10.1 The Framework for Hearing
I will admit as I was writing this book, this chapter was always fuzzy to me. I wanted it to provide something (sage advice, roadmap, checklist, or some other topic) that would help people and organizations in their digital transformation journey. However, as I reviewed various ideas for the chapter, I always seemed to find reasons why each wouldn’t work for a potential class of reader.
I then harkened back to the story in Chap. 1. How do leaders know if their organization “hears” digital versus just “listens” to digital? What do organizations that succeed in their digital transformation efforts do differently from those that struggle or fail?
A recent article I read outlining retail store closings for 2018 underscored this thought on differentiation. Thirty retail chains are planning to close nearly 5000 stores in 2018. Overwhelmingly, the number one reason for the store closings was a shift in customer demand away from brick-and-mortar shopping to e-commerce. However, many other retailers are not shutting down stores and are, in fact, significantly expanding their brick and mortar presence. What are the differences between these retail organizations? What role does digital play in retailers that are expanding and those that are contracting?
One specific example in retail is Ulta Beauty, an Illinois-based retailer. Ulta Beauty plans to open 100 additional locations in 2018. Ulta’s CEO is an outspoken advocate for using technology as a critical component of transforming the customer experience. Their stores feel fresh and exciting and leverage technology to create a more seamless shopping experience for their customers. A quick scan of Ulta’s board composition reveals 2 of the 12 members are technology experts. While many retailers are retreating in 2018, Ulta Beauty is expanding through their leverage of digital technologies.
Organizations that succeed in their digital transformation efforts are the organizations that truly understand the importance and impact of digital technologies. These organizations develop a clear transformation vision and align the entire enterprise on the value and benefits they expect to receive.
COMPETE framework
As we discussed in Chaps. 3 and 8, culture is foundational to digital transformation. An April 2018 article by the Boston Consulting Group (BCG) underscores this importance. In their assessment of 40 digital transformation efforts, BCG found that 90% of organizations that focused on culture as the basis for their digital transformation achieved “strong or breakthrough” performance versus only 17% of those organizations that did not focus on culture. The BCG study also found that focus on culture played a significant role in the ability of an organization to sustain strong performance (Hemerling Jim, 2018).
Why do we exist as a company? Digital transformation challenges the purpose of an organization. It can change the market focus, the types of customers served, competitors, and the business models operated by the organization. Failure to understand the essential elements of purpose will make it difficult for a company to transform successfully.
Can our organization be bold and innovative in decision-making and direction or will we only seek incremental or marginal gains? Transformation is about fundamental change. It is not incremental. If the organization is seeking only incremental change or impact, it is not seeking to transform.
Are we, as an organization, genuinely customer-centric? Do we know our customer and can we anticipate their needs? Having an intimate understanding of the customer is elemental for digital transformation.
Can we eliminate biases and look at our organization through a different lens? Organizations must be able to enter transformation without preconceived notions or assumptions that successes or failures of the past are still relevant.
Are we, as leaders, ready to listen to our associates, our customers, and our partners? Digital challenges our preconceived notions as to what is possible. Leaders can’t summarily dismiss new ideas just because it doesn’t conform to their notion of plausible.
As we discussed in Chap. 2, it is critical that an organization has a strong sense of the outcomes they hope to achieve in their digital transformation journey. The development of a digital transformation vision and associated outcomes should emanate from the leaders in the organization with a vested interest in the success of the transformation.
Provide a detailed, achievable goal that results from some aspect of the digital transformation.
Define a specific impact on products or services provided to customers, vendors, and associates. In doing this, the outcome should also detail the impacts to associated processes, roles, technology, or all of these items.
Link to defined business strategies and describes potential obstacles and constraints.
Inevitably there will be a need to define some form of prioritization for outcomes. A good rule of thumb is to identify those outcomes that are “non-negotiable.” In other words, which outcomes are mandatory?
With culture and outcomes defined, the organization should be in a position to describe the future state business model(s) and associated processes. The definition of the future state models should include the products and services to be provided, the supporting business processes, roles and responsibilities, organization structure, and technology platform. In other words, the model brings together all the pieces of the transformation puzzle and brings the picture to life.
Perhaps just as important to the definition of the business model is the identification of partners. I even contemplated calling this slice of the pyramid Business Models and Partners. Organizations realize they can’t be all things to all customers. Organizations must identify and focus on their core strengths and differentiators. They will leverage partners to provide services and capabilities that are considered non-core.
For example, an innovative manufacturer has developed a great idea for a product. Instead of going through traditional retail channels, they may choose to market their product via Amazon’s marketplace and allow Amazon to manage the distribution of the product to the end customer.
The choice of what processes will be core and which will leverage partners is an important part of developing an overall business model definition.
Once the model(s) is created, the organization should have a clear understanding of the desired end state of the transformation and how operations will need to change to achieve the end state.
With the future state operating models in place, enabling technologies are identified in support of the new processes and products. Identifying these new technologies is not a trivial task as the IT organization will need to clearly define the prerequisites, dependencies, and sequencing of the technology and ensure it aligns with the sequencing of the desired business outcomes. Not understanding the interplay between the enabling technology and the business outcomes is a common problem during transformation efforts.
