Setting The Scene: The Digital Leader
As the 4iR digital revolution increasingly fuses the virtual world with the real world, businesses are changing right before our very eyes. Yet despite this eye-popping metamorphosis, many ‘leaders’ are still stuck in old-school ways risking commercial extinction. These people are possibly better described as ‘people in authority’ because they too often do not lead.
The digital agenda is fundamentally about people. The execution of a successful digital agenda starts with a mind-set shift that places a heightened emphasis on people and social systems to effect positive and sustainable change. Put simply digital transformation needs transformational leaders.
While some fear the digital future leading to an Orwellian-like dystopia where people are replaced by robotics, artificial intelligence and automation – the visionary leaders that I have had the privilege of working with are excited by the digital opportunities to augment and amplify the human condition. Furthermore, they understand that information technology is not the solution alone – instead, they think about the purpose, power and politics that go with the new technologies. Put simply they understand that the digital open architecture will not itself guarantee a more liberating, empowering, democratic or open world. They understand that this will only occur when there is a meaningful vision of the future in place, providing a compelling and clear north star to build towards – that has mapped out the future by evaluating it from all angles whilst considering both the good and the bad – thinking deeply about the consequences whilst embedding positive values in all the system.
Research published in the Harvard Business Review in 2009 defined transformational leaders as ‘visionaries that ask the following questions. What’s new? What’s next? What’s better?’ Furthermore, the research found that leaders that ask these questions tended to possess a people-oriented leadership approach. They engaged, empowered, energised, excited and rallied their people behind a meaningful cause – and compelling story of the future. Qualities ideally suited for digital transformation.
“Any company can digitally transform in their own way. However, they should remember one thing: if they make every other change but employees are not empowered, the digital transformation will not be successful. Empowering people is the key to achieving profound and lasting digital transformation that provides sustainable growth and inclusion.”
Source: World Economic Forum
The above quote goes some way to capture leadership’s role in achieving a successful and enduring digital transformation… and culture is critical. You can have a great idea, product or service but without culture it won’t succeed. Culture creates an environment where all get to play. Culture creates a sense that we are part of something that’s bigger than us – that we can be part of, contribute to and grow-with.
The Why & What: Digital Transformation
It seems that everyone wants to go digital nowadays. Before starting out on your digital journey, the first step should involve collectively defining and agreeing ‘what’ going digital means to your business (your digital vision). In the absence of agreeing your own digital terms of reference, you run the risk of it meaning something different to each and every person in your organisation – the CIO may view digital as a way to drive operational efficiency, while the CMO may see digital as the answer to boosting customer engagement – a true digital transformation requires both. This divergence of understanding creates a significant barrier to follow-on digital implementation because people and teams are neither joined-up nor pulling in the same direction.
The digital-first world is fast approaching. Digital technologies are already disrupting the previously established rules of business by enabling new business models and levelling the playing field in unprecedented ways. Where previously the role of IT was primarily focused on reducing costs and increasing productivity; digitalisation is profoundly altering the business landscape with the new capabilities to leverage innovation to unlock new paths to growth and value creation. The very nature of how we do business today is transforming; the new enabled technologies coming off the conveyor belt at an ever increasing pace are making business more fluid, accelerated, hazardous, competitive and connected (both locally and globally). There are a number of reasons that an organisation may undergo digital transformation, but by far, the most likely reason is that they have to – it’s a survival issue for many. In this climate of uncertain change, organisations are left with the very stark choice to get on board the digital train – or get left behind.
Business now has to focus on delivering more personalised services as they look to improve the way they interact with and serve their customers. The consumer craving for always-on connectivity and service is pushing digitalisation to the fore. Going digital presents huge implications and complexity with business seeking to understand how to digitise in an appropriate manner that fits the demanding and varied requirements of their customer base. Going digital also presents the opportunity to streamline, consolidate and share service development and delivery. Business is increasingly waking up to the benefits that can be gained from digital innovation, they are seeking to harness advances in technology to create seamless and high-quality customer experiences – whilst also achieving improved efficiencies through economies of scale and better thought-out (planned) delivery.
