Firstly, a few no brainers about digital transformation:
- Digital enables the transformation of human experiences whether they be customers, employees, stakeholders, shareholders, suppliers etc.
- There are four outcomes any digital transformation must deliver; increased revenues, improved people capabilities, operational efficiency and cost reduction.
- Most digital transformation focuses on the tactics.
- The reasons for most failures on digital transformation programmes is not focusing on the real barriers; culture, leadership and investment.
The infographic above shows the structure of the digital transformation programmes I’ve used on many occasions. Its an approach that helps organisations understand the reality/challenge and the framework for giving digital its best chance of success.
But in this first of two blog posts on this infographic, I want to focus on the key elements that enterprises must prepare for before digital transformation kicks off; culture, leadership and investment. Ironically, they are the key barriers too.
Only now are digital transformation programmes giving these areas the attention they richly deserve. Failure has been huge simply because people have been plugging a round hole with a square plug and diving in without understanding the implications. Digital transformation is not a technology problem to solve, its an enterprise wide issue that is about people.
Lets look at each one in turn:
- Culture – typically most organisations have operated in a particular way, digital is changing that. The adoption of agile – fail fast, learn fast, minimum viable products and iteration after iteration are changing the way in which people deliver. Teams are becoming smaller, form quickly, deliver and dismantle even faster. Flatter hierarchy, if there is any at all, less bureaucracy and nimble decision making are changing behaviours and attitudes. Many are not prepared for this sweeping and seismic shift in operating. It can bring disconnection and disharmony with huge resistance and protectionism. Any digital transformation programme must prepare the ground for this massive challenge where there is often a polarisation of behaviours and attitudes.
- Leadership – its most often the root cause of digital transformation failure or limited success. Digital transformation is led from the top and like any successful leadership it is underpinned by a well‑defined process, clearly communicated to the organisation and directly linked to measurable business outcomes. Leaders who understand digital know that in order to achieve digital transformation they must embed digital agility at every level of the organisation, its not one departments job to do it. They get that all digital transformation programmes/projects need a robust business case based on improving human experiences and there is a clear roadmap to deliver it. A leaders job? To facilitate it, remove the barriers and keep people inspired.
- Investment – Digital transformation isn’t cheap and traditional organisations are about to face a stand off between the balance for immediate results and longer term outcomes. As Forrester have said “Digital transformation investments are ultimately about business survival through disruption.” The real value of digital transformation investments is about long-term revenue growth and/or operational efficiency, not short-term technology return on investment.
I’m not going to lie, too many times I’ve got quite concerned when I arrive on the scene of a digital transformation programme to see tech being implemented at a fast pace, the only reference to culture and leadership, in the risks section of the plan, with a single paragraph on its mitigation. Not good enough and too risky.
Previous years have seen us focus on the tactics – lets implement the technology and then worry about the humans using it. In 2018, we will see the more mature customer/digital organisations start to switch that. Human experiences designed first with the tech tactics rolling in to meet those needs. It will, hopefully, mean more success, synergy and progress. Digital transformation changes business processes and models. It changes culture and requires a different set of leadership capabilities. From an investment perspective, ROI works for single digital initiatives, but not for shifts in business models.
So when designing your digital transformation programme make sure the culture is ready, the leadership is prepared and the investment is realistic and the method by which you measure the ROI may be different.