In my career, I had the opportunity to work for five different companies. Each company had its own distinct culture, distinctly different leadership styles, and unique goals. Four of the five companies I worked with had aggressive growth goals as part of their mid-to-long-term vision. While every company I worked for grew, only one met its aggressive growth goals.
When I joined Lowe’s, Inc., it was wrapping up its 1992 business year where it would generate approximately $3.8 B of revenue in the home improvement retail sector. We ended the year with roughly 300 stores and 10 million square feet of retail selling space. The average store in the chain was approximately 32,000 square feet in size. The company had opened its first big box store during the year as it was beginning to embark on a new business strategy.
I remember some of the first meetings at Lowe’s. The topic was transformation on a massive scale. The goal was simple enough, to grow the company to 600 stores by the year 2000. As meetings picked up momentum it became clear it wasn’t just the about opening new stores; it was also the transformation of the existing store base. Over time, the goal was refined to 600 “superstores” and $20 B in revenue by 2000.
As we closed the books on the 2000 business, Lowe’s was operating 650 stores totaling over 67 million square feet (an average of 104,000 square feet per store). Revenues totaled just under $19 B.
I left Lowe’s at the close of the fiscal year in 2010 (January 2011). As I departed, the company was operating nearly 1750 stores with over 197 million square feet of selling space. Revenue was approximately $49 B.
During my career at Lowe’s the company grew stores by 6X, retail square footage by almost 20X, and revenues by 13X. It is a transformation story almost unparalleled in US retail history.
Continuity of leadership. Three CEOs led Lowe’s during my 19-year tenure. All three of the CEOs came from inside the company. When I left the company, 10 of the 14 top executives had over 15 years experience with Lowe’s. Four of the 14 had over 30 years of experience. This level of experience played a vital role in propagating company culture.
Simplicity of the message. Lowe’s focused not just on growth, but profitable growth. This theme was pervasive in all meetings and all company messaging.
Intense focus on the fundamentals. Lowe’s understood its customer and its competition. Lowe’s possessed good sources of information and leveraged it effectively to maintain a firm finger on the pulse of the business.
Great people. I had the opportunity to work with an amazing group of leaders and associates during my tenure at Lowe’s. The people at Lowe’s were highly motivated and introspective. Lowe’s was Lowe’s worst critic.
I share this story of transformation success as the backdrop for discussing our Deaf Diagnostics. Transformation on a large scale is possible, but not without tremendous effort and focus.
We have been through eight chapters and identified 16 Deaf Diagnostics. These 16 items are ones that, if not addressed, will present major obstacles to your digital transformation efforts.
I chose to prioritize these diagnostics based on my opinion of their importance (most important first). Your priorities may be different depending on your specific situation.
For each Deaf Diagnostic we will provide the chapter in which we identified the diagnostic, a short description, symptoms to look for, why it is important to recognize, and potential actions steps to mitigate (or eliminate) the impact to your transformation journey.