Digital Transformation Defined
Because digital transformation will look different for every business, it can be hard to pinpoint a single definition that applies to all. With a plethora of articles and various definitions of digital transformation available, it’s easy to see why there is some confusion around the topic. As yet I have not yet come across an industry standard definition of digital transformation. The working definition that I keep in my back pocket is my reworked amalgam of definitions lifted from various sources including McKinsey, MIT Sloan and a host of other sources…
“Digital transformation is defined as the integration of digital technology into all areas of a business resulting in fundamental changes to how the business operates and how it delivers value to customers, partners and employees. Being digital means being closely attuned to how customer decision journeys are evolving in the broadest sense – this involves the simplification of channels and portfolio by understanding customer needs and behaviours and keeping this insight at the center of everything the business does. Digital transformation requires a cultural change that involves a shift in leadership thinking to continually challenging the status quo, encouraging innovation (experiment often and get comfortable with failure), and the introduction of new business models. Targeted outcomes of a successful digital transformation include less human intervention – a seamless personalised experience at any time anywhere via preferred communication channels – and one-click-one-touch access to what the customer wants, when they want it, how they want it, wherever they are.”
The How, Part 1: Disrupt Or Die
All of the great innovators of today have embraced digital disruption. There are examples of it in every industry.
Fuelled by cloud and mobile, the changing workforce, digitised supply chain and back-office, digital consumers and introduction of new regulatory compliance at a global and local level – there will be larger, more interactive transactions and higher volume virtual networking.
Evolving technologies like social and mobile, and how they are connected over 5G networks, will change the way people experience the world. These networks will offer connectivity to a high quality global network of consumers.
“Business is increasingly leveraging combinations of cloud, analytics, artificial intelligence and machine learning to better serve customers or streamline operations.”
The Need To Think, Plan & Act Differently
To respond to the changing landscape, leaders have to respond by thinking very carefully and differently about how they operate. To understand and tackle the market disruption leaders are increasingly taking a whole-system view of their organisation, both internally and externally.
The need to respond to increasing ambiguity, complexity and pace of change, is placing stress on established strategic planning norms. New planning approaches are being employed to ensure the upfront thinking/planning is more robust and more vivid in experiential meaning for the frontline – with the planning process becoming more collaborative and inclusive to build broader buy-in and consensus. Taking this more dynamic approach to the planning process is delivering better outcomes because risk is better understood and mitigated in advance.
Digital Transformation, Blueprint Thinking
Customers are increasingly seeking engaging experiences: personalised service, self-service, self-solve, simplicity, convenience, transparency and value… and on their terms. With digital technology now faster, better and cheaper – this is now achievable – and if you don’t do it, your competitors will.
A successful digital transformation requires a transformational approach, you will need to consider and adopt new ways-of-working, thinking and planning – that are beyond silos, outside-in and agile in nature.
The new business and operating model will ideally arrange around a series of customer journeys that originate from customer insight and co-created digital experiences – with multi-disciplinary teams using agile, adaptive methods to help bring the different organisational moving parts together.
There are a number of strategic models that you will find helpful to frame and cascade your blueprint thinking. One lens that I regularly use is the ‘Value Disciplines Model’. This will help you work through and settle on the kind of organisation that you want to build towards (see Fig. 1).
When developing your digital terms of reference, the first step should involve securing a shared understanding of your digital vision and buy-in of what the transformation will look like. As you commence your journey of change, calibrate your focus and ambition – select your organisational shape whilst identifying, quantifying and prioritising where the value lies – continue to iteratively develop the case for change and adjust the governance.
Some Additional Things To Consider
The disruptive capability of new technology and analytics is accelerating disruption, shaping:
- The personalisation of products;
- Direct sales – including the quotation and purchase process;
- Just-in-time processing – for example, online form filling and claims;
- Self service portals; and
- Automated customer service.
