'Digital transformation' has been a recurring phrase in conversations I've been having during the past week. What does it mean? Well apparently there's no real consensus. MIT I think has a good general definition 'the use of new digital technologies (social media, mobile, analytics or embedded devices) to enable major business improvements (such as enhancing customer experience, streamlining operations or creating new business models)'
Howard King writing in The Guardian has a well-reasoned piece on the subject with a definition of digital transformation as 'a visible wholesale restructure to avoid a tipping point caused by digital technologies and downstream market effects.'
Accenture neatly avoids defining 'digital transformation' instead saying that each organization's digital journey will be different but that broadly the journey requires five elements: integrated services to allow personalization of customer experience, analytics and intelligence, data management, content management, and omni-channel experience. These five strands built on a platform of an ecosystem that addresses organisation structure, culture and partners.
There's merit in having an organization specific definition if it clarifies the design focus and direction. For example, depending on the organizational definition, all resources could be put into the 'digital' aspect – converting customer interaction channels from face to face to online. Or effort could focus on a business 'transformation' where the digital was simply one of many delivery channels and the transformation lay in say, outsourcing services and/or acting as a commissioning body or holding company, or the definition could facilitate something that combined a very high focus on digital 'digital' with an obvious 'transformation'.
Each of the three possibilities mentioned above (and there will be others depending on the definition arrived at) demands different resourcing, organizational and individual capability, measurement and so on. Different definitions mean different strategies and thus organization designs that take the concept of 'digital transformation' to different end-points.
Defining the terms carefully, with the end-game or ideal state in mind, set expectations that make reaching the desired outcome more likely. Further, identifying measures or objectives against the agreed definition provides the necessary tracking towards target. A job I once had asked that I 'convert one third of the organization's face to face training to high quality computer based training (CBT) within 18 months.' This sounds clear-cut but we had some discussion around what we meant by CBT – for example, were accompanying texts allowed, or telephone coaching, or occasional participant meetings or was it specifically only computer based?
We ended up with a definition of CBT that we all subscribed to. Simultaneously we explored why the decision had been made to convert training from face to face to CBT: was it to save travel or other costs, improve quality, decrease the amount of time off the job, offer flexibility, reach more trainees, provide consistency etc?
Getting a level of specificity on the definitions, expectations and intended outcomes steered the design direction. Working within the definition and the outcome criteria we were able to come up with an innovative approach that, among other things, supported and tracked the trainees, converted CBT sceptics, and allowed for a proportion of employees who could not handle CBT for various reasons, for example, lack of access to equipment, visual impairment, or whatever.
That was one of my early learnings that defining terms, agreeing expectations, setting the design scope and criteria, and determining outcome measures are not wasting time when we could be acting but valuable discussions in progressing the right actions to take. (Another learning was remembering to take stock at points to check that the ground hasn't shifted as the work is done).
Back to the digital transformation: if we go for the notion (from Accenture) that 'Becoming a digital business is no longer simply about how we incorporate technology into our organizations; it's about how we use technology to reinvent [i.e. transform] those organizations to get out in front of the dramatic changes that technology is creating' then what is the path for doing that?
MIT Sloan Management Review, bucking the traditional 5 or 7 steps to success, comes up with 8 steps to digital transformation and accompanies these with a 44 minute video discussion . I recommend listening to it – it's worth the 44 minutes.
For organization designers four themes emerge from it that complement the 8 steps:
It's not the technology that is king it's the way it's used.
There's a common talking point amongst the four panelists (and other stuff that I've come across) that digital transformation is less about the technology and more about the business, its customers, and its employees with a strong focus on using technologies to transform processes in order to improve the customer experience.
Customers are the drivers of digital transformation
Mark Norman of Avis (rental cars) for example, talks about digital technology in relation to the customer experience asking what is it that we're trying to solve? He gives some examples around making the driving experience easier. He illustrates the use that can be made of it to improve customer experiences and solve their perhaps unrecognized 'problem' or 'need' asking first 'what do we need to accomplish here?' Others note that often what is driving changes in organizations like Avis is the fact that customers are putting pressure on organizations to change – social media amplifies the customer voice.
Hierarchies work against digital transformation
Hierarchical structures and competitive cultures are not going to work in digital transformations. Panelists talk about swarm work – coming together for a work project and then disbanding, experimentation, social collaboration in real time (less email), having a transformation leader in each business area, adjusting performance and reward systems to reduce 'silo mentality', and making physical space changes to change the established hierarchical patterns/behaviours. The view is that changing the way people work changes the culture.
Technology innovations are going to keep piling on
The other common point is that this is not going to stop – the technologies are going to keep on rolling and big project approaches need to give way to experimentation, having people scanning the horizon for new technologies, avoiding 'moonshots' instead using data, scenario planning and quick turnaround analysis to make swift decisions and keep the organization transforming.
All this might seem scary. Talk of 'transformation' to employees and you can see the eye-rolling and then the anxiety. But couch it in a different way. I came across a graphic that shows that the digital transformation has been going on since the 1950s which puts the whole thing into context. People have coped with the evolution and have integrated it into doing work differently.
Our organization design challenge I think is three fold. We have to act to
- Speed up/change our own design processes for example, keeping the pace on redesigning constantly as the technologies evolve
- Present 'digital transformation' as less about technology and more about changing the customer experiences for the better with technology,
- Dismantle established infrastructure elements – policies, reward systems, etc – that interfere with the digital transformation direction
What's your view on designing for digital transformation? Let me know.
Naomi Stanford 