The Hard Thing About “Digital Transformation”

Mukesh Gupta — March 16, 2017 Follow @rmukeshgupta

Premise:

Everywhere you go on the internet, there is one thing that is prevalent. No, I am not talking about Donald Trump, though he seems to be prevalent almost everywhere as well. I am referring to “Digital Transformation”. I have been reading about digital transformation everywhere i go on the internet for sometime now and yet, I don’t yet see true success story of a brand or a business that has actually successfully gone through and transformed, in the true sense of transformation. The question is why is this so?

Any transformation is difficult, digital transformation, more so:

As any leader who has attempted to change an organisation or a team of people will readily accept – change is difficult, both at a personal level and more so in a group. And if the change is not small but is at a scale where it can be called a transformation, the scale of difficulty goes up by a few notches. In the case of digital transformation, it is change at every level.

It is about how the business engages with their customers, partners, vendors and other stake holders. It is also about how they work within the organisation. It is also about how they think about these things. It is also especially difficult because this also requires everyone in the organisation to learn new tricks (and we all know how difficult it is for people who are senior enough in a organisation to first accept that they need to learn as well, then to go on to actually learn).

Is there a playbook for successful digital transformation?

I don’t think so. If someone says that they have one, I would assume that they truly don’t understand the magnitude, complexity, customisation and the level of difficulty involved in running a digital transformation. No two organisations are the same and have the same challenges and hence can be transformed in the same way. So, that, in my opinion rules out having a playbook for digital transformation. Whatever approach one takes, it needs to be custom built for that specific organisation and developed in-house, maybe in consultation with external consultants.

So, What does that mean?

This means that digital transformation is a virgin territory. Every leader or an organisation will need to figure out how to traverse in this territory. Having said that, the same basic concepts that are important for every change project is applicable here.

Some of these concepts are:

1. Self Realisation: As with every other change effort, it should start with self-realisation that there is a need for change or transformation. If you start a project for digital transformation, just because, everyone else seems to start one or every alternate vendor is talking about it, then you are doomed to fail, even before you start.
   
2. Start with the why: Once the leader senses the need to change, it is important that they communicate this insight or understanding with their team. It would serve them well, if they are able to clearly articulate, why the need for change and what will happen if they don’t successfully change (we all know that negative consequences are more powerful motivators than positive outcomes).
   
3. Then move to Where: Once it is clearly articulated and the teams buy-in the reason, why change is imminent, the leaders need to work with the team to create a vision of what the successful change could look like. While it is important for the leader to have a vision herself, it is equally important that they don’t share it with the team upfront, to avoid HiPPO’s (Highest paid person’s opinion) bias to take hold. Leaders would be surprised with the creativity and passion that could be unlocked within their teams, once they give them the permission to revv up their imagination and imagine what the future could look like.
   
4. What would need to be true: Once the vision for the future is agreed upon, you might think about the assumptions that you have made while imagining the future. You can think of it as a series of “what would need to be true for __x__ to be real”.
   
5. Experiment to test the assumptions: Once the assumptions have been identified, we need to create experiments to test these assumptions and learn from them. The learnings need to be communicated to the team and the vision updated accordingly.
   
6. Pick a starting point: The easiest way to lose a change project is to go big. While there are change projects which are big and transformative, that succeed, the probability of such a project (specially, one which is going to be in unchartered territory) to succeed, is small enough for me to suggest that, it is best to start small. The way you do that is to pick a starting point. It could be as simple as updating your internal IT system to enable cross-functional collaboration or training employees on the basics of new technologies or how you engage with your customer in the sales cycle. I would pick a starting point that is totally in the control of the leadership team and doesn’t involve external stakeholders first. Also, the important point to remember in this step is that we need to pick something that forms the foundation on which we can build the transformation effort. Usually, it is about changing mindsets or toolsets, and in some cases both.
   
7. Create a ripple effect: Once you have identified a starting point, enroll the people who will need to change to make the transformation work. Find ways to create some initial success and build on the success. Once you have successfully done transforming the first phase, pick the next point of transformation. Once you have done two and learnt what works (and more importantly, what doesn’t work) in your organisation, incorporate the learning back into the next phases. Once this is done, then look at involving external stakeholders.
   
8. How to select the projects: There are multiple ways to select which areas should be picked for transformation and in what sequence. Some people pick the areas that can have the most impact, some pick the projects that are the easiest to successfully complete, some rely upon the recommendations made by consultants that they have engaged. My personal opinion is that we should pick the projects, just the way an architect builds a building. The most important is the foundation on which the entire building will rest. Then comes the walls followed by plumbing, electricals and finally fittings, flooring and finishing. The leader needs to discuss and decide what is this sequence for them. The only criteria is that each project’s success should make the next one easier to complete and succeed.
   
9. Communication is the key: As any change manager would readily agree, it is critical that you monitor and report progress through good communication with the entire team. Regularly. All through the change effort.
   
10. This transformation doesn’t stop: Unlike other change management projects, digital transformation is unlikely to have an end date or state. Also, because of all the rapid change that is happening in the world of technology, it is quite possible that you might have to re-visit your vision to ensure that it is still valid and the right one to go after. And due to this, I believe that the digital transformation would not end-up being a project but will become a way-of-life.

Conclusion:

All of this means that while we all hear a lot of noise and too many people trying to sell their own IP on how to go through digital transformation, leaders need to be aware that it will take much more than that in order to truly transform to the digital era. It also might mean, that as a leader, you are the first person who needs to understand and personify the kind of person it takes to go through such a change initiative, so that others can learn and model them (the list of characteristics that they need to display is a topic for a separate post sometime soon).

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