The confluence of design thinking and technology is driving the introduction of new business models through:
- The leveraging of eco-system collective intelligence to reduce cost, boost collaboration and facilitate the coordination of collective action within networks of trust;
- The internet of things is enabling telematics and increased connectivity;
- Usage and scenario based design to augment and amplify human interaction / transaction;
- The use of gamification to simplify complex processes; and
- The increased role of big data in modelling and managing risk.
Digital is moving how we do business from a traditional to a customer-centric model:
The How, Part 2: It’s Not The Technology Holding Us Back
It’s not the technology holding us back; it’s the lack of clear quality upfront thinking – as well as the limitations of our imagination.
When we envision what success looks and feels like in a meaningful outcome-based way, selecting and configuring the technology is straightforward because we know what we are designing and building towards – this includes explicitly aligning digital transformation projects to business value.
With 4iR upon us, entire systems of production, distribution and consumption are transforming people’s lives. To develop a business-ready next-generation digital enterprise, you need to focus on answering the following question:
“How can technological progress drive enhanced value creation through game-changing technologies that ensure inclusivity, connectivity and responsiveness?”
Source: AllChange Strategic Consulting
To ensure success in the midst of digital disruption, there will be a premium placed on innovation, a willingness of organisations to disrupt themselves, a quest for active collaboration and a commitment to advance comprehensive value creation strategies. In the context of this seismic change, we need to envision and shape a future where technology is firmly-embedded in people’s lives, making their daily experiences simpler, highly personal, more rewarding and on demand.
Envisioning The Future Organisation
A significant part of the digital transformation design process involves envisioning what your organisation will look and feel like in the future, including how technology will transform the workplace. As technology advances, with the tidal wave of new technology available, ‘people’ not technology will become the focus of the workplace. Employers will want creative people who can apply the technology in new innovative ways. The current ways-of-working will be transformed with different skills required alongside a premium placed on complex problem solving, creativity and innovation.
In an ideal world, everyone will be contributing their creativity, sharing ideas and linking-up their different knowledge-sets to help take the organisation where it is trying to go. In today’s challenging business environment, how organisations approach mobilising ‘high involvement innovation’ is increasingly becoming a critical element of agile operating model design.
New technology will require new delivery models and new styles of leadership. How we deliver change is being transformed from large complex waterfall projects, delivering large monolithic changes over long cycle times to smaller agile teams delivering smaller functional changes in shorter cycle times. IT Transformation is moving towards DevOps and agile structures and ways of working, to work more closely with the businesses we serve, and enable us to have a bigger positive impact at pace.
With respect to envisioning the future organisation and relating this back to digital transformation design, I have selected the most common topics that come up during my conversations with leaders:
- Visualising What Digital Looks & Feels Like
Those of you who are experienced with digital transformation understand that the ‘customer journey‘, ‘operating model‘ and ‘going digital’ share a common requirement. They all require you to understand how people operate in the real world.
Getting your people, culture and the organisation mind-set fully engaged and embracing the new digital way-of-working (and thinking) is critical for a successful digital transformation.
Understanding the difference digital makes to peoples lives and being able to visualise and articulate the experience in a way that design teams can unpack, increases the likelihood of building a digital experience the end-user needs.
Example techniques I regularly use to visualise what digital looks and feels like include strategic narrative, storyboarding and scenario visualisation. These techniques are incredibly collaborative and enable technical and non-technical stakeholders to engage in the design debate to co-create a better future together.
See link to previous thought piece on innovation culture here…
- Creating Value In Your Ecosystem
Ecosystems are loose networks of interdependent organisations or people. If you follow the logic that not all the worlds’ best people work within your organisation, this creates the driver to tap into the outside world more proactively.
Many leaders often exclude this thinking from the strategic planning process because they often don’t think this is possible – or lack the know-how – or fear being overwhelmed by too many interactions. But to develop an organisation and reduce its business risk, the leadership team needs to figure out the best way to leverage the ecosystem in which the organisation is a player.
