. a platform of business for the health vertical/industry.

In the near future, the health system has the potential to build a holistic product, for the full automation of surgery. Following the discussion above, recall, we stated that it’s possible to continuously improve or create new imitations, for all parts, of any job function; assuming a positive rate of technological progress that allows for functional advancement of a platform. It’s then only a matter of time, before a product for imitating (automating) surgery is commercially made available. In part (e.g. human driven robotic keyhole surgery) over a short time frame and in all (AI driven, fully automated, general and specialist surgery) over a longer time frame.

Once a product or platform is commercialised and generally made available, or democratised (as commonly being referred to in the case of advancements in artificial intelligence), it’s functional capabilities can be utilised as an emerging technology, i.e. as a tool or component, to build a more sophisticated product and/or development of a larger platform (e.g. imitation of human reasoning or prediction used in self driving technology can be used as a tool or component in the platform that completely automates surgery). This becomes recursive, leading or adding to continuous technological advancement, innovation, ingenuity and human progress (quality of life).

By association and extrapolation of the above, it can be implied that every* business function, and in aggregate, all the functions that make up a business unit, of every industry vertical, can be imitated in part or all today, i.e. every business function or general activity can be digitally transformed today.

*Given enough time, capital, risk appetite and the availability of the underlying tools (technological advancement) which allow for the imitation of the required human or (unintelligent) mechanical job functions.

It’s the time, capital and risk appetite to create the new technologies, the new business platforms, i.e. the development or utilisation of advancements in emerging technologies (e.g. the tools of general artificial intelligence, material science, mechatronics, etc.) for the development of additional imitations of unique parts of sophisticated human job functions that constrains further progress.

Operational excellence, as discussed prior, creates the head room for time, capital and risk appetite, allowing all organisations of all verticals to innovate and build new business platforms; the new technologies, or tools and components, that are then utilised as functional containers, to further build larger or more sophisticated platforms or ecosystems, of business.

The creation of these tools is not limited to any one vertical. The opportunity to create platforms of business, as a set of products, that imitate holistic business operations, is open to all businesses, across every vertical today.

Real world, complex and dynamic systems are constituted of job collections. Digital products and platforms are the same. They are constituted of ported and reused functional containers (the tools and components of the product or platform that imitate unique collections of job functions). It’s this particular characteristic of portability and reuse of functional containers (when structured into new products or platforms in various combinations and permutations) that allows for technological advancement. This is circular and recursive.

This is our demonstration of the imitation of the real world.

Summary

Going forward, we will refer to the process of digitally imitating the operations of our businesses, with business solutions platforms, simply as, “Business Process Automation”. 

If the imitation of a businesses’ operations is achieved by the building or enhancing of a digital platform, or simply business process automation, then by association, business process automation is the process of digitally transforming our businesses, i.e. Digital Transformation, is the game of imitation.

Business process automation or imitation are not a new terms, but we now have the technology to automate, part or whole job functions, across an entire organisation’s business operations. We are increasingly able to do this on a reducing cost basis, making it economically viable to imitate nearly every business function, including the ability to grow these platforms of business to global scale.

If the rate of technological advancement is very high over any given period of time, the ratio of ‘cost to functional-imitation’ falls across that period. If technological advancement is accelerating, the cost ratio falls, on a non linear basis. This gives birth to business opportunity creation or being dislocated by those who take up the opportunity differentiate and innovate.

Increasingly so, business functions that may have previously required significant capital, time or highly specialised skills or knowledge, to digitise, are rapidly falling as technological advancement is arguably advancing at an exponential rate. Technological advancement is occurring across and applicable to all industries. This is what has given rise to the fourth industrial revolution.

Digital transformation is business process automation, is the game of imitation.

Digital transformation is The Imitation Game. Game on!

In the next post of this series, we describe the nature of complex and dynamic systems and the rules of the imitation game.

Addendum: Robots and jobs, the future is bright.

The ability to digitally imitate (transform) every job function, brings up the question of jobs in the near and distant future. We will address this matter further in a follow up post, but for now, suffice it to say, there is enough work for us all in building the tools or the business platforms of the future, regardless of profession or trade.

To broadly imitate the job functions of a finance professional, a barrister, or surgeon, will require the knowledge of the individuals that either educate and/or practice these professions. This will be required for the initial imitation of their functions, and then the continuous augmentation of functional advancements.

It’s the term continuous that’s key in the paragraph above. The requirement for all professions will still remain for the advancement of the various platforms. All that changes, is the set of tools that are utilised in performing the job functions as old functions are imitated, facilitating advancements of functions or creating new functionality.

It’s important to consider that parts of these professional (or trades) job functions, when broken down into unique tasks (parts of the job function), will have both, similarities in unique tasks, and will often lack significant functional variation (post research and development and commercialisation of the function it self).

These jobs functions will often have highly repetitive and prescribed paths of reasoning, and little availability for procedural variation and therefore the need for sophisticated prediction. This abolishment of variation and prediction is done by design today.

Businesses that require additional humans to scale their operations, by design make their job functions repeatable for safety and consistency. This is done in order to reduce risk of errors and faults or procedural fairness. In fact the imitation of some of these highly repetitive and prescribed functions would eliminate human errors or faults, created by fatigue, failures in implementation of procedural learnings, gaps of knowledge or by the inappropriate application of discretion or judgement in determining fairness. This would then allow for global scale, with consistency, efficacy and efficiency of highly regimented and procedurally driven human functions.

This does not mean that human judgement, discretion, prediction or reasoning disappears. To the contrary, it allows for greater amounts of human inventiveness, as a digital platform is only imitating what we are collectively creating, as a result of our conscious will to pursue progress, fairness or the improving of human quality of life or that of the environments in which we co-exist.

The imitation of many of these professional functions can only be done with multi-disciplinary teams, i.e. professions and trades working collectively in one team, to build the parts of job functions as functional imitations’.

This can only be achieved by the broad abolishment of individual, separated and/or segregated information technology teams, across all organisations and their industry verticals.

We are all in the business of building platforms of business. We are all building the imitation of the systems (health, finance) in and for which we work. We all utilise information for our job functions. The adoption and building of platforms allows for greater efficacy and efficiency of the operations of our businesses and the purposes that they serve.

The organisations that still consider technology to be a separate operational cost from the operating cost of the entire business, i.e. run technology as a silo or separate department, will, given time, be dislocated due to the accelerating fall in the ‘cost to functional imitation’ ratio. The time to being dislocated is a function of the rate of change in this one ratio, i.e. if the cost to imitate any business continues to fall in an accelerating fashion, the barriers to entry and to dislocate a market place incumbency of that business will reduce significantly. This will have the same effect as surviving on a shrinking timeline or akin to attempting to land or take off on a shrinking runway.

We all have significant opportunity, in building the future platforms of business, given the opportunity to re-train and the desire to continuously learn.

To imitate (build, commercialise and scale) a business solutions platform for every one of the job functions we know today will require years of work.

Be under no illusion, this is well underway, thus the (fourth industrial) revolution.

After we have successfully imitated our current set of job functions, history has repeatedly shown us, across the preceding three revolutions, that we will face new business problems and opportunities we have not yet even imagined.

So goes the wheel of human discovery and progression.