9.1 Digital DNA
Chapter reference | 8 |
|---|---|
Description | Your organization must possess the characteristics inherent in digital organizations, or your transformation efforts will not deliver the desired impact |
Why is it important? | Culture shapes the playing field for transformation. Culture is reflected in an organization’s values and beliefs. If the organization does not possess the needed characteristics, it will be unable to foster support for profound, meaningful change |
Symptoms | • Lots of gossip and sidebar discussions • Unhealthy competition among leaders • Inability to make decisions and move forward • Organization clinging to its silos • “Blame games” • Information hoarding • Everything follows a traditional sequential pattern |
Mitigating actions | Most of what I can say about improving culture sounds like motherhood and apple pie. The actions of the organization illuminate its culture. Changing the culture requires real effort, with the actions of the leaders amplified in these scenarios. The nine characteristics of digital organizations need to become core to the organization. Ways to do this include: • Publish the characteristics you want in the organization and keep them front and center to employees at all times • Develop and cultivate an environment that recognizes and rewards positive behaviors reinforcing the culture you want. Conversely, recognize and call-out harmful behaviors as well • Incorporate these values into your hiring, promotions, and evaluation criteria for leaders |
9.2 Leadership Commitment
Chapter reference | 8 |
|---|---|
Description | Leadership in your organization must be “all in” on the benefits and promise of digital transformation. As important, the leadership must have credibility across the organization |
Why is it important? | Leadership establishes the tone for the organization. Clear, consistent, and authentic messaging from leadership builds credibility and elevates the priority staff will place on transformation activities |
Symptoms | • Leaders disregard or even show disdain for the transformation outside of public forums • Different transformation messages and priorities emerging from various leaders • Organization staff is unclear on the intent and goals of the transformation • Messaging from leaders does not resonate with the organization’s staff |
Mitigating actions | • Message from the CEO (written and presented) outlining expectations, timelines, and structure • Workshops with leaders to get everyone “on the same page” • Coaching leaders on storytelling and how to make the message personal • Common talking points with emphasis on those items most critical to success • Leaders holding each other accountable for staying on message • Remove leaders not willing to enthusiastically deliver and support the transformation message |
9.3 Customer Intimacy
Chapter reference | 2 |
|---|---|
Description | Your organization must be in constant contact with your customer, understanding their preferences and preventing any business practices from interfering with how the customer wants to transact with you |
Why is it important? | If you don’t have a solid understanding of your customer, it will be impossible to set a course for your digital transformation. Our target is to improve customer outcomes. Without strong customer knowledge, we could focus on the wrong outcomes and not generate the returns we would expect |
Symptoms | • “We know better than the customer” or “The customer doesn’t know what they want” • Inability to understand why some promotions work and others don’t • Inconsistent performance on new product introductions • High number of customer complaints • Refusal to change business processes that would make it easier for the customer because it would make it tougher on the organization |
Mitigating actions | • Collect data at every place you touch the customer • Socially connect with your customers (Facebook, Pinterest, Twitter, Instagram) • Invest in customer data integration (CDI) technologies to tie together disparate sources of customer information • Create and staff a role of Chief Customer Officer |
9.4 Board Composition
Chapter reference | 4 |
|---|---|
Description | Your board of directors must have membership possessing relevant and in-depth knowledge of digital technologies to provide the level of support needed to ensure a successful transformation |
Why is it important? | Digital transformation is a significant and impactful event for an organization. If pursued, it will be a core component of any organization’s strategy. The Board must be in a position to understand, approve and fund the resources needed to support the transformation |
Symptoms | • No board members with in-depth or relevant digital knowledge • Technology initiatives seldom discussed at board level (note, this does not include Audit Committee) • Funding requests for digital technologies denied. Funding held up while the board deliberates or while a third party, appointed by the board, reviews the request |
Mitigating actions | • Include digital technology expertise as a prerequisite for future board member searches • Select a knowledgeable, independent, third party to augment the board until new, digitally literate, members are added • Consider creating a separate committee or sub-committee dedicated to digital transformation |
9.5 Clearly Defined Governance
Chapter reference | 2 |
|---|---|
Description | Your organization must define a governance structure for your digital transformation effort that clearly details the roles, responsibilities, authorization, approval, and funding processes |
Why is it important? | Governance sets the framework for transformation execution. Understanding who owns the overall effort, how to manage change, how to receive funding, and the expectations of transformation execution teams, are all prerequisites for any transformation effort |