The pinnacle of our model is the experience that our organization will provide to our customers, our associates, and our business partners. Providing illustrated and detailed stories of these experiences help anchor the organization on the envisioned future. The stories should highlight those aspects of the transformation that will have the most positive impact on the customer experience. In the same vein, illustrating how the transformation will impact the associates in the enterprise is just as important to obtain buy-in to the overall vision.
With that we have our COMPETE model:
Culture
Outcomes
Models & Processes
Emerging Technology
Experiences (Customer, Associate, Partner)
As the name suggests, the COMPETE model defines how our organization will compete in a digital future. The output of the COMPETE model establishes the critical foundation for all digital transformation activities to follow.
10.2 Setting the Table
Armed with the output of the COMPETE model, the organization must now “set the table” to execute transformation successfully.
Setting the table in this context means developing consensus and alignment across all leadership and conveying a vibrant unified message to the enterprise.
As we discussed previously, this is where the voice of the organization’s leader (we will use the CEO title for purposes of discussion) is needed the most.
The CEO should have participated in the COMPETE model exercises to define the envisioned future of the organization. At worst, the CEO should have spent substantial time reviewing the output of the process and be entirely on board with the direction. Participating will allow the CEO to provide the necessary messaging to (1) organization leadership (2) all associates and (3) key partners/vendors.
As we covered in Chaps. 3 and 8, it is essential that the organization’s leadership be aligned and unified in their messaging. There are multitudes of ways to inform and align organization leaders. It is incumbent on the CEO to choose the approach that best fits his/her style and the culture of the organization. The two most critical elements in communicating this message are authenticity and candor.
The CEO must be authentic and demonstrate full commitment to the effort. Leaders should be free to surface candid concerns and ask detailed questions. This discussion is not the time or place for leaders to become shrinking violets. Open discussion and debate are critical to ferreting out concerns and issues BEFORE taking the message to a broader audience.
Once leadership consensus has been reached it is time to turn attention to the board. Just as the discussion with the leaders, the board discussion should be candid. If digital transformation is considered an essential element to the organization’s future, the board should recognize this and seek to develop a mechanism to stay informed and support.
Finally, after achieving leadership alignment, it is time to communicate the message to the organization as a whole. Again, this should be communicated in keeping with your organization’s culture. It is also crucial that associates be given the same level of opportunity to discuss, learn, and opine as was given to leadership.
If successful, digital transformation will no longer be a topic limited to a few senior executives and the board. It will be broadly discussed in the organization and will begin to shape the content and focus of meetings, projects, and events.
There is one final item to address before embarking on your digital journey. This item is often overlooked and is a vitally important element in setting the table. The item is assessing the current relationship between your IT organization and your business organization.
10.3 Achieving Common Ground Between IT and the Business
As a primary focus of digital transformation will be deploying new technologies to enable the business vision, it is vital that leaders assess the relationship between IT and the business with the same degree of candor used to build the digital vision.
The IT and business leaders should have an open discussion on the state of their relationship. Any existing fracture will become a chasm during transformation. Addressing strained relationships up front is vital to building the level of trust and partnership needed to succeed with anything as ambitious as digital transformation. Both IT and the business must be honest and diligent in addressing any outstanding issues. Addressing issues may require challenging individual biases, personalities, or even rehashing past failures. No one wants to rewind “old tape,” but sometimes it is necessary to take a step back to chart a new path forward. Having this type of dialogue is important, as I am supremely confident in saying broken relationships will not heal during transformation.
Achieving a true partnership between the business and IT is essential to success in any technology effort. As with most other organization relationships, transformation amplifies the importance of the business and IT association. Providing transparency and setting expectations up front is critical for both the business and IT. IT shouldn’t promise what it can’t deliver and neither should the business.
IT must act as a trusted partner, delivering new innovations and ideas to the business. In order to serve in this capacity, it is critical for IT to understand the goals of the business and the interdependencies of corporate value chains. IT must invest the time to understand business’ perspective on the challenges they face in the achievement of business goals. More often than not, at the core of these challenges are technology solutions that are either non-existent or lacking.
Another place to develop a shared understanding is resources. Specifically, both IT and the business must be realistic in defining the level of staffing capacity that exists to build new technology capabilities. Both groups must step up to the table with regards to enabling critical staff to participate at the levels needed to drive success. When discussing critical resources and skills, there can’t be enough transparency.
Also, jointly defining a governance process that works for both groups will help establish expectations and should provide a framework for communication and execution.
Speed of Delivery. How quickly can IT deliver the solution to the business for use?
Usability. How easy is the solution to use? Often highly usable systems require additional work to mask complexities from the end user.
Reliability. Does the solution do what it was designed to do? The level of testing performed and how well the testing mimics real-world scenarios often dictates reliability.
Availability. Is the solution always ready to be used? Architecting for high availability typically requires additional infrastructure, development, and testing.
Scalability. Can the solution grow to handle larger volumes of transactions or usage?
Securability. How well is the solution protected against cyber criminals?
