Leading a company through a digital transformation isn’t for everybody
The new, fast digital world
The key characteristic that sets digitally enabled companies apart from their less savvy peers is speed. The ability to move quickly is the key in an evolving market. And as soon as internet-era technology is applied to an industry or sector, it tends to revolutionise the industry, often creating a permanently evolving market.
10 years ago, the Nokia 6300 was state of the art mobile technology. Now self-driving cars have started to roam the streets and Nokia no longer exists, at least not in a shape we recognise. It is hard to imagine where we will be in 10 years from now.
Even our physical world is rapidly going online. Gartner predicts that the 6.4 billion connected devices will reach 20 billion by 2020. Others predict the number to be as much as 50 billion.
In addition to speed, another key aspect of the new reality is that the once clear distinction between our so-called “real lives” and “online lives” is quickly dissolving. We are experiencing fundamental changes to basic concepts like communicating, socialising, learning and consuming. It’s reshaping our lives at a neck-breaking pace.
Digital have reached a level of normality and integration where it is no longer meaningful, and frankly commercial suicide, to think of them separately. Long gone are the days when digital was the responsibility of the IT department.
Although there is a lot of lip service paid to this sentiment, few bite the bullet and spring to action. The high pace of change of technology makes jumping on the digital train, a daunting thought. Which new technology should we go for? Will it be obsolete in 2–3 years? Do we have the internal knowledge and skills to handle this modern technology?
The good news is that going digital often means new technology but rarely cutting edge technology. The biggest change involve a new way of working to meet new expectations around speed, transparency and flexibility.
This new Fast Digital reality is creating huge opportunities for those who can deliver. With small means — a resourceful team working at a speed hard to match with traditional ways of working — mountains can be moved.
Fast lane, slow lane
Companies used to win on making things efficient. And inefficiencies erode profits but today, the inability to be fast and flexible kill companies. Companies who continue to use traditional methods will find themselves outmanoeuvred and increasingly irrelevant to customers.
A decade ago, in a more stable market, it was perhaps defensible to use 6 months and millions to set a strategy. Back then, a strategy was used to justify further investment with the comfortable assurance that numbers had been crunched, frameworks developed and roadmaps meticulously planned. For the subsequent 3–5 years, the only thing left was to execute the plan in the most efficient way possible.
Strategy, planning and execution are still treated as sequential phases in most companies today. The new Fast Digital world demands a change of gear. A parallel and integrated approach to strategy, planning and execution is the only way to thrive as the speed of development and change increases even further.
If a simple update to a product requires manually changing database instances in various systems in hundreds or even thousands places, you know it’s time to take action. If every new digital initiative is met by the IT department saying “computer says no,” you are definitely in the slow lane.
If you still think of the IT department as the problem, you have a mindset problem and should probably stay in the slow lane. They are likely not the problem. They are players in the system and structure that you and previous leadership have created.
Changing to the fast lane is not for the faint of hearts especially when you realise that the biggest change often has to happen with you as a leader.
Virtually all companies have build their own personal IT Frankenstein’s monster by adding functionality for staff and customers on top of old systems during decades. Even companies that thrive today share the struggle with the monster in the basement.
What sets the winners apart is how they approach the future. They haven’t simply replaced the old monster for a shiny new one. Instead, they fundamentally change the way they work.
Is it too late to start? Is the IT mess too big? Is it too hard to change the company culture? An old Chinese proverb provides some wisdom:
“The best time to plant a tree was 20 years ago. The second best time is now.”
Let me paint a picture of what life is like in the fast lane.
Life, in the fast lane
Digital transformation does not mean creating a new digital product/service that meets today’s increased customer expectations in this new digital era.
Digital transformation means that your company starts to work in new ways to deliver on continuously increasing expectations faster than you’re comfortable with.
There is not one unified way to go digital but below are some clear signs that a company is in the process of digital transformation.
- Action-biased culture
- Human-centered approach
- Autonomous and multi-disciplinary teams
- Distributed decision-making
- New ways of working
An action-biased culture
Digitally transforming companies value action. They realise that building something, not just talking about it, will influence the strategy and planning as much as vice versa. They build to think and fail fast to move forward quicker.
The goal of a digital transformation is to set up both your technology and your organisation to design, build and test new hypotheses, features, apps, messages, products or services within a few weeks, not within 12–24 months.
