Business Transformation Requires Transformational Leaders

I've been in the software development industry for over 30 years, which is more than half my life. I love it, but I’ve had to undergo many changes over the years to stay current and valuable to the industry. Accord­ing to application developer Bob Martin, it’s possible that the number of professional software developers entering the job market doubles every five years. This means that 50% of software developers working professionally have less than two and a half years’ experience on the job. This is a scary thought for an industry that literally runs the rest of the world. This trend has been building for decades, and it’s getting worse. Because of the high demand for skilled programmers, computer science and software engineering curricula are now among the most popular in higher education, and there’s no sign of this letting up. But the skills students learn in school don’t always match well with what’s needed on the job.

Business capabilities are a foundational business architecture domain. Capabilities play the role of anchoring business perspectives for a wide variety of transformation scenarios, including digital transformation. Coupled with value stream, organization, information, product, strategy, and initiative mapping, capabilities provide a central focal point for exposing multidimensional aspects of a business ecosystem.

Why might you want to model strategies? Well, my experiences in working with hundreds of organizations around the world suggest that strategies are often unclear, ambiguous, or muddled. Now there are plenty (possibly good) reasons why this might be the case — some of which I’ll cover here, but from an enterprise architecture (EA) perspective, one of the architect’s key roles is to proactively manage and architect change … and this requires some sense of future direction. So, in this Update, we look at some ways architects help key decision makers form, manage, and use their strategic knowledge in collaboration with enterprise architects.

The economic gains brought by digital payments are significant. Greater financial inclusion and less friction in commerce lead to increased spending on goods and services. This, in turn, creates a virtuous economic cycle whereby increased consumption translates into more jobs and higher income. Moody’s Analytics estimates that increasing electronic payments contributed an additional $296 billion to consumption between 2011 and 2015, or a 0.1% cumulative increase in global GDP during the period. They also created 2.6 million jobs on average each year. By harnessing payments innovation, Asia can further accelerate its economic growth.

Many observers believe that distributed ledger technology (DLT) will bring fundamental disruption to relationships in a borderless, modern economy that has become more decentralized and more connected than ever. A recent report from the World Economic Forum pointed to blockchain — one potential implementation of DLT — as a revolutionary decentralized trust system that will reshape the global economy. The UK government has been researching DLT for some time now, exploring how the government can use the technology to benefit the country and its citizens. The bank-backed R3 blockchain consortium has gathered key players from the financial markets to work together on blockchain adoption in the financial industry. The year 2016 will definitely be remembered as the moment when blockchain and DLT emerged into the mainstream.

The digital revolution has hit the insurance sector, with insurtech disrupting the entire value chain and customer lifecycle. New technology offers opportunities to redesign the customer experience, design new products and services, streamline processes, and increase effectiveness. The opportunities are huge; hence, they attract financial technology startups and drive investment. Accenture reports that in 2015, insurtech attracted approximately US $2.6 billion in investment, up from $800 million in 2014. According to CB Insights, $1 billion has been invested in insurtech in the first half of 2016, and there are over 1,300 startups in the insurtech space worldwide.

Not surprisingly, this amount of investment impacts the traditional insurers, and according to a PwC study, almost half (48%) of insurers fear that up to 20% of their business could be lost to standalone fintech companies within the next five years.

In this article, I will address the causes of this digital revolution, the most important trends disrupting the insurance industry, and ways that incumbents can harness the insurtech trends and respond to them. 

Blockchain is most simply defined as “the first native digital medium for value, just as the Internet was the first native digital medium for information.” Blockchain has gained great attention, investment, and development because it addresses two of the riskiest aspects of life and business on the Internet: transactions and trust. We’ve long recognized the security, privacy, and trust issues that plague the Internet, and since the early 1980s technologists have been working on a solution. For transactions, intermediaries have made possible the trust and security needed to complete transactions and until now have been the best method for completing transactions with trust. However, as we know, security has unfortunately been a weak point, with data breaches leaving individuals’ personal and financial information vulnerable and putting trust at risk.

Digital transformation and technological innovation are reshaping the financial services sector. Today the sector is confronted with both large, established tech companies like Apple, Google, Amazon, and Facebook and small fintech startups that are moving into the financial services space. From a sector perspective, it is clear that a lot of the innovations focus on disintermediating the incumbent organizations. There is a clear move toward more decentralization and peer-to-peer (P2P) collaboration. Blockchain technology enables value transfers through a decentralized, P2P consensus process. International money transfers are drastically improved using P2P operating models, new P2P insurance solutions are created, and both lending and capital raising now take place on P2P platforms.