Digital Transformation — What Is It All About?
Along with being agile and innovative, companies typically claim that they are also (being) digitally transformed. But, is Digital Transformation yet another business buzzword? We asked seven leaders to explain what Digital Transformation is and how technology, processes, and culture are interlinked in this context.
In this chapter, our leaders describe the conditions under which companies need such a program — they also explain how to set up a team to drive the efforts and the role of the leadership. We also touch on the extremely important topic of measuring the success of digital transformation initiatives.
Read eye-opening insights from Daniel Burrus, Tom Goodwin, Ger Perdisatt, Erik Schumb, Jonne Kuyt, Dimitris Livas and Jonathan Rose.
Excerpt from 60 Leaders on Innovation (2021)
Daniel Burrus
CEO — Burrus Research
Excellent question. Let’s talk about the word transformation because I think we understand digital but the key stumbling block, I believe, is transformation. And one thing I’ve found is that how you define the word gives you an entrepreneurial advantage. For example, I see people that say they’re good at communicating; but actually, they’re really good at informing, because they don’t know the difference: informing is one-way and static while communicating is two-way and dynamic.
Transformation always comes from the inside out. - Daniel Burrus
Similarly, people would say, we’re good at collaborating when they’re really only good at cooperating because they don’t know the difference: you cooperate because you have to while you collaborate because you want to; cooperation is based on scarcity — I have to work with you so I’m going to protect and defend my piece of the economic pie while collaboration, is how can we work together to create a bigger pie for you and me. We get new collaborative software, and we cooperate with it; we get new communication tools, and we inform with it.
So why did I bring that up? Because we say we’re transforming a process, a product, or service when we’re really just changing it. And this is because we don’t know the difference — and the difference makes all the difference. So let me give you a quick example: Change always comes from the outside in and it forces us to react, respond — and that’s where agility comes in.
Agility is a reactionary defensive strategy, it’s reacting as fast as you can to a problem after it happens or a disruption after it disrupts, to something incoming, something that’s happening now. To deal with rapid change being agile is very important, but, as the 2020 pandemic has taught us, reacting quickly, no matter how agile you are, is no longer good enough. We now need to become anticipatory, using hard trends based on future facts to anticipate disruptions before they disrupt turning disruption into a choice. Anticipate problems before you have them so that we can pre-solve them. Agility represents a defensive strategy, and it represents only one side of a two-sided strategy coin when it comes to dealing with accelerating exponential change. The anticipatory side is an offensive strategy, and it allows you to become what I call a positive disruptor by using the certainty of hard trends to create the transformations that need to happen to elevate relevance and accelerate growth.
We need to become anticipatory, to use hard trends based on future facts to anticipate disruptions. - Daniel Burrus
Transformation is quite different than change: whether it’s a personal transformation or business transformation, it always comes from the inside out. For example, BlackBerry changed how we handle email — they put it in a phone so that we could handle emails while on the go. Apple transformed the phone — it gave us the ability to do photography and video, watch movies and so many other things.
Another example of change is the international chain of bookstores Barnes and Noble. What they did with bookstores, instead of it being a small bookstore in the corner, they put it in a big store, they put pianos in their stores, they offered cappuccino, they made it an experience — and in doing so, they changed how you buy books. But Amazon transformed how you buy books — in other words, Amazon doesn’t look at all like a book store including Barnes and Nobel — it functions totally differently.
When you create a change you made something bigger, smaller, taller, thinner, wider, or you hire more staff, you make a pivot of some kind; but that’s not transformation. So, making a bookstore bigger and hiring more people is not transformation, it is change. Amazon transformed bookstores — by selling books online. Amazon didn’t resemble a bookstore, it didn’t organize its products like a bookstore, and it didn’t have a sales staff; It was totally different.
So, I would say that most companies that are claiming to be implementing digital transformation, are actually implementing digital change. And that’s why they’re not getting the transformational advantage. Those that are anticipatory innovators, or entrepreneurs don’t implement change; they use hard trends to have the certainty and the confidence to make bold moves, to transform — and in doing so, they redefine and reinvent their processes, products, and/or services. Anticipatory entrepreneurs have a transformation mindset. They’re looking at entirely new ways of innovating and solving problems.
