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BLOGDigital Transformation Strategy: Debundling

by Randall CraigFiled in: Make It Happen Tipsheet, Blog, Digital StrategyTagged as: ,

Ask any member of your management team what business you are in, and they will tell you clearly: You provide advisory services. You sell widgets. You solve clients’ problems in the area of ABC. But if you look at most businesses closely, they are really a “bundle” of interdependent functions, all existing to support the core raison d’être.

Digital Transformation Strategy: Debundling

The question, however, is whether each of those interdependent functions are really “best of class” in their area. Or perhaps more specifically, whether the staff in these areas are considered stars, and whether these areas deserve priority investments. The answer is, usually, no. The functions of these non-core areas of the business are necessary, but the question of whether they MUST be delivered within the organization, is rarely questioned.

A debundling strategy asks these questions, and then strips the organization apart, delegating non-core parts of the business to other organizations, for whom it IS core. And only then does the “digital” part of digital transformation begin.

A number of years ago Baskin-Robbins decided to get out of the ice cream manufacturing business. They reasoned that it was their brand, recipes, and distribution system that were strategic. Running a global manufacturing operation was not. Any future digital transformation suddenly didn’t have to be concerned with manufacturing systems, ingredients suppliers, HR for factory workers, and so on. Another example: Apple designs its chips, but a specialized chip foundry manufacturers them. It also designs its computers, but yet another company manufactures them. Same with Peloton.

While you might not see direct parallels between your business and Baskin-Robbins or Apple, the concept is what is important. Consider these questions:
Are you in the mailroom business?
Are you in the front-line tech support business?
Are you in the bookkeeping business?
Are you in the training business?
Are you in the recruitment business?
Are you in the social media business?
Are you in the event planning business?
Are you in the procurement business?
Are you in the logistics and transport business?
Are you in the copywriting business?
And so on.

While not suggesting that it never makes sense to have these functions within your organization, it is worthwhile to consider that there are OTHER businesses for whom these functions are their core, and may be able to do the job better. Yes, outsourcing may reduce your costs, but it also means that your organization is not burdened with the many systems that will need to be digitally transformed.


This is a big one: After you map out all of the non-core functions within your organization, give them each a score for two things: systems complexity, and the urgency of updating the system. The higher the scores, the more scrutiny there should be to outsource it. Not only does this avoid an investment in a non-core area, but it also makes your job of digital transformation easier.

Digital Transformation Insight: When the entire organization can be simplified, digital transformation can enable business growth in completely new ways.

Related post: Digital Transformation Strategy: Transformation to SAAS8 Disruptive Business Models

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