To build ecosystem advantage requires the creation of a network of relationships, interfaces and processes that can deliver value to the end-customer more efficiently by connecting complementary participants to each other. These loose networks – of suppliers, distributors, outsourcing firms, academia, makers of related products or services, technology providers, and a host of other organisations – affect, and are affected by, the creation and delivery of an organisations own offering.
As an aside, it is worth noting that Blockchain’s ability to securely expand on AI’s access to data across whole ecosystems will drive a whole new set of insights and value.
“Harnessing the Collective Intelligence of our people and wider ecosystem is a crucial step to becoming more agile, accelerating our creativity, and solving problems at high speed.”
Source: Colin Nelson, Hype Innovation
- Taking A Customer Journey Approach To Operating Model Design
Taking an enterprise-wide focus on customer journeys is crucial because it allows the organisation to arrange itself around customer needs, which can provide distinctive sources of value at the core of the operating model.
McKinsey suggests that the implementation of the new digital operating model can be accelerated by establishing great customer journeys through three actions that need to be carried out at the same time: (1) continually improving end-to-end customer journeys with a clean-sheet approach (aka visualising the ideal organisation), (2) integrating technology with operations by testing and learning, and (3) establishing agile ways of working through teams focused on specific journeys.
- Big Data & AI
AI isn’t new. Until very recently though, the lack of data stymied the growth of AI. Today, things have changed. There is now an enormous amount of data available of all types. This includes images, audio, and text data. Data can also come from the IOT, internet based transactions, and other sources.
Big Data and AI combined will provide the brainpower behind a whole new digital future that is only limited by our imagination. Sectors, where Big Data and AI are already disrupting the established order include Digital Marketing, Manufacturing, Automotive, E-commerce, Retail, Health Care and the new Smart Home Industry. According to a McKinsey study; AI has the large potential to contribute to global economic activity. But widening gaps among countries, companies, and workers will need to be managed to maximise the benefits.
- The Innovation Dividend
The chance to work at scale, the embedding of a rigorous process model that provides a structured route for moving from idea to implementation and value creation, and knowledge management offer a powerful boost to the concept of high involvement innovation.
There’s an evolutionary aspect to the way in which platforms have developed, moving from simple support for ideation to creating a robust innovation infrastructure within and even beyond the organisation. Next-generation digital operating models need to integrate innovation infrastructure that promote, support and enable the innovation process from ideation to value creation.
- Business Capability
Tasks performed by humans are increasingly becoming more complex, whether it’s accessing information in multiple formats from multiple sources or responding to changing market and customer dynamics at ever-increasing speeds. We are living through a fundamental transformation in the way we work. Automation and ‘thinking machines’ are replacing human tasks, changing the skills that organisations are looking for in their people. In order to succeed, organisations will need a system to continually monitor and synchronise their strategies, initiatives and performance.
Each organisations path to a new more agile digital operating model is unique. However, successful transformations include a similar set of design considerations, these are:
(1) Autonomous and cross-functional teams anchored in customer journeys and value creation;
(2) Flexible and modular architecture, infrastructure, and software environment;
(3) A management approach that connects clear strategies to outcomes across the organisation, with tight feedback loops; and
(4) Agile, customer-centric culture and way-of-working demonstrated at all levels and role modelled from the top.
For organisation’s to compete, thrive and survive in the era of digitally driven, on-demand, mobile and customer driven markets, IT Transformation needs to move towards DevOps, agile structures and agile ways of working.
High performing organisations built on agile technologies are revolutionising global industries, sweeping aside traditional industry leaders through their ability to innovate and interact ‘on-demand’ with customers through digital interfaces.
Technology teams are increasingly being organised for fast delivery of high quality software. Operations teams are working closely with development teams to meet the needs of the business in order to deploy software and services better, faster and cheaper.