The anticipatory side is an offensive strategy, that allows you to become a positive disruptor. - Daniel Burrus
For example, one of my early companies offered the first ballistically launched parachute for ultralight aircraft. If you had a malfunction, you could deploy a parachute attached to the plane and you could parachute yourself and the whole plane safely down. That was back in the early 80s. Now you can get that solution for small aircraft like Cessna’s and Piper Cubs and the like. That was out-of-the-box thinking — putting a parachute on an airplane. You know it’s transformative when people, look at it and go, “Wow, never thought of that” or “I never knew that could be done”. And one of the best ways of doing something transformative is using technology — because technology lets you do what used to be impossible.
The essence of innovation is really about eliminating those barriers in your mind and making sure that you don’t get trapped in your own box. One of the ways entrepreneurs can get trapped is by falling in love with their idea. So often, we create our own trap “I just built a new box. And it’s really cool” — but maybe now you’re back in the old box again.
Daniel Burrus is one of the world’s leading global futurists and disruptive innovation experts. He is the author of seven bestselling books including The Anticipatory Organization and a strategic advisor to leading C-Suite executives worldwide.
Tom Goodwin
Co-Founder - ALL WE HAVE IS NOW
Digital transformation is one of those terms everyone talks about, and everyone nods. However, there’s no real agreement on what it actually means. For me, there are two separate notions — one is digitalization and the other digital transformation. Digitalization is modernizing what you already have — by adding a surface of new technology which makes you appear slightly more contemporary. For example, if you’re a fast-food restaurant, and you start buying ads on YouTube, and you put a digital kiosk in one or two of your stores, then you are doing digitalization, not digital transformation. If you’re a big chain of fast food, and you decide that all of your stores should have digital kiosks and that your entire workflow behind the scenes should be rethought and you start working with partners to deliver food to people — that’s closer to the notion of digital transformation.
For real digital transformation, the most important thing you need is a vision for your company. - Tom Goodwin
On the assumption that we’re talking about real digital transformation, the most important thing you need is a vision for your company. You need to challenge all the assumptions that have shaped your business so far and rethink all its core aspects — its structure, the core processes, the business model. This refined model of your company would then become the foundation on which to define and start growing the right culture. And, while digital transformation is powered by technology, it is not about technology: technology runs in the background, and to use an analogy, technology is like crayons: No art is about the crayon but crayons make art possible.
The tough question regarding transformation is about the right timing. There are moments when the world changes quite a lot, where consumer behaviors shift, and new consumer patterns emerge. If you believe that such a shift or new pattern in consumer behavior will be persistent, then that would be a good time to consider a digital transformation initiative. For example, with COVID, everyone moved to e-commerce but then they’ll slowly come back a bit. So actually, now is not a great time to completely transform an e-commerce business. But if you are in banking, you must realize how companies like N26, and Monzo have changed loyalty towards banks, indicating that there is a big consumer behavior shift — and hence it is a good time to think about digital transformation and ponder these questions.
While digital transformation is powered by technology, it is not about technology. - Tom Goodwin
Another element that may define the timing — when to initiate a transformation program — is the state of technology and the associated trends. Actually, there is a right time to jump on a technology, but this is usually incredibly difficult to spot. For example, if you decided 15 years ago to reinvent your core banking systems, then you probably would have been building a tech foundation, which today would be nearly obsolete. In a way, you almost needed to wait for scalable architecture and advanced APIs to exist.
To drive real digital transformation, you must also invest in culture — which comes down to people’s tolerance for risk, their willingness to change, and their motivation to make a difference. In reality — and none of these things are said in a disparaging way — for many people in many companies, and in many cultures, the primary need is to feel secure in employment — and that is what drives almost all of their behaviors. For example, in many big companies, there are people who would prefer to be invisible, who hope to never get noticed. This attitude results in behaviors like agreeing with consensus, following the processes strictly, and avoiding blame — because everything is about not getting noticed. And then there is a small number of people who believe that the ends justify the means — and they are all about making something they are proud to be part of. Those people are just oriented very differently — they strive towards visibility, not from an ego perspective, but more from a sense of personal pride in the fact that they accomplished something important.
I think we have this obsession with changing the culture rather than building the culture. The reality is that not many large companies have actually changed significantly their culture — and this explained partially by how people choose to work for a company: maybe they enter through a graduate training scheme and they like practical aspects such as the fact that their offices are on the edge of town or they appreciate that they have a structured training program or the fact it looks good on their resume and that their parents will be proud of them — and therefore, you get highly compliant people. And then we assume that if a company is going to change, then we have to keep the same people, so we reduce the number of changes that we have to handle. In this sense, companies tend to prefer to reassign people internally and help them develop their roles — rather than bring in people with the right profile, risk appetite, motivation, and willingness to change things.
