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Bringing Home Digital Transformation - Part 2: Enabling the Critical Ingredient

Bringing Home Digital Transformation - Part 2: Enabling the Critical Ingredient
August 28, 2018

Start with the top

Typically, change happens in enterprise technology from the bottom up. IT comes up with a project proposal to modernize, and sells the business case using revenue growth or cost savings as drivers, and if not, sell it using the fear of obsolescence.Once the project is underway, they put pressure on business to engage, provide bandwidth, force to reengineer some of their business processes, and so on. Some visionary business leaders see the value and provide more of their engagement in these projects. But nevertheless, it is a bottom-up approach, with much energy spent by IT on trying to convince people that this is a good thing and that they are trying to change the world. Inevitably, many projects don’t meet their timelines, budgets, and business KPI’s as the project was sold with optics that looked good but in practice were hard, right from the beginning. And, this failure makes it harder to sell next time around and keeps eroding the credibility of all involved.

Well, that doesn’t work anymore. For digital, change has to be driven top- down. The reason is simple — high probability of initial failure. Anything that disrupts needs taking risks, tenacity, and a strong belief in the purpose. A shift to something like digital strategy would involve a steep learning curve, and the chances of initial failures would be high. Unless, the organization can get through this pain period, it will not strengthen itself to succeed. Organizations are run by humans and demonizing failure would drive people to make their decisions based on their personal survival. They have families to feed and a life to live. A top-down cultural shift to digital strategy would give them the confidence that this change is owned by the top most leadership, and their job is to execute it with the best intent and ability, rather than be afraid of being accountable for failures.

The recipe for culture change

It is hard to provide a simplistic recipe or a magical formula for culture change, as it depends on many dynamics in an organization. However, there are many common elements that apply to most organizational environments. But, above all, there is one absolute thing that matters the most: intent.

Intent is the big bang for culture change

We all know the leading hypothesis on how the universe is was created with from a single event, the big bang. Similar to that, a massive and successful digital transformation can be triggered with a clear and forceful intent from the CEO. If the board and the top most executive of the organization truly believe that the company has to become digital across the board, and use that to drive their decision- making, it is a huge head start, like a marathoner starting ahead by at least 10 miles. The board and the CEO, with their decisive intent, will lay the foundation that is visible to everybody in thought and action. This will trigger the cultural shift to a digital strategy that will set the path of progress and expansion.

The intent should be beyond market-pleasing statements and speaking the trends, but well and truly coming from the heart. The board and the CEO need to make their organizational and investment decisions based on this, and be prepared to support this marathon. Bottom-line, Walk the talk and be strong, bold, and decisive in intent to shift the culture to digital strategy.

Other crucial ingredients

Assuming a strong intent is powering the culture led digital transformation, most organizations have to go through a multi-step journey to make transformation happen. We do not want to be prescriptive about the steps or the sequence of steps an organization should undertake, since it depends very much on the specific circumstances and maturity level across various dimensions. Instead, we want to leave you with a few core ingredients that you should consider during your digital innovation journey.

  • Organizational change

    The most critical step is to organize people, responsibilities, and accountability that reflect a digital organization. For example, appointing a Chief Technology Officer or Chief Digital Officer who is responsible for driving the digital transformation and organizing IT teams by business capabilities and product groups, and bringing business to own the capabilities and products.

    Approvals and the pace of change for the organization should be ‘un-red taped’ or short-circuited to happen rapidly. Ideally, a Digital Transformation Office (DTO) should be located in proximity to the CEO’s office and frequent review/approval cadence should be in place.

  • Clear roadmap

    The DTO or a similar function needs to develop a comprehensive digital vision and a corresponding roadmap of what and how they will accomplish the same. The vision and roadmap can look into the future but no further than five years, as things are moving so fast. Within that five-year roadmap, an aggressive vision needs to be laid out for the next 18-36 months which will translate into short-term quarterly planning. The roadmap is not just about implementing technology but changing the culture and the organization.

Decision framework and methodology

The execution of the roadmap should be thought out in detail not just in terms of what to be done, but how to be done. The big part of this ‘how’ is how decisions will be made at various levels. Digital innovation needs fast decision-making and sophisticated risk management. This new way of thinking and deciding could be a paradigm shift in culture for many, and it is the DTO’s mandate to develop a decision framework that will guide the organization. This framework will address key decisions at various levels like:

  1. How should a project be evaluated – transformation value first and revenue/cost later?
  2. What should be the guiding principle in splitting projects into bite-size chunks?
  3. How and what risks should be monitored – redefine the high risks as traditional evaluation measures may not provide the long-term transformational value that is more important?
  4. When should experiments be abandoned?
  5. What roles should be mandatory in teams and where does accountability lies?
  6. Who owns the decisions across product, technology, and methodology?
  7. How will transformation be measured?

Establishing a decision framework as well as a standard methodology for transformation initiatives will help the organization immensely, bringing a level of transparency and a common understanding of how the organization thinks and acts. It will reduce the subjectivity and forces people and processes to adapt to the new ways.

A key capability to mature is a strong framework to measure and monitor the progress. The DTO plays a crucial part in this as well and should establish a transformation dashboard of metrics to measure and monitor.

There should be two types of metrics that should be championed. : External facing and internal facing. The external-facing metrics measure the impact of digital on a business like revenue generated through digital channels. The internal-facing metrics measure the progress of digital transformation along the dimensions of technology, organization change, and culture. In the initial part of the transformation, the focus should be more on the internal metrics, until the organization becomes digitally mature.

In conclusion

Digital transformations need not be as daunting as they seem or as half-baked, if only leaders understand that this transformation needs to be driven top-down by them, and it starts with the “culture,” powered by a genuine, passionate, and strong intent by themselves. There are many other ingredients that contribute to the recipe of success for digital business transformation, but starting with the CEO-led, strong intent-powered cultural shift will remove the headwinds and allow the organization to accelerate with full force and commitment. This is the magic sauce of bringing home digital business transformation, and the critical ingredient.