Symptoms | • People are not clear about who is leading the transformation effort • Authorization and approval processes are not clearly defined, are time-consuming, or both • Funding mechanisms for the transformation are time-consuming and bureaucratic • Transformation execution teams are not clear on their mandate or are receiving direction from multiple points in the organization |
Mitigating actions | • Clearly define the governance model for the transformation effort including explicitly stating the roles and responsibilities of key stakeholders • Review authorization, approval, and funding processes, to ensure they are streamlined and aligned with the message of the transformation • Define and create a formal Digital transformation steering group/committee if this has not already been done. Digital transformation is not a typical organization undertaking. It requires different treatment |
9.6 Transformation Messaging
Chapter reference | 3 |
|---|---|
Description | Developing a transformation message and communicating it to the organization is a critical enabler for digital transformation. Messaging must be clear, targeted, and crisply delivered to have the anticipated impacts on the organization. Delivered correctly, the message will resonate in meetings and hallway conversations |
Why is it important? | Once leaders establish the tone of the transformation for the organization, ongoing messaging and updates keep the effort alive. Associates need to understand their role in the transformation and why it matters |
Symptoms | • Associates making disparaging remarks about the transformation • Alternatively, no one is talking about the transformation • Confusion over roles and the impact the transformation will have on individual responsibilities • Associates being unaware of transformation status and not preparing for new responsibilities |
Mitigating actions | • Reference item 2, as the leaders must establish the tone for the transformation • Strive for transparency in all communications regarding the transformation. Holding back information will only drive people to create their version of the truth • Ensure the governance of the effort is working • Realize you can’t over communicate vision and business outcomes. For transformation efforts, the frequency should be a factor of 5–10 times more than usual • Ensure people have the time to work on the transformation. It can’t be a part-time job • Find and eliminate silos of information and misinformation |
9.7 Talent Management
Chapter reference | 8 |
|---|---|
Description | Your organization must have a practical and executable plan for the talent needed to lead, execute, and sustain digital transformation |
Why is it important? | Organization talent is the foundation of transformation. Having the right skills, in the right quantity, available at the right time is key for transformation execution |
Symptoms | • Critical skill gaps exist within the organization • No sourcing plan exists to find the talent needed to fuel the transformation • Lots of consultants, not many internal people working on the transformation • People in the organization are not prepared to operate in the new digitized environment |
Mitigating actions | • Identify the skills needed to drive the transformation and develop a detailed sourcing plan (internal and external resources) • Develop evaluation and education plans for groups most impacted by the transformation • Build transition plans for all critical external resources |
9.8 Technology Leadership
Chapter reference | 5 |
|---|---|
Description | Your organization must have the right leader at the helm of your technology function reporting to the CEO. The structure of the technology function must be aligned to eliminate confusion and set the table for crisp execution |
Why is it important? | The technology leader (regardless of title) in the organization must provide the vision, strategy, and structure to enable execution of the technologies to enable digital transformation. Spreading this responsibility to multiple parts of the organization adds complexity and can lead to conflicts that hamper or slow transformation efforts |
Symptoms | • No organizational plans in place supporting digital transformation • Technology leader does not report to the CEO • Technology treated as an expense (leveraged) versus a strategic capability (enabling) • The business does not regard IT as a partner |
Mitigating Actions | • There are no shortcuts. If you don’t have the right leader of your technology organization, you need to be searching • Dependent on having the right leader, technology should report directly to the CEO and participate in board meetings • If technology is in multiple parts of the organization (such as operational IT, Analytics, Digital Transformation), unite it under a single leader |
9.9 Technology Demand Management
Chapter reference | 7 |
|---|---|
Description | Your IT organization must possess a mechanism to collect, categorize, prioritize and fund demand in a systemic manner. These capabilities provide the needed visibility to identify dependencies, focus resources, and ensure the highest priority efforts are understood |
Why is it important? | Can you imagine trying to forecast inventory requirements without a firm understanding of your capacity? The same issue exists for technology. Technology is a scarce resource with more demand than capacity. Therefore, the business must determine the priority of efforts based on value. IT must then develop an execution plan based on their computed capacities |
Symptoms | • Lack of a centralized IT demand management capability • IT is asked to prioritize efforts for the business • IT can’t articulate their capacity (to the role level) to execute programs and projects • No process exists for the business to review and prioritize technology efforts • A published timeline does not exist for the execution of technology projects • Lack of either an IT or Business Program Management Office (PMO) |