To drive real digital transformation, you must also invest in culture. - Tom Goodwin
However, I think we’re being very naïve — if we think that we can tell people to wear more casual clothes on a Thursday afternoon and stick them up in a little room with some funny sofas and whiteboards and somehow expect that is going to lead to people radically changing the very wiring of who they are as a person. There are people out there with a genuine entrepreneurial mindset who are seeking opportunities to launch a crazy company — and they would ‘beg’ people for money, and they would get laughed at by their friends in pubs — but those are the people who are going to create really interesting new things and one should be aware that those people don’t exist in large companies. If a company is willing to transform itself and become more innovative, then it will need to recruit people like these. Moreover, they would probably need to create a new entity that is just utterly different.
For example, if you’re a big established company, just setting up a new digital transformation team within the corporation is not enough. Nor is having a new, crazy team of people that are reinventing your existing product and they co-exist as just another brand. It is more likely that you need a very different entity that probably works from a different location and is allowed to use different software tools and has different policies regarding compensation. An entity of this form should be loosely aligned to the parent corporation — quite adjacent and separate. Digital transformation, in my opinion, it’s about being brave enough to find and create the things that end up cannibalizing the parent company.
Tom Goodwin is a writer, speaker and advertising and media provocateur and consultant. He has been voted a top 10 voice in Marketing by LinkedIn, one of 30 people to follow on Twitter by Business Insider, and a ‘must-follow’ by Fast Company. An industry commentator on the future of marketing and business, he is a columnist for TechCrunch and Forbes and a frequent contributor to The Guardian, GQ, Ad Age, Wired, Ad Week, Inc, MediaPost & Digiday.
Ger Perdisatt
Director, Technology Strategy, Western Europe - Microsoft
Given both the ubiquity and also the ambiguity of the term ‘digital transformation’ there is no ‘typical’ digital transformation project. Each one is different, responding to a different catalyst, and taking place within a unique organizational and cultural context. However, I’ve seen two distinct flavors of digital transformation: those driven by exogenous factors and those driven by endogenous ones.
In my experience, digital transformation programs emanating from an internal, endogenous impulse to capture a new opportunity, mitigate an emergent risk, sustain or grow a particular business line, differentiate from a competitor — these programs tend to have more executive buy-in, more organizational investment, and greater momentum and longevity. It’s because the catalyst for change is rooted in something specific that the organization feels, senses, hopes. The change is contextualized within the culture, the coda, the unique language, and artifacts of the organization. These organizations also typically enjoy a higher degree of ‘first- or second-mover advantage’ — in many cases because the impulse for change was driven by a desire to break out of a particular competitive landscape into an adjacent (or sometimes altogether different) area of business.
When digital transformation projects are driven by endogenous factors, my experience has been that the likelihood of success is lower. There’s an element of ‘me too’ thinking factoring into a decision to go on a ‘digital transformation journey. These are often journeys with no specific destination in mind and driven by a sense that because competitors are embracing digital, the organization must too. Without a strong intrinsic sense of why the digital transformation is important, the organization creates a ‘burning platform’ moment — but without any clear sense of what they’re jumping from, and jumping into.
In either scenario, one principle remains consistent: digital transformation programs are not about technology. The technology is simply the tool to deliver business value to the customers of the organization in more effective ways. This is a critical point. It’s all too easy for organizations to fall into the trap of a digital transformation program that becomes an exercise in arcane technical details and architectures. As mentioned earlier, being able to locate (and relocate) the program in the why, the context for change, is so critical. Digital Transformation, like any other large-scale change, is typically about people, processes, and tools/technology. If organizations can focus on people and processes, invariably the technology will exist (in virtually every case) to capture the underlying business problem or opportunity that’s being solved for.
Digital transformation programs are not about technology. - Ger Perdisatt
This places a significant premium on leadership styles that are comfortable with leading through ambiguity and driving large-scale cultural and organizational change. If you’re a leader expecting a technological silver bullet, a software panacea to all your business problems, without touching your people and processes, then you’re going to struggle to derive value from a digital transformation program. In fact, this type of scenario can be detrimental to business value, as it becomes a significant distraction to the business, a point of friction between technology teams and business units, and sows a (deeper) distrust of technology.
