For more than a decade, I've been writing about Frictionless Enterprise as an overarching framework for planning an enterprise digital strategy. This article sets out the essential principles of this approach, honed over those ten years. It is the first chapter in a series of seven, in which I'll go on to examine the repercussions for how enterprises sell and engage with customers, how they organize their IT and manage their workforce, and how connected digital technologies — pervasive smart devices, hyperscale cloud computing and near-ubiquitous connectivity — are continuing to change and reshape enterprise today and in the future.
1. It's about the connections
Connection is the most overlooked characteristic of modern digital technology. It is at the heart of what makes these powerful tools so transformative for how we organize work and do business. The primary goal of digital transformation, therefore, should be to eliminate any barriers or friction to connect and to network.
The pre-eminence of connection is often missed because organizations instead focus on the task of upgrading their old systems and ways of working to digital alternatives. As early as 1999, I found it necessary to emphasize that cloud computing wasn't simply a relocation exercise. As I argued then, putting computing on the Internet moved it into a connected environment where it would be forced to adopt a more networked, atomic architecture. The transition was not from on-premise to cloud, but from disconnected to connected.
2. It's not just about the tech
In the following decade, I came to realize that the same transition was true of the enterprise itself. Cloud computing was not the destination, but just the beginning of a much bigger journey, as connected digital technologies unlock completely new ways of working and doing business. Introducing the concept of Frictionless Enterprise in a 2011 article, I wrote:
The successful modern business is one that is not fixed in place, contained within its own 'prem'. It has to transcend physical walls and boundaries, harnessing the cloud to share information, co-ordinate resources and interact with customers wherever they are.
3. There are five essential characteristics
The essence of Frictionless Enterprise is the elimination of friction in order to maximize the benefits of digital connection. This manifests itself across five primary characteristics:
- Everywhere — connection collapses distance, making it possible to collaborate and interact, irrespective of location and time zone.
- On demand — infrastructure becomes pop-up. We don't have to put plans on hold while we wait to build stuff or recruit teams. Self-serve resources are available instantly.
- In real time — we no longer have to wait around for paperwork to arrive or for the data to be updated. We can assess live data as it happens and take action immediately.
- Change-ready — processes are not fixed. We must be able to adapt rapidly and iteratively to the continuous flow of data and the changing landscape of resources and markets.
- Collaborative — teamwork is supercharged within the enterprise, while external connections make it possible to pool resources, aggregate data, share context and innovate communally across networked ecosystems.
4. Frictionless Enterprise means getting things done
In a sentence, Frictionless Enterprise describes an organization that uses digitally connected technology to operate on real-time data and resources, available anywhere on-demand, within a framework that's adaptive to change, and inherently collaborative. But there's more. This isn't skin-deep, it's end-to-end, enabling faster, more responsive decisions and actions throughout the organization. And although enabled by technology, it is best defined in terms of how the organization operates:
Frictionless Enterprise is a business architecture that optimizes the use of connected digital technologies to strip out cost, delay and opacity when harnessing resources and delivering outcomes. Simply put, it erases the barriers that get in the way of getting things done.
5. It slashes transaction costs
This new architecture radically changes the nature of the industrial-era enterprise as it transforms to become digital, upending the assumptions on which the modern firm was built. As British economist Ronald Coase explained in a seminal 1937 article, The Nature of the Firm, the friction that all those barriers introduce — transaction costs, in economist-speak — made it more cost-effective for industrial-era firms to do many things in-house rather than sourcing them externally. In the network era, the frictionless nature of digital connection turns that calculation on its head:
Today's connected digital infrastructure has completely transformed the economics of those transaction costs, fundamentally changing the equilibrium of the enterprise. Much of the friction caused by time, distance and lack of information has been swept away, forcing a complete recalculation of the cost-benefit analysis that led to the creation of the twentieth-century enterprise.
6. Unbundling and rebundling
Pervasive connection means that functions that in the past were usually performed in-house — computing is an obvious example — are now delivered faster, better and cheaper from external providers. Conversely, if core activities are to compete in this hyper-connected economy, they must be completely refashioned for digital engagement. Often this means connecting with employees, partners and customers in entirely new ways.