In most companies today, especially in the high levels of the organisation, a lot of people think it’s their job to provide input, not to do the job. Not so in action-biased cultures. There, people don’t talk about what they should do, they talk about what they have done.
They build a simple version of a new service or product in the morning and take it out to real customers to test it in the afternoon. And they learn more in those 8 hours than most companies after hundred hours of strategy meetings.
A human-centered approach
Okay, you need to grab the bull by the horns and look the tech monster in the eye but there is so much to fix and everything is precariously held together with duct tape and wishful thinking. This leads nicely into the next point, using a human-centred approach. Designing for your users’ needs will help you prioritise which parts of the IT monster to start with.
A human-centered approach assures that the company is designing empowering, intuitive, and engaging experiences based on customers’ needs. Teams regularly talk to customers for inspiration, feedback and to make sure that they are making decisions in-line with what people actually want and need.
It is easy for a team to start veering off course and end up spending months designing and building a beautiful product, service or app only to discover that nobody uses it once released.
Companies where customer experience and design decisions are taken by teams without strong processes around getting feedback is taking unnecessary risks. In companies where these decisions are taken by senior individuals at the top who make decisions based on gut feel could be playing Russian roulette.
Autonomous and multi-disciplinary teams
Digitally strong companies bring together teams comprising the core skills it takes to solve the challenges they are tasked with. The teams are empowered by the responsibility and trust to deliver to a vision, without being micromanaged.
Companies that won’t break the internal silos will struggle to keep up with today’s demand for speed and an holistic approach. These silos are relics from a time when the way to win was to plan and execute the perfect process in the most effective way possible.
However, optimising for efficiency has, for many companies, compromised the ability to adapt and act quickly.
Your job as a leader is not necessarily to make the digital transformation happen. It’s to allow it to happen. Your job is to trust and protect the team and give them as much runway — time and resources — as you can. Their job is to build a great product/service and pioneer a new way of working at your company.
In order to stay fast and flexible, empowered teams and individuals are armed with the data they need, the vision to guide them and the autonomy to make quick and informed decisions.
In order for people in various parts of the company to make autonomous decisions in diverse situations toward a common goal, they need two key things lacking in most companies today.
They need access to data from all other parts of the company and they need it without first having a meeting about it. Decisions need to be data-driven so data needs to be within reach. A hair’s breadth away.
They also need a clear common vision and a high level strategy to guide them. The leaders set the vision but let the teams — who know more about the realities of the product/service and has direct and frequent contact with the customers — choose the best path to deliver on that vision.
In hierarchical structures where it is assumed that “the boss must know best” slows down processes in wait of “decisions from the top.” Beyond this, it is often a fallacy to assume that the boss is in the best positioned to make most decisions. This is especially true for tactical, operational and customer experience decisions.
New ways of working
Digital transformation is 90% about people and 10% about tech. Ask anyone who is going through a digital transformation right now. The toughest thing when it comes to a digital transformation is the people and the organisation. Change is hard. The tech is the easy part.
A digital transformation is a process that eventually changes the entire organisation. But successful companies start with a small team of “early adopters” that form the first new team. The new team sets clear principles to guide new behaviour and prevent the new culture to revert to the old one.
This group is far from exclusive and secret. They have an open door policy to anyone regardless of status at the company. Curiosity trumps seniority.
The ultimate goal is for this new way of working to spread. The way is spreads is through cell-division into more teams with at least one or two from the original team to ensure that learnings remain in the collective consciousness in a sustainable way.
The Death Star, the Separatists and the Catalyst
There are a couple of ways to approach a digital transformation. I’ll discuss three common archetypes. Let’s call them The Death Star, The Separatists and The Catalyst.
Remember, your goal is twofold, to create great new services designed with internet era technology and to change the culture to become fast and flexible through new agile ways of working.
The Death Star
The Death Star approach is when the company starts a new digital project inside the current corporate structure. The team and the projects start excited and hopeful that they will be able to work in a new, agile way and set a new standard for what a successful project looks like inside the company.
The likely fate for such an endeavour is that, slowly but surely, the external pressures from the company, it’s bureaucracy, politics and power structures will crush the new project. Unable to withstand the forces, the project grinds to a halt, the team is rapidly disillusioned and any hope evaporates.
If you’re lucky, much later than the original time plan had predicted, you might just possibly have a new digital product or service. It won’t be what you hoped for. And it certainly didn’t change anything or anyone in the company.