In order to succeed at digital transformation, organizations need to have a strong, diverse, multi-disciplinary team drawn from across the business units impacted by the change. It needs technology expertise, but expertise that can bring business clarity and simplicity to technical details. It needs a strong alignment across the leadership team. It needs a well-resourced and clearly defined change management organization, as well as a program management office. It also needs to feed into more mundane elements such as performance and compensation plans — because to some extent, with Digital Transformation, as with any other initiative, ‘you get what you measure’. If you’re building a transformative initiative but your organization remains compensated in old ways of working, then don’t be surprised when your initiative struggles. I’ve personally seen situations where companies have adopted the ‘change is everyone’s business’ mantra; frankly, it’s a bit of a fallacy, as if it’s everyone’s responsibility, inevitably it’s nobody’s responsibility.
Measuring the success of digital transformation tends to be both art and science. - Ger Perdisatt
Measuring the success of digital transformation initiatives tends to be a balance of both art and science. You can absolutely measure qualitative impacts around both activity and/or outcome e.g. levels of inter-team collaboration, faster development of applications and processes, increased process automation and its impact on customer NPS, etc. There’s also a qualitative element: how are the teams feeling about the impact on their work, the impact on customers experience; does it make their working day easier or better, etc.
Regardless of whether you’re measuring activity or outcome, qualitatively or quantitatively, it’s important to focus on what your measures are telling you: are you getting better, or worse? Is anything changing? Are different teams displaying different engagement levels, and if so why? It’s also important to set the expectations upfront that the measures themselves may change. Some measures might be replaced, retired, or reworked — which is fine, as long as you focus on why you’re measuring, and what your measures are telling you. And build as many ‘doors and windows’ into your reviews/ tuning of your Digital Transformation initiatives. The organizations that are willing to constantly tune, iterate, learn, renew are the ones best able to harness the potential of Digital Transformation. You won’t get it right the first time.
Ger Perdisatt is an experienced business leader with expertise in digital transformation, cloud (IAAS, PAAS, SAAS), sales leadership, industry partnerships and GTM strategies, people and organizational transformation. Excellent track record of performance across a range of industries and functions. Postgraduate qualifications MBA, ACCA.
Erik Schumb
Founder & CXO — AGILE SPRINTS
There are three types of digital transformation programs:
- Type 1: digitalization of the internal business processes. This includes both the generic processes that all companies have e.g. HR, CRM, SCM, F&A, etc. and the industry-specific processes e.g., policy management (Insurance), administration of banking accounts, credit assignment (Banking), management of health records (Healthcare), etc. The goal of transformation programs of this type is to increase profitability and competitiveness through leaner and more efficient processes. Such programs typically aim at reduced operating costs and improved customer satisfaction, and therefore retention.
- Type 2: Development of new products and services. This goes beyond the incremental improvement of current products and services to the strategic development of completely new ones. Programs of this type have high external visibility and are the most common and obvious forms of digital transformation.
- Type 3: Holistic programs that combine Types 1 & 2. There are industries in which products and services are closely connected with the performance of internal, back-office systems and processes — for example, Banking, Insurance, and those types of industries that have a strong e-commerce or online element — e.g., Retailers.
StartUps evolve quickly, from sailing boats to tankers in either ´Red Oceans´or ‘Blue Oceans’. - Erik Schumb
Yes, technology plays a major role in all the above types of digital transformation programs. But that is not what makes a digital transformation difficult — technology can be addressed properly by the right experts. Digital transformation is more than technology though; it is rather a mindset and a culture of people and organizations — and this is what adds huge complexity to any digital transformation program. It is not easy to establish this ´agile mindset´ — as this requires a massive change in people’s way of thinking, at both leadership and employee levels.
Behavioral and organizational change can be driven by systemic and simultaneous tackling of exploitation of the current basic and the exploration of the unknown future towards innovation. This is what the term organizational ambidexterity[1] means. It is nothing else than what IT organizations are already driving, for years now, with their DevOps initiatives: they operate the existing IT and in parallel develop and innovate it further.
