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Transformation through innovation

Focus on the right things

I spent the last decade working on digital transformation projects and learned that we tend to focus and devote energy to the wrong aspects of transformation.

Digital transformations often start with creating a benefits case — a way to justify such change.

More often than not, though, these cases never stack up. People are wary of accounting for new revenues based on transformations. While cost reductions could be easier to account for, they are equally hard to estimate. Systems are so entangled that even the decommissions which should bring apparent cost reduction are hard to achieve.

Once we get past the benefits case, which often gets ignored once produced, we try to make it work using the existing technology, ways of working and org design. We are working so hard to make it work and rarely manage to do so.

I believe that we should spend energy on other aspects, namely enabling innovation. Here is my opinion on why.

There are certain things that we know …

  • We know that it takes effort only to remain still, and organisations must constantly adapt and evolve only to survive (the “Red queen effect”).
  • We also know that work will fill the time — people will try to “make it work”, working around the constraints and limitations of technology and organisational designs. All this leads to waste and inefficiencies and the proliferation of current weaknesses.

The way out of this state is through innovation.

Big leaps gained through innovation and asymmetric pay-off ideas

And to innovate, organisations need to break away from the present technological and organisational constraints.

Technology must become an enabling factor capable of supporting high-speed rate change. We must balance:

  • (1) the move towards commodity-based services since they increase delivery efficiency and agility (focus on reducing deviation)
  • with (2) optimising the change function for speed of delivery (focus on reducing the cost of change), and
  • (3) creating new sources of value enabled by higher-order systems (focus on increasing the speed of learning)

The organisation itself will need to transform and separate the structure of new endeavours from those of the old. A structure hardened by past battles will likely be resistant to change (think only about the control and compliance rules accumulated over the years). Instead of building on the old to enable innovation, the focus should be on creating new structures.

The “Red Queen effect” and the fear of inefficiencies caused by people trying to make it work with whatever they have at their disposal should be enough justification for transformation. As Bill Campbell said, “If companies don’t continue to innovate, they’re going to die — and I didn’t say iterate”.

Instead of spending energy on a hard-to-create business case or building new endeavours on old structures, organisations should focus on enabling innovation — finding out what and who can enable it.

It is time to use the I-word much more often in our digital transformation work.

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Peter Pito

Peter Pito

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Agile practitioner and software developer at heart. Husband, father and rookie triathlete. I try to be the best version of myself, as often as I can.