The Separatists is another popular way to go. In light of the challenges listed above, some companies choose to remove the new team and locate it elsewhere and entirely cut it off from the mothership.
They are self-aware enough to realise that the project is unlikely to be successful in a Death Star approach. They have probably tried it, failed and are smart enough to change their strategy.
This approach is likely to lead to a much more successful and on schedule product or service. The weakness is that the success is isolated. It is digital but there is no transformation. It’s a one-off and any beneficial cultural ripple effects will be minimal.
Reintegrating the Separatists into the mother organisation is usually very challenging.
The Catalysts in a Goldilockian spirit — neither too hot nor too cold, neither too hard nor too soft — “just right” is the way to go. The new team isn’t cut off from the company but has a clear and public mandate to explore new ways of working. They have a licence to challenge the company’s current structure and processes.
This approach involves using external people mixed with internal people who join the new team fully committed and dedicated.
The benefit of using people external to the company is that it can accelerate the early phases of a digital transformation significantly. Ideally, these external people have previously experienced a digital transformation and can therefore transfer a lot of learnings.
An “outside-in” perspective on the company and industry is in itself invaluable as people within the company are often blind to opportunities as well as blocked by perceived barriers. External people will bring a healthy irreverence towards the internal power structures and politics that has developed over years.
Bumpy road ahead
I’m not saying it will be easy. Quite the contrary. As mentioned before, a digital transformation is in large part about people. The new way of working will challenge old processes and decision-making structures and re-distribute power towards individuals and teams that are more action-oriented. Feelings will be hurt. Senior people who have build their success on relationships and access to key information will feel threatened.
You want to remove “access to information” as the currency for power and a privilege of senior people. This information imbalance benefits a few individuals but does little to make advances towards the company vision. Information should be free, “action” the new currency.
An analogy here would be learning to ride a bike. At some point you’ve got to get on it and simply “go for it” knowing that you might get a few scrapes in the process. You need to trust the person holding on to the back running with you, to let go when you’re ready.
Why companies like IDEO make great partners
Many companies contemplating a digital transformation often underestimates the need for an holistic approach. Instead, in an effort to reduce cost or to “hire the best for each task,” companies hire a management consulting firm to crunch numbers and set a strategy, another company to provide training and change management and yet another to design the customer experience and e.g. make an app.
The attempt to optimise in this way inevitably leads to a fragmented and sequential approach with little sustained change within the company.
The strength of IDEO, in my experience, is our action-biased culture combined with our holistic approach. Our natural inclination to talk less, do more makes sure we go beyond words, frameworks and plans, roll up our sleeves and do what it takes. Whether that involves crafting a vision, making a slick pitch presentation, training frontline staff, acting as interim customer support, printing posters, prototyping a service or designing and building an app.
However, our strongest advantage is our deeply rooted human-centered design approach. This extends to customers and staff alike. This is key since the main challenge of digital transformations is, contrary to popular belief, people and not tech.
Embarking on a Digital Transformation is to a large extent a leap of faith. You don’t know the time plan, the exact outcomes and often you don’t even know which service or product is going digital first. Whoever you pick to lead the change in your company, make sure to pick internal and external people who will make it happen, not just strategise and talk about it.
Are you and your company ready for a Digital Transformation? Take this Digital Transformation Readiness Indicator Test if you are considering taking your company through the biggest transformation yet.
A bit about me
My name is Stina Jonsson and I apply cognitive science to design challenges to fundamentally question and reframe the way we engage in a digital context. I hold two masters, one in Cognitive Science and one in Interaction Design. My focus area is behaviour change in our new Fast Digital world. I’ve been working for IDEO for the last 9 years in our Chicago and London offices.
I’ve contracted my fair share of digital transformation war-wounds working, most recently with two huge conglomerates, one in South America and the other in Scandinavia. I’d be happy to share more in exchange for a beer or two. You can find me here.
Below, one of my favourite quotes from the wise and witty Terry Pratchett. Also, somewhat relevant in the context.
“Make a man a fire and he’s warm for the day. But set fire to him and he’s warm for the rest of his life.”
I’ve had the privileged to learn from and be inspired by a slew of brilliant people over the years. Tom Loosemore and Mike Bracken at Public Digital, Elena Gianni at The New York Times, Matthew Postgate at BBC, people at Barclays, Paul Clarke at Ocado, Tom Hulme at Google Ventures, Christian Lanng at Tradeshift and a whole heap of people at IDEO to mention a few.