Figure 7 illustrates how IT can be arranged to deliver value creation in a very targeted way. The model provides a line of sight that helps identify which business processes support value creation (aka capabilities), as well as identify which applications support the business processes. The main thing to bear in mind is that all activity is connected to strategic intent (explicitly connecting thinking to doing).
The How, Part 3: Visualisation, Design & Implementation
Shortly after commencing a new digital project, once the project scope, logistics and participants have been agreed, I transition to activity with the following design thinking in mind:
- Orient everyone to a different, highly creative and collaborative way of working – including the use of visualisation, visual thinking and corporate story-telling (aka strategic narrative); and
- Commence the process of producing a range of practical tools that start the iterative visualisation process – designed to stimulate creativity, ideas, big-picture thinking… and produce ‘meaning’.
One example tool that I use is called a Blueprint Concept Board (see Fig. 8 below). The concept board allows me to:
- Collaboratively walk through the digital visualisation process, so that everyone is clear what we are all working towards;
- Clarify what a digital vision and operating model ‘is’ and ‘does’; and
- Clarify the detailed critical path steps required to deliver a fit-for-purpose (agile) Digital Operating Model.
The Blueprint Concept board is one of a number of techniques that my team and I use to prototype, test, game-plan and validate the design thinking to ensure that everyone is working on the same page – armed with clear and meaningful terms of reference.
The Blueprint Concept Board Explained
- Level 1 – Delivery & Impact
Level 1 tells the story how the organisation will create value through its digitally enhanced internal and external relationships. The organisations purpose, mission, vision, strategic imperatives and values are connected to a stakeholder landscape – bringing the organisations digital vision to life through a blended mix of high-level big picture and deep-dive scenario-based value stories.
Note: The Blueprint Concept Board featured in this article is a real client work example with all sensitive content removed. Level 1 & 2 in this visual are intended as a conversation starter to enable technical and non-technical stakeholders to engage in the design debate – commencing the process of working out what digital means.
- Level 2 – Network Connectivity
Level 2 illustrates how the organisation structure arranges itself around the digital agenda. It provides a practical mechanism for people to visualise the organisation from multiple dimensions, describing how the organisation will do business in the ‘future’, including reflecting how the people will need to operate in the real world.
Level 2 will eventually feature the digital operating model moving parts including people, process, systems and technology required to bring the digital vision and strategy to life. Network design is arranged around the organisations Decision Value Chain and Customer Journeys with the prime intention of shortening the gap between decision-making and value creation.
- Level 3 – Capacity & Capability
Level 3 is focused on ensuring ‘thinking’ leads to ‘doing’. It features all the dimensions that inform and guide ‘change roadmap’ development.
Level 3 will eventually lead to the operational manifestation of the corporate vision and strategy – what the organisation wants to do, how it wants to do it, where, when, who-with and who-to.
Note: For sensitivity reasons, Level 3 & 4 featured here are the very first step in the (digital) exploratory conversation. Through a series of design-led exploratory workshops a detailed digital change roadmap is developed then agreed (this includes clearly defining targeted outcomes and the associated change levers/activities/initiatives/projects).
- Level 4 – Visualisation, Design & Planning
Level 4 illustrates the strategic delivery planning process. It provides an aide memoire of the critical path activity required to visualise, design, build, implement and embed a successful and sustainable Digital Operating Model… that is business ready and adopted.
Note: for sensitivity reasons, the content on level 4 has been stripped back to a very high level.
Network Operating Model Architecture
The Network Operating Model is designed with a digital business in mind.
The Network Operating Model is similar to Kotter’s ‘Dual Operating System’ in as much as it is designed to handle the daily demands of running a company in a traditionally efficient ‘hierarchical’ way – while also operating a highly responsive and innovation-friendly structure wired to navigate difficult change at pace.
