Essay: What is Digital Transformation?
The word of mouth: Digital transformation
In the last few years, the term “Digital transformation” became more and more present in the corporate people’s lives. Now the Digital transformation is in corporate business strategy, the area budget, the manager goals and also in our own goals.
But what is digital transformation? These 2 words can mean many things. For my personal experience leading projects in several companies in distinct industries, such as retail, healthcare, consumer goods, and banking, when someone says digital transformation they can be talking of the implementation of a new type of software, an acquisition of an a platform, a specific training, the use of a methodology or framework (the famous “Canvas”),implement some framework of agile, the redefining of an entire area or even a company, a cultural mindset change in the hole company, a digital architecture evolution, a company strategy shift, and this is only a few options because I’ve even heard that develop a dashboard in a BI platform were digital transformation.
With all these examples that I ‘ve mentioned above, I believe that the concept of Digital Transformation is not clear at all. Although in this VUCA (volatile, uncertain, complex, and ambiguous) / BANI (brittle, anxious, non-linear, incomprehensible) world have unified concept of digital transformation would imply that several new term would emerge to signify the actions and the change that are being done.
Whit this in our mind I propose that we focus on the word “transformation” that has a clear meaning. I interpret as “to have that is going from a state A to a state B with a positive perspective”. And just for you to know I’ve wrote mine understanding and then I looked up the meaning in the Cambridge dictionary that says, “a complete change in the appearance or character of something or someone, especially so that that thing or person is improved”. So, I believe that “transformation” has a fairness common meaning than “digital transformation”.
And to transform anything in corporate business you should consider and work with these four aspects:
- Strategy (vision, risks, invest, discontinue, pivot, mentor)
- People (training, informing, encouraging, monitoring, correcting)
- Process (ways of doing, goals, penalties, experimentation)
- Technology (democratizing, simplification, openness, flexibility)
They are common aspects, and fore that nothing sexy, but the complexity arises at the same scale that of the number of people and processes that you are changing and the number of changes that you are conducting in parallel.
How to start a transformation?
I believe this question is one of the most common questions related with digital transformation, and a lot of people will provide a lot of different answers…and not all of them will be wrong.
Some will say to start defining a corporate strategy, with a roadmap that will be detailed in work plans across the organizations. Others will say that plans don’t work, and it will be a waste of time, so you have to be agile and start to working in squads, delivering value all the time, but if you don’t know where is your goals how do you will know that you are getting there? (and not mention the shareholders that will not be happy investing in a company that has no plans because they don’t work).
As good consultant my answer to this question will be “it depends”. Depends in what extent the transformation that your are aiming to achieve; depends of what are the critical elements in your organization (i.e. a platform that is core but it’s outdated); depends of the culture that the company has (and I’m talking the real culture and not the culture commonly expressed in the mission, vision and values) among other questions.
These points must be addressed as business questions that the people that are leading the transformation must look for, because to develop a plan or start a project that doesn’t consider the goal, the context and the culture the results will be poor.
Moreover, the imperative of transformation doesn’t allow that the company dispend a lot of time and effort developing extent diagnosis and a detailed plan across the organization. So I believe that you must conduct some working session to reflect about the goal, corporate context and real culture (and having a critical perspective, because some “ghosts” that everybody knows, but none talks should appear) and select the first areas that will be focus to the transformation.
And what should be those areas? Here two interesting concept are to “seek for value” and “start small and scale”, these two phrases mean to look for an area that the transformation would add a apparent value to the organization but the challenge shouldn’t be to big, because it will take to many effort and time.
The key is to build a case that is somehow relevant and with a short time frame.
And why to transform?
This might be understood as a stupid question, after all I’m talking about digital transformation quite a while, but the “why” is something that is not always clear, and for that a lot effort can be spent and the results don’t meet with the stakeholders expectations.
Why a company should start (or continue) a transformation probably has a lot of reasons explicit and implicit. The reasons might be from decrease of sales or profit, competitors’ movements, enable new opportunities, inclusion in a strategic plan, a movement to stay in the hype, among others.
For my experience the why is a very important point to consider during all the transformation. The why must not be something static, but it not something than can be changed frequently. The “why” is very close to the purpose statement of something. And the purpose must be something that everyone understands and acknowledges, because when someone have a decision to make, the purpose must the something that will be include in the decision-making process. That’s why the “why” is something to work in your transformation.
This reasoning is influenced by the concept “Start with the why” from Simon Sinek, an author of several books that discuss topics related of the corporate life.