Mitigating actions | • Creation of a PMO to oversee programs and projects within the organization • Creation of a Technology Steering Committee and associated governance processes • Business demand function within IT responsible for vetting and consolidating demand requests from the business • Centralized IT Planning function responsible for the creation and publishing of the technology timeline balancing demand and capacity |
9.10 Analytics Capability
Chapter reference | 7 |
|---|---|
Description | It is essential your organization build and communicate a well-defined strategy and associated architecture for the building of an enterprise-class analytics capability |
Why is it important? | Digital technologies are creating massive amounts of new data enabling new insights to be discovered by any organization. Also, emerging capabilities through advanced algorithms associated with machine learning and artificial intelligence provide substantial opportunities for further growth and efficiencies. Organizations will not be able to capitalize on these opportunities without a strategy and associated architecture to capture, store, analyze, and leverage data |
Symptoms | • The organization is still reliant on paper-based reporting for decision-making • Multiple versions of “the truth” exist in the organization • The organization lacks the skills to build and leverage predictive analytics • Lack of standards and common tools for developing new reports and dashboards • The organization struggles to assimilate new data sources to produce new insights • Requests for new reports or dashboards, using pre-existing data, take longer than a couple of days to complete • There are no plans to begin leveraging machine learning, artificial intelligence (AI), or cognitive computing in the next 6 months |
Mitigating actions | • Creation of an architectural plan encompassing the collection, storage, and aggregation of data into a single, trusted (virtual or physical) source • Creation of an advanced analytics team (this could be an organizational structure or a project team) to determine the most critical use cases for predictive analytics within the organization • Creation of a governance process (and potentially governing body) to oversee data and analytics within the organization • Development of standardized tools and associated self-service processes to allow the business to build and leverage new insights much faster • Education for IT and the business on the “art of the possible” regarding AI, cognitive computing, and machine learning • Develop new positions and associated job descriptions for advanced analytics roles. Begin the hiring process |
9.11 Platform Mindset
Chapter reference | 6 |
|---|---|
Description | Your organization must view digital transformation as the creation of an interdependent platform of business processes and technology providing the basis for launching and sustaining business models |
Why is it important? | Digital business needs a platform to be successful. A digital platform is extensible and is built through a combination of technology and business process. As business cycles shrink and new digital ecosystems grow, the platform can adapt and enable new value opportunities |
Symptoms | • Not considering impacts to business process when introducing digital technologies to the organization • Project mindset to deploying digital technologies. Little or no consideration given to the evolution of the technology • The organization lacks a clear understanding of “platform” and is unsure how to go about building one |
Mitigating actions | • Education on digital platforms is available from many sources. Gaining organizational awareness of the importance of platforms and how they are different is essential for success • Align on the key capabilities and use cases to be addressed by the first iteration of your platform. Customer and business partner sessions should be considered as understanding how to reduce friction in these relationships is tantamount to success • Align business capabilities with technology enablers including integration, security, and applications to ensure technical architecture integrity |
9.12 Global Technology Talent
Chapter reference | 7 |
|---|---|
Description | Your IT organization must define and execute against a global talent strategy |
Why is it important? | The demand for technology talent is growing at an unprecedented rate. Technology talent hotbeds have emerged in a variety of countries including Canada, India, Argentina, Chile, Israel, South Korea, China, various countries in Europe, and Singapore. Limiting your search for talent to a single country or region could likely result in missing opportunities to upgrade skills within your organization |
Symptoms | • All technology resources in the organization reside in a single country • Little or no diversity in hiring new technology talent • Third-party consultants often used due to lack of specific, hard to find, skills • No processes exist within the technology organization to operate across geographies or time zones |
Mitigating actions | • Do your homework. Look at the skills you are lacking and use these needs to drive locations for talent searches. Use this combined information to build a talent-sourcing plan • Consider establishing at least one global integration center (GIC) in a location meeting your talent needs • Consider support for work visas (H1-B, NAFTA) as part of your recruitment process • Develop processes to leverage multiple locations and time zone differences |
9.13 Federated Technology
Chapter reference | 7 |
|---|---|
Description | Your IT organization must embrace the notion of line-of-business (LOB) technology (or “Citizen Developers”) and build the appropriate self-service platforms to increase overall speed and throughput of technology solutions |
