Transformation, easier said than done!
Digital business transformation is not easy, in fact more than 70 % of all initiatives fail. A lot of the failed initiatives gets delivered to its Product owner, but not with the benefits the business had expected, and sadly in many cases, the output of a digital transformation is often not aligned with company strategy and could actually end up being counterproductive.
Multiple companies today are forced to change their business to meet new customer needs, however often its not about transformation – its mostly replacing tech.
In fact, we should start every digital transformation initiative by understanding what we are actually aiming to achieve. As Rob Llewellyn at #CXO Transform says in his podcast “The Delusion of Digital Transformation”describes this as: “The tendency to label any project or programme involving digital technology as “Digital Transformation”. Those initiatives that will neither disrupt markets nor protect against disruption often lull firms into a false sense of security when executives are led to believe they are transforming their business.”
Jack Welch former GE CEO once said:
A great quote – but let’s discuss a what it means when applied in today’s organizations.
First of all, in real life, “picking a general direction” does does not really work. When company strategy is not clear, the c-level executives tend to choose their own path of “the general direction”. This is at best, and a common scenario we see is that the digital transformation initiatives are often running head to head with company strategy, and in some instances may even become counterproductive. This is not how you end up with the 5% that exceeds expectations – according to Bain & Co.
The other big challenge that we often face is the “implement like hell”. This is true as an ambition, but most companies have no idea of what their transformation capabilities are, and to make things worse, they have little or no idea of what baseline they are starting with. Great ambitions are not enough, you need to do your due diligence and adapt the “implement like hell” tempo to your capabilities. Else, you will likely end up in a situation where you started your transformation marathon using the tempo for a 800 meter sprint.
We have seen these issues and we apply proven models to fix them. We call it the Enterprise Change/Transformation Capability framework.
Be aware if your company have a Digital strategy. You need a CEO led company strategy. The CIO task is to deliver digital tools to support and enable the company strategy, not to develop a a second strategy which over time may divert. The first check you can do, is to ensure that your digital initiatives are fueling the overall company strategy. Have a look at Michael R. Wade from IMD article; Digital transformation: 5 ways organizations fail. We recommend to utilize models to help you reduce silo thinking and optimize flow across the whole enterprise, not just optimize certain functions within it.
Our enterprise eco system model goes outside-in, and always starts with strategy. Then moves to providing value by having a customer centric approach. Next organization & processes must be redesigned towards new business models and finally the technical systems and digital tools shall support what the organization has been set up to perform. Not the other way around, as it happens when good faith initiatives arises from technology, the strategic transformation required across the enterprise will rarely be performed.
To avoid the “Implement like hell trap”, we recommended to perform a 360-degree analysis of the enterprise’s Digital Transformation Capabilities. We have built our model on the Digital Capability Framework from the book: Digital Enterprise Transformation, written by Axel Uhl and Lars Alexander Gollenia. We evaluate six capabilities against a scale ranging from 1 to 5. The result will visualize the strengths and weaknesses in the as-is, and at the same time, we jointly determine the desired to-be levels. To bridge the gap between the as-is and the to-be we identify use cases; identifying projects and or line activities enabling the enterprise to build capability and reach the desired maturity levels. These activities should be included alongside the initial transformation driver and its corresponding activities.
Implementing the total will help your enterprise to deliver your transformation road map, AND significantly increase your ability to realize the benefits outlined in the programme business case. Ultimately, it will fuel your transformation journey to become a digital enterprise.
We will address more topics on digital business transformation, and showcase what our consultants take into account to help our customers succeed with Digital Business Transformation initiatives.
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