Extensibility. How easy is it to extend or add new features to the application?
None of these “ilities” happen without forethought and planning. In the past we considered some of these capabilities as we started new projects. However, we often neglected building the “ilities” in order to achieve delivery speed. As we covered in Chap. 7, modern technology development and integration practices allow IT to create an environment that builds the “ilities” into their normal processes.
It is essential that IT build the capabilities to support the continuous development of deployment of solutions based on the “ilities”. With that platform in place, we can focus on the execution of the digital transformation vision.
10.4 The Loop
We have all involved in projects and processes where we worked without the benefit of good, reliable information. Leaders are forced to lean on their experience and intuition when making decisions without all the facts. We can all probably point to decisions we have made in these circumstances and say, “if I had known xyz, I would have probably made a different decision.”
When executing an effort as diverse and complex as digital transformation, it is likely there will be times when we have to make decisions based on incomplete information. However, this can be mitigated by considering and building feedback mechanism throughout the transformation lifecycle.
What is a feedback loop? A feedback loop is a set of processes (which can be enabled with technology or not) that provide information to decision-makers on the state of an activity. In simple terms: you build something (product, system, service), you capture information about the status of your efforts and use this information to improve the outcome. It forms a perpetual cycle or loop of measuring, monitoring and improvement.
The first component of a feedback loop is a trigger. A trigger’s sole purpose is to prompt the collection of information. Triggers can be temporal (for example: every Friday, last Monday of each month) or event-based (status changes on a project, meeting or discussion takes place). The definition of a trigger should contain the time or event that prompts information collection, the specific information to be collected, and who (person or process) is responsible for collecting it.
The second major component of the feedback loop is the routing. Once a triggering event occurs, and the information is collected, it must be sent to the appropriate people inside the organization. A conventional method used to construct routings is the RACI diagram. RACI is an acronym for responsible, accountable, consulted, and informed. RACI is most often used to define the participation level of the members on a team. This RACI diagram can be used to help build routings for information collected via triggers.
The final component of the feedback loop is the action (decision made or problem solved). Certain feedback loops are built only to inform, while others require taking a specific action. As part of a feedback loop, it is critical to explain what action you expect from the people/roles on the routing as well as the timeline the action is needed.
Temporal feedback loop example
Weekly status update | |
|---|---|
Trigger | Every Friday, by 10:00 am EST |
Information needed | • Sprints planned, sprints completed • Net story points added • Cumulative story points added • Defect trends • Burndown chart • Outstanding issues for management |
Collected by | Scrum master |
Routing | Product manager Business sponsor Technical sponsor PMO contact |
Actions | Status information only, no actions Issue resolution handled by separate routing |
Using this construct of a feedback loop at the critical points of digital transformation is essential. Structuring the digital transformation effort into shorter duration and tightly scoped deliverables aids in keeping the information flows crisp and encourages rapid decisions.
Finally, the best type of feedback loop is one in which information is always available. In other words, it is real-time. Leveraging digital technologies to build real-time dashboards, alerts, and collaboration capabilities are great ways to keep the digital transformation efforts moving forward. This practice also establishes the mindset of organization leaders on what it means to be digital. Information moves in real-time, decisions are made rapidly, course corrections occur seamlessly, and the information is fully transparent.
Armed with a robust vision for transformation, excellent organization alignment, solid governance, comprehensive communications, and an effective set of feedback mechanisms the opportunity for your organization to execute a successful digital transformation is greatly enhanced.
10.5 Final Thoughts
The advent of digital technologies both excites and terrifies many organizations. The proper adoption and use of these technologies present incredible opportunities for defining new business models, penetrating new markets, acquiring new customers, and improving efficiency and profitability. Conversely, failure to embrace these technologies could spell the demise for many organizations as more nimble competitors erode their market share.
It is also an exciting and terrifying time for the technology organizations tasked with developing, integrating, and deploying these technologies. IT has long wanted its moment “in the sun.” With digital transformation, IT has never had a better opportunity to build meaningful partnerships with the business.
However, a question remains, “Are we all ready?”
This question is what drove me to write this book. As I observed in my organization and countless others I have talked with; there is a great deal of confusion regarding digital technologies. Digital transformation is a buzz phrase encompassing many other buzz terms. There is tremendous hype, but quite often a lack of clarity. Early attempts at digital transformation have resulted in high failure rates and disappointment. I am hopeful that we have covered many of the reasons behind these failures and outlined ways in which your organization can avoid the same fate.
As we started this chapter, think back to the dialogue from White Men Can’t Jump . Many leaders read books and listen to seminars and presentations regarding digital transformation. How many of these leaders really “hear”?
To hear is to believe in the power and opportunity of digital transformation. Believing is the backbone of vision. As we have discussed, vision is the foundation for transformation.
It is my profound hope that this book has shed a different light on the topic of digital transformation. I am hopeful, by sharing experiences and research into the current state of digital transformation, we illuminated some of the pitfalls and obstacles that may be facing your organization. Equipped with this perspective, I am optimistic that organizations can avoid these issues and successfully complete their digital transformation journey.