That underlies a special mindset that needs to be shaped and established. Gartner uses the nice metaphor of ‘Samurai & Ninja’[2]: “two distinct but coherent approaches, deeply different, both essential.” So, it is the ‘Samurai mindset’ that operates within the borders and hierarchy — a Samurai is reliable, plan-driven, linear, and not that creative. Then there is the Ninja mindset that operates towards the new, the untapped space being close to the customer, reactive to their needs and therefore iterative, creative, non-linear, and good at dealing with uncertainty. To establish this mindset, a special leadership style is required. New denominations are describing leadership styles like the ´Servant leader`, the ´People Leader´ which are characterized by the following common things[3]:
- Leaders are not expected to make the right decisions themselves alone; instead, they are encouraged to share their responsibility with team members who might be much better suited to solve complicated problems.
- Leaders are ‘servant leaders’ — they assist their teammates to do their work in a collaborative, transparent manner. Servant leaders clear the difficulties out of the way.
- Leaders play the keyboard from exploitation of the current to exploration of the new.
In my opinion, every company needs such a program. Until recently, organizations and corporations in highly regulated environments like Banking and Insurance used to be hesitant about digital transformation. But those who don’t face the challenges of our VUCA[4] world will not be able to stand the high pressure from their demanding digital customers. The vibrant energy of the global intelligent human digital crowd forms StartUps that meet customer needs in a never-seen-before way. Those little StartUps evolve quickly, from sailing boats, to tankers on ´Red Oceans´ — the existing, traditional, highly competitive markets. Or those little StartUps suddenly sail on their own unique unexpected ´Blue Ocean’ — the new market that they created and had not been imagined before. The old ´Red Oceans” get softly supplanted.
Only a few industries are lacking behind — typically governmental-owned companies or other companies in monopolistic niche markets are not so much under pressure from their clients to go for a digital transformation. Other drives for change play stronger here like governmental cost-cutting demanding for a higher level of automation or just the ´war for talent` as such organizations appear unattractive for new talent.
Running a digital transformation program requires a very special team — having among others, the following characteristics:
- Heterogeneous, inclusive, representative. The DS team should represent the combined brainpower of all internal experts from all business areas and all hierarchical levels. It could include external experts or moderators, as needed — for example, to help identify blind spots.
- Empowered. It should be authorized to run the program with ongoing support from the top. Hence, the best to implement it on the headquarter level in proximity to the C-level minus one.
- Digitally Enabled. Able to work effectively in a fast-paced, agile mode.
- Connected to the world. Externally connected to get signals and inspiration.
In terms of planning and execution of Digital Transformation programs, I find OKRs[5] (Objectives & Key Results) very useful — also as the means to measure success and steer the program accordingly. OKRs are closely linked to the long-term Vision & Mission of a company which usually spans 3 to 5 years.
While the Vision/Mission provides the North Star, OKRs break down this long-term goal to smaller short and mid-term objectives that can be achieved within a year. The more qualitative objectives can be further broken down to key results which are measured with quantitative KPIs (Key Performance Indicators). OKRs therefore can be seen as the ´agile operating system for modern organizations´[6].
Erik Schumb is an Agile Strategist & Coach. He is the founder & CXO of Agile Sprints and Chief Facilitation Officer of AllStarTeams. Previously he has been a Market Analyst, Information Broker, Strategic Researcher, Digital Transformation Manager, Innovation Consultant, Agile Coach.
Jonne Kuyt
Director of design driven innovation — Edenspiekermann
Above all, transformation is about people. We may define digital transformation as “installing a process for using digital technology to change customer experiences, business processes and culture to meet changing business & market requirements”.
Like this, it sounds like a straightforward program to execute — anyone would probably start with understanding the new market and business requirements — then base a clear vision and strategy on that. The gap analyses would show the desired changes for technology, capabilities, and processes, and you would ideally fit that into a program, and there you go; transformation in action. Hooray.
Make digital transformation a human-centric process. - Jonne Kuyt
Reality is, of course, a bit tougher. And the toughness lies in the biggest challenge of all; the transformation of people. The biggest challenge of this process is the necessity to radically transform the thinking and doing of the people and stakeholders involved. Many books describe it (Neil Perkin is a great reference), but if organizations don’t change people first, they will end up with solutions that look like transformation but are nothing more than temporary features and innovation theatre.
Organizations are set up for repetitive business. Do one thing that is in demand and do that as efficiently and effectively as possible. And after years and years of tweaking, the organization, hierarchy, management, processes, people, and incentives are optimized to deliver a great product. But what you also got is an organization that is a collection of fully optimized blackbelt inside-out thinkers. Along the way, they lost the ability to look through the eyes of their customers. And that is where digital transformation starts.
