For over a decade, I have been writing about Frictionless Enterprise as a global framework for planning a digital business strategy. This article sets out the essential principles of this approach, refined over the course of these ten years. This is the first chapter in a series of seven, in which I will continue to examine the implications for how businesses sell and interact with customers, how they organize their IT and manage their workforce, and how connected digital technologies – ubiquitous smart devices, large-scale cloud computing and near-ubiquitous connectivity – continue to change and reshape the business of today and tomorrow.
1. It’s all about connections
Connection is the most overlooked feature of modern digital technology. It’s at the heart of what makes these powerful tools so transformative in the way we organize work and conduct our business. The main goal of digital transformation should therefore be to remove any barrier or friction to connect and network.
The preeminence of connection is often missed as 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 point out that cloud computing was not just an exercise in offshoring. As I said then, putting computing on the Internet moved it to a connected environment where it would be forced to adopt a more networked atomic architecture. The transition was not from on-premises to the cloud, but from disconnected to connected.
2. It’s not just about technology
Over the next decade, I realized the same transition was true for the company itself. Cloud computing was not the destination, but just the start of a much bigger journey, as connected digital technologies open up whole new ways of working and doing business. Presentation of the concept of frictionless business in an article from 2011, I wrote:
The modern successful business is one that is not set in stone, contained in its own “prem”. It must transcend physical walls and boundaries, leverage the cloud to share information, coordinate resources and interact with customers wherever they are.
3. There are five essential characteristics
The essence of Frictionless Enterprise is the elimination of friction to maximize the benefits of the digital connection. This manifests itself through five main characteristics:
- All over – connection reduces distance, making it possible to collaborate and interact, regardless of location and time zone.
- On demand – the infrastructure becomes pop-up. We don’t have to put plans on hold while we wait to build things or recruit teams. Self-service resources are instantly available.
- In real time – we no longer have to wait for documents to arrive or for data to be updated. We can assess live data as it happens and take action immediately.
- Ready for change – the processes are not fixed. We need to be able to adapt quickly and iteratively to the continuous flow of data and to the changing landscape of resources and markets.
- Collaborative – teamwork is supercharged within the company, while external connections make it possible to pool resources, aggregate data, share context and jointly innovate through networked ecosystems .
4. Frictionless business means getting things done.
In one sentence, Frictionless Enterprise describes an organization that uses digitally connected technology to operate on real-time data and resources, available anywhere on demand, in a framework that is adaptive to change and inherently collaborative. But there is more. It’s not superficial, it’s end-to-end, enabling faster, more responsive decisions and actions across the organization. And although enabled by technology, it is best defined in terms of how the organization works:
Frictionless Enterprise is an enterprise architecture that optimizes the use of connected digital technologies to eliminate costs, delays and opacity when leveraging resources and achieving results. Simply put, it breaks down the barriers that prevent getting things done.
5. It reduces transaction costs
This new architecture is radically changing the nature of industrial-age business as it transforms to digital, disrupting the assumptions on which the modern business was built. As British economist Ronald Coase explained in a seminal 1937 article, The nature of the business, the friction that all of these barriers introduce – transaction costs, in economist terms – made it more profitable for industrial-age companies to do a lot of things in-house rather than sourcing them out. In the age of networks, the frictionless nature of the digital connection overturns this calculation:
Today’s connected digital infrastructure has completely transformed the economics of these transaction costs, fundamentally shifting the balance of the business. Much of the friction caused by time, distance and lack of information has been swept aside, forcing a complete recalculation of the cost-benefit analysis that led to the founding of the 20th century company.
6. Ungrouping and regrouping
A ubiquitous connection means that functions that in the past were typically performed in-house – IT is an obvious example – are now delivered faster, better, and cheaper by external vendors. Conversely, if core businesses are to be competitive in this hyper-connected economy, they must be completely redesigned for digital engagement. Often times, that means connecting with employees, partners and customers in entirely new ways.
Economists talk about the concept of unbundling and bundling, in which products or processes that were previously packaged together are separated and repackaged again. As the transaction costs of assembling and coordinating these components decrease, new configurations become possible, creating new business opportunities and competitive threats for incumbents.
Frictionless Enterprise is a massive exercise in unbundling and regrouping, as new models of digital connection enable the reconfiguration and reinvention of products, processes, entire organizations and even industries.
7. Pass paper
Digital transformation therefore goes far beyond the simple introduction of a new generation of technologies to automate existing processes. The industrial age business is structured around functional channels designed for the internal flow of static documents from one department to another, carrying the information they need with them. It is time to abandon this paper heritage. The digital connection means that contextual information can be viewed at any time, so that, for example, a vacation request can be submitted and approved with just a few clicks, rather than having to fill out and sign a form.
The digital connection thus opens up new avenues and shortcuts that produce results much more efficiently and with immensely less friction than these paper-based processes:
The frictionless business is structured around dynamic processes that connect content, resources and participants in a digital network, often crossing organizational boundaries.
8. Get out of the silos
The functional silos of the traditional company are part of this paper heritage. Reconfiguring information and process flows for Frictionless Enterprise means unbundling these traditional operations to dynamically consolidate them into networked configurations better suited to a connected digital world.
Internally, this means breaking down functional silos and strongholds to share information, know-how and agency where and when it is needed – for example, the convergence of sales and service teams, or the expansion of DevOps teams to include product managers.
The goal of Frictionless Enterprise is to enable your organization and all those who contribute to it to become a more effective participant of the network in all their interactions.
Externally, it means connecting to an ecosystem of suppliers and customers and becoming a networked business. Small players can connect to existing ecosystems, while large players can use their larger reach to facilitate their own ecosystems:
In Frictionless Enterprise, the best way to reduce transaction costs is to provide an optimized network platform that seamlessly brings together suppliers and buyers. The more friction your platform eliminates, the more you can justify reducing the reduced transaction cost.
9. Give autonomy
Unbundling and networking of functions and resources can only work effectively if these components and participants are able to act autonomously. It means breaking away from the command and control mindset of industrial-age enterprise to create a culture of trust and empowerment more suited to the distributed architecture of Frictionless Enterprise.
The continued atomization of the underlying technology infrastructure, with the emphasis on stand-alone components connecting through APIs and standardized contracts, is increasingly reflected in the business infrastructure it supports. The dynamic and distributed network of external suppliers, self-help teams and self-employed workers must hone their digital teamwork skills to manage and coordinate their production.
10. Continue to iterate
Frictionless Enterprise is a dynamic state, not a static destination. For established organizations, achieving this 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 agile must constantly re-evaluate the changing landscape, as technology continues to evolve, while early adopters are at the forefront of new business and operational models. The only way to approach this journey is to break it down into smaller stages and come up with intermediate advancements, while still being ready to reschedule the larger roadmap as you progress.
With that in mind, subsequent chapters in this series over the coming weeks will look at specific aspects of the journey:
- Customer engagement and Everything-as-a-Service (XaaS)
- Digital teamwork and the collaborative canvas
- The tierless architecture of frictionless computing
- The evolution of the digital user experience
- Atomic talent and employee experience
- Distributed ecosystems and decentralized trust systems
You can find all of these articles as published in our Frictionless Enterprise Archive Index. To receive notifications when new content appears, you can either follow the RSS feed on this page, stay in touch with us on Twitter and LinkedIn, or sign up to download The XaaS Effect for free and subscribe to the mailing list for our bimonthly Frictionless Enterprise e-newsletter.