Economists talk about the concept of unbundling and rebundling, in which products or processes that were previously packaged up together are split apart and repackaged anew. As the transaction costs of collating and co-ordinating these components falls, new configurations become possible, creating new business opportunities — and competitive threats for incumbents.
Frictionless Enterprise is a massive exercise in unbundling and rebundling, as new patterns of digital connection enable the reconfiguration and reinvention of products, processes, entire organizations and even industries.
7. Move on from paper
Digital transformation, therefore, is much more than simply introducing a new generation of technologies to automate existing processes. The industrial-era firm is structured around functional channels that were designed for the internal flow of static documents from one department to another, carrying with them the information they need. It's time to leave this paper-based legacy behind. Digital connection means that contextual information can be looked up at any time, so that, for example, a vacation request can be submitted and approved in just a few clicks, rather than having to complete and sign a form.
Digital connection thus opens up new paths and shortcuts that deliver outcomes far more effectively and with immensely lower friction than these paper-based processes:
Frictionless enterprise is structured around dynamic processes that connect digitally networked content, resources and participants, often criss-crossing organizational boundaries.
8. Break out of silos
The functional silos of the traditional enterprise are a part of that paper-based legacy. Reconfiguring information and process flows for Frictionless Enterprise means unbundling these traditional operations in preparation to dynamically rebundle them in networked configurations better suited to a connected, digital world.
Internally, this means breaking down functional silos and fiefdoms to share information, know-how and agency where and when it's needed — for example, converging sales and service teams, or expanding DevOps teams to include product managers.
The purpose of Frictionless Enterprise is to enable your organization and everyone who contributes to it to become a more effective network participant in all of their interactions.
Externally, this means connecting into an ecosystem of suppliers and customers and becoming a networked business. Smaller players can plug into existing ecosystems, while larger players can use their greater reach to facilitate ecosystems of their own making:
In Frictionless Enterprise, the best way to reduce transaction costs is by providing an optimized network platform that transparently brings providers and buyers together. The more friction your platform eliminates, the more of a cut you can justify taking from the reduced transaction cost.
9. Empower autonomy
The unbundling and networking of functions and resources can only work efficiently if those components and participants are able to act autonomously. This means breaking away from the command-and-control mindset of the industrial-era enterprise to build a culture of trust and empowerment that's more suited to the distributed architecture of Frictionless Enterprise.
The ongoing atomization of the underlying technology infrastructure, with its emphasis on autonomous components connecting through standardized APIs and contracts, is increasingly reflected in the business infrastructure it supports. The dynamic, distributed network of external providers, autonomous teams and self-directed workers must hone their digital teamwork skills to manage and co-ordinate their output.
10. Keep iterating
Frictionless Enterprise is a dynamic state, not a static destination. For established organizations, achieving it is a long and arduous journey, with significant changes required not only in technology infrastructure but also in business infrastructure, operational practices and organizational culture. But even the most nimble must constantly re-evaluate the changing landscape, as technology continues to evolve, while early adopters pioneer new business and operational models. The only way to approach this journey is to divide it up into smaller legs and deliver interim advances, while always being ready to replan the broader roadmap as you progress.
With that in mind, the following chapters in this series over the next few weeks will drill down into specific aspects of the journey:
- Customer engagement and Everything-as-a-Service (XaaS)
- Digital teamwork and the Collaborative Canvas (1/2)
- Digital teamwork and the Collaborative Canvas (2/2)
- The Tierless Architecture of frictionless IT
- The evolution of the digital user experience
- Atomic talent and the employee experience
- Distributed ecosystems and decentralized trust systems
You can find all of these articles as they're published at our Frictionless Enterprise archive index. To get notifications as new content appears, you can either follow the RSS feed for that page, keep in touch with us on Twitter and LinkedIn, or sign up for a free download of The XaaS Effect d·book and join the mailing list for our fortnightly Frictionless Enterprise email newsletter.