Learning something new needs a safe space. So let’s say you run a car factory and now you find out your customers want more mobility solutions like bikes and electric scooters. If you would ask you the car manufacturing people to design a bike they will say things like: ‘Our systems can’t make bikes’, ‘The sales department says that their clients aren’t interested in bikes’ or ‘We’ll never be able to hire bike mechanics’ and even’ Bikes are less profitable than cars’. These are some examples of common barriers to progress towards change. As a result, the mechanics will deliver a bike that looks too much like a car to be relevant for customers. So before anything else, it is crucial to create a context outside of the existing structure. You need a place where people will experiment and develop skills and competencies that deliver tangible value for customers. Like Erik Ries[7] says: “In most companies, the problem is not a lack of ideas, but the lack of a process to test out those ideas and to take them out of the lab and commercialize them.”
Success comes when digital capabilities are turned into core capabilities. - Jonne Kuyt
Transforming means going from A to B. Within digital, it’s not clear from the start when you will be ready or done. It’s for sure not about the deployment of technology. It’s not only about the implementation of Agile work processes. It’s not about customer-centricity alone.
The transformation is successful when digital capabilities are turned into your core capabilities and they have married the in-depth knowledge of user needs & operational processes with digitally skilled professionals. It’s all about people. If you make digital transformation an intrinsically human-centric process rather than a technology-focused one, I’m sure you will meet objectives faster and be more relevant for your customers sooner.
Jonne Kuyt is the Director of design driven innovation in mobility and partner at Edenspiekermann. He helps businesses adapt to digital change and innovate.
Dimitris Livas
Co-Founder and Managing Partner — Agile Actors
Advances in digital technology have led to an era of continuous innovation where existing services are challenged by new innovative ones that typically provide an enhanced, more appealing experience. A few decades ago, a service could last and hold the scepters as a service of preference in the market for many years. Nowadays, the lifespan of a service — from the moment it is introduced to the market to the time that it becomes obsolete or replaced by a more advanced one — is getting shorter and shorter.
A digital transformation program aims to change the company itself. - Dimitris Livas
A digital transformation program aims to change the company itself — to transform it into a new, evolved, and drastically improved organization. To do so, a digital transformation program must effectively transform multiple layers of the organization — established processes, structures, technologies. Moreover, given that all these are operated by people, a digital transformation program must also improve the culture and redefine the skillset available in the organization. More specifically, Digital Transformation is about transforming three layers of the organization:
- Processes. Transforming an organization to a simpler, more efficient, and effective one requires changes of the existing processes — including the organizational structure and roles. In the future, we will also see higher-order digital transformations where organizations will be applying alternative digital transformations dynamically — to utilize different strategies of operation and service provision.
- Technology. Modern technology provides new opportunities for efficient, ‘intelligent’ automation of complex processes — and this is getting more and more sophisticated at an accelerating pace. For example, Artificial Intelligence and Cloud Services can be used to automate complex tasks and processes, across domains and industries. Such technologies are game-changers — they are evolving fast and they drive change or even disruption to established organizations: business leaders need to rethink the ways they operate and get things done.
- Culture. In a typical organization, people grow their skills and knowledge in alignment with the established processes, systems, and technology; they adopted certain routines and ceremonies that help them to be effective in this established ‘system’. As a result, the transformation of the processes and the technological layer of the organization is typically challenged by people’s resistance to change — their fear to move out of their comfort zone. Hence, it is essential to create a strategy for helping people to prepare for digital transformation — as they will have to unlearn skills, knowledge, and habits and learn new ones. People may have to leave the organization and new ones with specialized skills may have to join.
Digital transformation impacts multiple layers of the company — processes, technology, culture. - Dimitris Livas
In an era where transformation happens more often than before, companies must develop a culture with the following elements:
- Transparency — provide access to information, ideas, strategies
- Adaptability — encourage continuous learning and unlearning
- Curiosity — encourage people to challenge the status quo
- Purposefulness — advocate the organizational purpose
- Accountability — promote proactiveness and ownership
The success of a digital transformation requires a leadership style that arouses an eagerness to the people about the forthcoming change. Leaders have to inspire people, guide them to understand the new order of things, and find a meaningful and developmental purpose for each of them. Building a strong, structured, and knowledgeable team of early adopters and influencers is of the highest importance: members of this team will act as role models, train others and guide them to the ‘new’. This team will inspire and acquire new members until the majority of the organization becomes part of it.