Network Operating Model is what it says on the tin – a single network with three kinds of interconnected structure that act similar to communication/redistribution nodes:
- Parent Organisation (aka Mothership)
- Sub-organisation (aka Advance Base)
- Enterprise Cell (aka Satellite)
For further information on network operating model design, see link to previous thought piece here…
Some Guidance To Get You Started
Organisations are built for people. The more visionary, meaningful, collaborative and inclusive your methods; the better your digital transformation will be.
I have highlighted a few select take-aways alongside sketching the indicative steps to get you started with your digital transformation. The guidance is based on my hard-earned real-world experience of what works:
- Strategic Narrative
A strategic narrative (aka corporate story) is the ideal mechanism to collaboratively identify and shape strategic intent into a coherent vision capable of informing and framing policy. I have found the process of developing a strategic narrative the most effective way to get a group of senior leaders working on the same page. The story creation process provides an element of group therapy, providing space and quality airtime for the senior leadership to work through conflicting perspectives – that otherwise might never have been addressed in the workplace.
For more information on strategic narrative and how to translate strategy into meaningful execution, click here…
- Visual Thinking
The use of visual thinking is an effective way to resolve complexity and confusion in groups that arise from inadequate or conflicting mental models. This is crucial when the models involve our ideas of how work gets done, how teams co-operate, how decisions are made, how people organise and learn. Much of our understanding of systems and how things work together is represented through visual imagery. A large amount of time in meetings is spent working out these differences. Using visual thinking techniques accelerate the process of getting the upfront design thinking right, and in a highly collaborative and efficient way.
- Clarity of Direction With Clear Terms of Reference
Strategy execution is a journey as much as a process. All organisations need to know ‘where’ they want to get to before they set off on the journey. Continually planning for ‘what’ you are going to do without knowing, or fully understanding ‘what’ you want to achieve, will result in disappointment.
- Systems Thinking
To control a system, you have to have an accurate model of how it works (ref: Conant-Ashby Cybernetics Theorem) – for your digital transformation to succeed, you will need to accurately capture the multi-dimensional organisation characteristics (aka people, process, technology, systems) that inform operating and business model design. Effective digital operating models need to incorporate how the organisation does business now and in the future, as well as accurately reflect how the people operate in the real world.
Summary steps for your business-ready and adopted digital transformation:
- Step 1: Produce a single, cohesive, overarching strategic narrative to inform and guide the delivery of your digital transformation.
- Step 2: (If appropriate) produce additional ‘identity-based’ strategic narratives for selected organisation areas. You may also wish to produce narratives to inform your customer journeys.
- Step 3: Explore and unpack the strategic narrative to explicitly connect strategic intent to project delivery (connecting thinking to doing).
- Step 4: Develop a common agreed digital approach, with agreed terms of reference, language and definitions.
- Step 5: Build a hi-level (multi-dimensional) digital operating model, taking a network approach utilising collaborative visualisation techniques – with an emphasis placed on achieving simplification through visual design. Visual scenarios and storyboards are ideally suited for digital transformation because they enable technical and non-technical stakeholders to engage with the design. Visual thinking also removes barriers that often come from technical and management speak (removing fog factor). Do this activity upfront, your follow-on implementation will be all the better from the insight gained.
- Step 6: Develop guidance/instructional materials and enforce guidelines when rolled-out to ensure consistent best practice is applied. This should include:-
- A common team approach – including defining clear decision rights, roles, responsibilities, accountabilities and team ways-of-working; and
- A common communications approach – in particular with document management. This specifically refers to ensuring relevant strategic intent/thinking is clearly referenced within all appropriate documented artefacts.
- Step 7: Update all existing document artefacts and review previous content to ensure the organisation/digital design are consistent.
- Step 8: Start building your digital new world!
Whether starting-out or in the midst of your digital transformation, the foundation of your success will heavily depend on how well the senior leadership have envisioned what the organisation will look and feel like in the future. As technology advances, with the tidal wave of new technology available it really will be ‘people’ not ‘technology’ that become the focus of the workplace. Digital is all about augmenting and amplifying the human condition. If you get this right, the size of the prize on any metric you choose will be off the charts.