A defined why, and therefore a purpose, will provide a much more level engagement of the people. Not have a explicit “why” will not block the process of transformation, such as define actions, conduct meeting, workshops, and so one with a greater participation of people of the company. You may not realized but we go to a lot of meeting not knowing “why” a meeting was held, “why” you were invited, “why” all the attendants were invited, and this not stop us from continue going to those type of meetings. But can assure you that when you know the “why” and acknowledge that you behave differently, probably more engage and more open minded to move on with the themes that are being discussed.
Therefore, have a clear “why” a company is doing a transformation is something that you should address and have all the employees with this information. And how to spread they “why” so everyone will know it? For my experience there is only one way to do it: communicate, communicate and communicate. This may sound obvious, but I’m not talking about to send a e-mail to all employees with some text and that’s it. No, I’m talking several communications, in different formats, spoken by different persons, and not just the CEO, and for a wide time frame, showing not only the message, but also the results.
Doing this is really challenging, because after a few months, a lot of different topics might emerge in the agendas and the transformation can be forgotten. That’s why a consistent engagement strategy is necessary.
Where to start a transformation?
That’s it another question that is very common to make. Because as the transformation must the change the whole company, some will think that the right answer should be to start all at once. But as we are talking about digital transformation processing this “Big bang” approach the odds of success will be very low. In addition to choose a area to build your case, you should also consider the four aspects that I mentioned before in this text: People, Process, Technology and Strategy.
These 4 aspects can be addressed individual or in parallel, but the key here is to set a strategy that provide guidelines, budget and support, train, engage and empower the employees that will conduct and be impacted by the transformation, incentive the experimentation in the processes, until there are with a higher level of maturity, and also conduct process to monitor the performance of the transformation and enable technologies that can be tested and used in the MVPs and prototypes during the transformation.
Again, this might sound simple, and a little bit obvious, but this is something really hard to achieve in any company.
As a recommendation the most critical aspect that should address is the people. This aspect, if well worked, will growth exponentially, and even if the other aspect not succeed, the impact in the people will provoke changes in the others aspects organically.
I have a personal experience to share about this, while I worked in a bank a initiatives of continuous improvement / Lean methodology was taken in place. The corporate initiative has some workstreams, but the main one was to provide trainings, held a committee with some employees, that exchange from time to time, and engage all the employees to propose, execute, and share the improvements. This initiative was held for almost a year and as a result the engagement of the employees from all levels with continuous improvement increase significantly and I not only remember but use some of those concepts until today.
How to measure the benefits of the transformation?
This is question that don’t come up until some time executing the initiatives of transformation, you might or might not have concluded some of them, and the stakeholders start to question if these initiatives are resulting in a tangible impact in the organization.
This usually take a few months to come up, and when it pop up, the team that are conducting the transformation start a task force to gather data and calculate some KPIs to show that the transformation are producing positive results. The problem with this approach, as you probably may realize, is when you are gathering past data with some urgency and also some bias, after all you are gathering this data to show that the transformation ARE impacting positively in the organization, the outcome of this task may not be better.
While you are defining the where and how to start a transformation, a workstream that must run in parallel in the definition and execution moments is the definition and measurement of KPIs that should help to track both execution and results.
The key to define KPIs and the data that will be used to calculate the indicators, is that the data must be generated without any additional effort (i.e. every week one employee take 1 day talking with people and register the information and calculate the KPIs), with structured data and a structured workflow to generate the KPIs. This not imply that you have to acquire a BI (Business Intelligence) platform. You can execute this processes using spreadsheets.
The KPIs must cover not only performance metrics, but also financial and people perspectives. The data can be gathered by extracting information from other platforms, such as process workflow, project or management, ERP, etc. Survey with the employees involved with transformation also can be used, but not so frequently that impacts the performance of the team.
And a important point, you have to measure the KPIs before the transformation start. Preferably gather the data even before the area knows that it will be involved in the transformation, so you would have KPIs in the “As Is” moment.
Another thing is that the KPIs should not vary between the areas. The data and the KPIs should be replicated, in order to allow the comparison among the areas and their stage of transformation, providing meaningful insights to execute the transformation, such as a lesson learnt or a champion model that could be replicated. Another benefit of this approach is the short time to implement the KPIs as the transformation spreads across the organization because you replicate the KPIs with the same structure besides to build a KPI catalog that could be picked over the areas.
This essay has the objective to share some of my experience, not being a guide or a playbook.
