Digital Transformation Approach

IT industry is going through a transformation phase; its result will get more and more visible by 2020. In this transformative phase of enterprise IT, AI and Automation will play a crucial role. As computing resources are getting abundant and cheaper by the year (at the pace of Moore’s law), it has become necessary to rebuild and transform business models and existing capabilities, but at the same time it is necessary to ensure that fundamental values of an organization should not get transformed.

I observed that most of the large and established companies find it very difficult to invest adequate resources in disruptive technologies. Here I would like to refer the theory of resource dependence propagated by Jeffrey Pfeffer and Gerald R. Salancik in their famous book “The External Control of Organizations: A Resource Dependence Perspective”, it’s a fact that these established companies depend on customers and investors for resources, these companies find it very difficult to invest adequate resources in disruptive technologies, because disruptive technologies in their initial phase seem lower-margin opportunities that their customers don’t want.

I believe the leadership art in such scenarios is to align the transformation approach with the forces of resource dependence, rather than ignoring or fighting them, this is possible if we set up an autonomous unit/team focused and dedicated to exploring disruptive technologies, a team with lean and agile mindset and equipped with the capabilities of testing the potential of disruptive trends/technologies. This Lean Digital Transformation Team should adopt a discovery based planning approach because the right markets and the right strategy for exploiting them, cannot be known in advance. But we have to discover that because these disruptive technologies/innovations offer strong first mover advantages. As Mr. Clayton M. Christensen author of the book “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” has said “Companies whose investment processes demand quantification of market sizes and financial returns before they can enter a market get paralyzed or make serious mistakes when faced with disruptive technologies. They demand market data when none exists and make judgments based upon financial projections when neither revenues nor costs can, in fact, be known. Using planning and marketing techniques that were developed to manage sustaining technologies (technologies that their customers needed) in the very different context of disruptive ones is an exercise in flapping wings. There are times at which it is right not to listen to customers, right to invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial, markets.”

In today’s disruptive and uncertain market environment you cannot afford to follow a single strategy and it is applicable to organizations of all size. Running two strategies in parallel, one for Transforming core capabilities and other for hunting new technologies/trends is needed. A structured approach combined with lean mindset will enhance the existing capabilities and the ability to tap emerging digital technologies faster. After exploring different transformation strategies/reports/case studies I recommend a dual approach to transformation in which the first part is Lean Digital Transformation Approach and the Second part is Structured Approach.

Dual Approach to transformation focuses on building three capabilities-:

–Digital capabilities by eliminating waste and improving existing business processes, customer engagements, and business models.

–Leadership capabilities to drive the transformation. And

–Smart capabilities to explore new business models and untapped markets by continuously hunting for and experimenting with the latest technology.

 

Lean Digital Transformation Approach	Structured Approach
Explore new and untapped technology trends/ practices/frameworks	Identify bottlenecks or pain points in existing processes (operations/customer experience)
Run an experiment/pilot on these trends with the minimum investment of time and resource possible. Work in a lean and agile manner.	Identify and analyze existing processes/strategic assets/systems and lean the fatty part. Eliminate waste.
Share the feedback and recommendation about the potentially disruptive technology.	Build digital vision, incorporate the recommendation of Lean Digital Transformation Team. Collaborate and coordinate with them. Define intent and outcome.
Coordinate with the teams which are using Structured Approach (the implementers) in their journey to transformation; design implementation roadmap in collaboration with them.	Build Capabilities essential for Digital Initiatives. Understand and leverage the data. And establish the right digital traction metrics to track the transformation process.
Design strategy case by case	Execute strategy, integrate automation and if required integrate on-demand workers into the workforce.
Provide mentoring/guidance/training to the implementer teams.	Constantly be looking to evolve/extend your vision using the capabilities you have created.

 

The combination of Lean Digital Transformation Approach and Structured approach will deliver the best returns on transformation investment; lower the risk by deliberately addressing key legacy and change management issues.

Now if I talk about the culture part:

First– I believe that technology professionals are smart enough to adapt new things, as they are used to of it. The need is to align their engagement platforms, activities, training and discussions around digital transformation vision and latest technology.

Second- As digitalization/automation is no longer an option for organizations, keeping up with its pace is no longer an option for professionals too. The need is to make them aware of the direction of industry and organization and its future state, those who want to keep going will definitely consider this as an opportunity for self-growth, and they will change their approach. Aligning KPI, incentives, rewards/recognition (tangible/intangible benefits) around Digital Transformation vision and objectives will help too.

Third- the outcomes of digitalization will simplify the processes, fill the knowledge gaps, smoother running processes bring self-motivation and self-motivation brings excellence.

Digital transformation is an opportunity to develop a mindset of human-machine partnership within the organization. It’s a perfect time to prepare the workforce to adopt a liquid approach- always ready to learn and adapt new technologies/frameworks, multi-domain expertise, ability and willingness to switch responsibilities and a collaborative culture. The workforce should be trained to develop an attitude of ‘contribution’ to the larger vision.

To conclude I would say that vision and direction of any transformational program are always top down. Involving everyone in the digital transformation process is fashionable but such activities most often create a diversion and waste precious resources (time/money). Approaches such as “let a thousand flowers bloom” (of Mao Tse-Tung), does not work in real business.

It is the responsibility of transformation unit leader to ensure that approach to transformation and dealing with the disruptive technology is taken seriously within the organization without putting at risk the needs of present customers who provide profit and growth.

You can view my Digital Transformation Video Series too.