To measure the success of a digital transformation initiative, companies need to obtain insights and understanding of the initial state — a baseline to be used for measuring progress throughout the transformational journey and calibrate the direction of the program. Progress measurement happens against certain KPIs that reflect different aspects of the business — including user and customer satisfaction, cost and operational effectiveness and efficiency, security, and compliance among others. The ability of an organization to perform continuous ‘micro transformations’ — guided by the ongoing monitoring of the KPIs can lead to the state where higher-order transformations are possible. In this state, the organization is able to dynamically apply strategies and reshape itself by making alternative compositions of essential processes, teams, and technologies. These organizations are characterized by their agile management practices and autonomous and continuous developmental mentality of their people and teams.
Dimitris Livas is a collaborative leader focusing on motivating people to achieve challenging goals and objectives. He has decades of experience in the development of technology professionals and the management of large software development units.
Jonathan Rose
Digital Transformation & Innovation Lead - ::projective
Those of us who have been evangelists for digital transformation for many years can find a silver lining from the economic impact of the pandemic. Namely, the pandemic has helped the whole C-suite to truly understand that digital transformation and innovation are not just fuzzy buzzwords. Many now get the joke that it has become a crucial requirement to ensure the business can thrive in the new competitive landscape and the realities of the world of flexible working which is now upon us.
If senior executives don’t take the opportunity to surf this innovation wave sweeping the market they will soon find it crashing over their heads! The laggards will find themselves with higher costs of doing business than their competitors coupled with the threat of losing the war for talent as retention and productivity fall behind the market leaders.
When it comes to digital transformation too often the top-down lens jumps to the crudest short-term metrics to measure success. Unfortunately, doing so can choke the life from the return on investment which is on offer. A classic example is only incentivizing programs targeting support departments with the sole carrot of achieving headcount reductions.
For too long digitisation in these areas has only been able to secure investment if it comes wedded to this poisoned chalice. The bottom-up reality of programs with such a mandate is that they almost never realise the gains targeted on the way in. The most obvious reason for this is that employees are far less motivated to collaborate or engage with the digitisation agenda if it’s a thin veneer for the axe man.
The laggards will find themselves with higher costs of doing business than their competitors. - Jonathan Rose
So, what can be done to escape this typical digital transformation trap? One way to break this paradigm is to start small by giving enough rope to the transformation department to investigate the organisation’s potential for digitisation — before making grandiose assumptions on possible gains — and then come back to the board with a realistic and tested business case which can warrant deeper investment.
With the right detectives in action within two months, a comprehensive picture can be built of the whole organisation to uncover which of the closets are loaded with skeletons and so ripe for disruption. For these investigators, it can be hugely effective, and disarming to ‘automation anxiety’, if we flip the typical script when engaging the teams in the trenches. For example, asking questions such as:
- What’s the least motivating and draining part of your role? Very often this will lead you to a treasure trove of operational excellence and potentially intelligent automation use cases where your team’s valuable talent is being wasted on the most incredibly menial activities!
- What new outcomes could your team achieve if everyone was able to recoup an hour a day? Suddenly we’re not talking about saving headcount, but potentially higher value target activities such as the team’s ability to realise avenues for [a] new revenue creation, [b] achieving the absorption of targeted future business growth without throwing more bodies at the workflow, [c] reducing procedural issues incurring daily negative financial impacts and, [d] mitigating regulatory exposure.
When it comes time to wrap this back up for the board the goal is to show that there are many more ways to prove that your digitisation agenda is having the desired transformative effect. Investment in these more creative use cases can unleash a far broader range of tangible wins for the company’s clients, employees, and shareholders than the axe man ever will!
Jonathan Rose supports clients in financial services to leverage ::projective’s digital innovation solutions to deliver value from front-line teams to the C suite. He focuses on creating and developing new revenue streams with banks and fintech companies and unlocking the business case within digitisation strategies.
[1] Organisational ambidexterity | London Business School
[2] Bimodal — delivering on the promise — Gartner
[3] What Servant Leadership Is Not | INSEAD Knowledge
[4] What VUCA Really Means for You (hbr.org)
[6] Objectives & Key Results: The agile OS for modern organizations (Lobacher & Jacob)
Excerpt from 60 Leaders on Innovation (2021) — the book that brings together unique insights and ‘practical wisdom’ on corporate innovation. Created and distributed on principles of open collaboration and knowledge sharing: Created by many, offered to all; at no cost.