Why is it important? | There has, and likely always will be, been more demand for technology resources than can be supported with existing capacity. The lack of resources results in long wait times for even simple technology requests and propagates un-managed and potentially dangerous “shadow IT” factions. By embracing the notion of “citizen developers” IT can enable business speed and agility in a managed environment |
Symptoms | • The business is dependent on their desktop (such as Excel and Access) applications to execute critical business processes • A large backlog of technology requests in IT • Standardized tools and processes are not provided to business users enabling them to build or extend applications • IT frequently criticized for being “too slow” and “unresponsive” |
Mitigating actions | • Creation of an architectural framework enabling business self-service. Critical components of this framework would include a managed data repository (see item # 9 above), an application program interface (API) layer enabling application extensibility, a set of business tools promoting the exploitation of the data and API layers, and automated testing and release • Establish a keen understanding of business pain points and where requests for technology are underserved. These are areas where self-service can provide • Development and execution of a self-service initiative within IT. The self-service initiative should include promoting the service to the business, educating users on the new toolsets, and establishing governance of the new self-service environment |
9.14 Modernizing IT
Chapter reference | 7 |
|---|---|
Description | Your organization (IT and business) must adopt modern techniques and methods for the development and deployment of new technology solutions |
Why is it important? | Business cycles are shrinking, and the technology introduction cycles are increasing. The need for speed and agility in technology has never been higher. To support the level of speed and agility required by the business, IT adopt new techniques, tools, and methods |
Symptoms | • Project-oriented mindset for new technology initiatives (versus product-oriented) • Current technology project duration exceeds one year • Silos exist within the IT organization resulting in miscommunication and inefficiency • Cloud technology seldom leveraged for new applications |
Mitigating actions | • Undertake a cross-functional initiative with IT and the business to establish the groundwork for the adoption of agile techniques for future development efforts. Once everyone is grounded, pick a pilot effort and get started • Creation of product teams versus project teams • Adoption of a DevOps approach within the IT organization to knock down traditional silos between application and operation teams • Alignment with the business on the role Cloud technologies will play in future efforts. Establishing a common understanding of the pros and cons of Cloud technology with the business is a prerequisite before embarking on a Cloud journey |
9.15 IT Efficiency
Chapter reference | 7 |
|---|---|
Description | Your IT organization must become more efficient to free up valuable resources to assist with the development and deployment of new digital technologies |
Why is it important? | Technology resources are scarce. The more resources tied up with the status quo, the less is available to help drive new business value. Investments in IT efficiency (that work) pay for themselves many times over |
Symptoms | • IT can’t quantify the amount of time spent on various activities (development, maintenance, enhancements, innovation) • More than 50% of IT resources are devoted to maintaining existing systems • Lack of plans to drive efficiencies in IT operations • Technology capital investments (CAPEX) not pursued due to high technology operating costs (OPEX) |
Mitigating actions | • It is vital for the IT organization to have a firm grasp of where time is spent. Some form of time tracking solution must be implemented to provide this visibility • Benchmarking of primary operational tasks and costs (dollars and resources). Leverage these benchmarks to identify targets for improvement efforts • Establishing goals for efficiency efforts and monitoring against progress to goal |
9.16 Digitized Information Consumption
Chapter reference | 1 |
|---|---|
Description | Your organization must embrace the digital consumption of business performance and other relevant information |
Why is it important? | Paper-based reporting is obsolete the moment it’s printed. As business cycles continue to decrease it is imperative for business executives to have access to information at intervals up to and including real time |
Symptoms | • Pervasive use of paper reports throughout the enterprise • Reluctance of executives and board members to use digital media (such as tablets) • Lack of real-time information demands in the business. Over-reliance on historic data |
Mitigating actions | • User awareness sessions on alternatives to paper reporting • Ensure the desired information is provided in the form, frequency, and quality needed to support decisions by aligning technical data architecture with business requirements • Develop a mobile strategy (phone and tablet) for providing information to consumers • Find and equip digital information “evangelists.” These evangelists will be the outspoken advocates that drive acceptance in the business community |
I am hopeful that you will scan your organization using these diagnostics. Digital transformation needs a solid foundation and culture to succeed. It doesn’t mean you can’t start a transformation effort before you address all of the inhibitors in your organization. However, you must, at the very least, be mindful of the existence of the inhibitors and plan your contingencies accordingly.
I will borrow a favorite phrase from American football and adapt it to digital transformation. During digital transformation, you have to keep your head on a swivel. Challenges and inhibitors are always lurking. Identify them early and stay on top of them to prevent your journey from being derailed.