The 3 E's of Transformation

The world is transforming at a feverish pace, or so is the perception, at least. I often question if this pace, or more importantly its mere perception, is burning us all out. There’s a constant cloud of threats over our heads. Banks have been on the brink of extinction because of crypto-currency. Industrial automation companies are going out of business because of new IoT players. Automotive companies are being crushed by upcoming autonomous vehicles. And Artificial Intelligence has consumed our jobs. Not really! Banks are still making money off of us. The incumbent industrial automation companies are still…incumbent. The automotive companies are still contributing their share of GHG emissions to mother Earth. And well, I’m still writing this article myself, rather than a bot writing it for me; for now. Regardless, there is a lot of nascent technical innovation taking place. It’s the potential of these innovative domains, and perhaps not the most imminent results that is driving much debate about transformation (oft dubbed 'digital') today. The potential of some of these technologies could, indeed, disrupt whole industries. And this is the primary driver for most organizations to embark on their quest for digital transformation – to discover how not to get disrupted, and to discover how to exploit the potential of these nascent breakthroughs to gear up for the coming decades.

The most obvious question is where to start. With so many divergent areas to explore, the answer is certainly not a scientific one. What is clear though, is that this quest needs to begin with the right people. Transformation needs to begin with a person or a team who knows how to go against the tide. The guy running your product development for the past two decades is most probably not the best choice. Or maybe he is. The point is that embarking on a transformation project, you don’t want someone who has been a key contributor to the system that you are setting out to disrupt. What you need is a change agent (or agents). Depending on the implementation model* one could opt for a centralized or decentralized transformation team. Once the team is in place, there are three key tasks to perform for this transformation team: educate, evaluate and enforce.

Educate

This is perhaps the toughest part to handle, especially because transformational objectives are not likely to be crystal clear from day one. The challenge is to address education in a three-prong fashion: educating the team itself, then educating the rest of the organization and the customers. The transformation team needs to understand that its role is not to catch a fish, but to teach the whole organization to catch a fish. The need to transform for most organizations stems from the birth of new technologies, and their effect on the business. Nobody is an expert on AI, blockchain, edge computing and IoT, all at the same time. The transformation team needs to gather knowledge on these topics and then effectively communicate through formal and informal channels. It’s important that the transformation leaders are able to inspire. Some commentators are quite averse to the term “digital transformation”, with the bone of contention being the use of the word ‘digital’. I may have developed similar feelings about the term myself, mostly because of its abuse. But objectively speaking, when you have to educate tens or hundreds of thousands of employees to transform, buzzwords like digital transformation and shiny roles like the Chief Digital Officer could act like beacons that the others could follow. The goal, at the end of the day, is to use whatever communication tools necessary to educate your employees, your partners and even your customers on the quest to explore new technologies. Having experts in the domain of AI in your team will not suffice. Remember, again – the objective is not to catch a fish, but to teach everyone how to fish. Here's one way to do it:

Evaluate

Education alone is not enough. In order to make new technologies a part of the organization’s DNA, you need a nimble structure to evaluate new ideas. Testing ideas is not a new paradigm. In fact, it sounds almost trivial. What’s relatively new in the business world is the concept of design thinking. Historical test methods have been governed by a linear or pseudo-linear approach, which are mostly constraining. This approach has been useful for incremental innovation, but is totally outdated for “out-of-the-box” ideas. When evaluating nascent technologies, pre-meditated notions need to be locked out. The whole purpose of transformation is to discover a new way of thinking and operating. Design thinking exercises are supposed to help employees break the shackles of conventional thinking. I’ve even had the chance to attend design thinking-like sessions, where the orchestrators have entered the meeting with a pre-conceived idea in mind; with the hope that at the end of the workshop the group would concur with what they had in mind in the first place. This is a no-go. If you already have an idea for your business, and you are somehow convinced that it’s the best one, then don’t go the design thinking route. Also bear in mind that design thinking is just a means, not an end. The target of evaluation should be to test your final concept in as natural an environment as possible. This step takes a lot of resolve. The team as well as the management has to be mentally prepared that a big part of the concepts will not go through after the scrutinized process. The process though, is likely to boost the confidence of the transformation team as well as the management to take the best ideas to market.

Enforce

A better word would be ‘deploy’. But ‘enforce’ completes my 3 Es for transformation, and also highlights the importance of being able to industrialize what had been done during the evaluation phase. Whatever mechanism is used during evaluation, successful test results do not guarantee commercial success of any idea. Your employees, your partners and your customers need to be on-board. With concepts like design thinking, you could reduce the probability of being too far off the mark in real life implementation, but the transformation team (or part of it) has to see the idea through to its deployment stage. The education and evaluation phases are somewhat temporary phases. The transformation team can’t just bake the idea and hand it over to a team of 'implementers' who have no ownership of the idea. This is where your new fleet of leaders is born! It’s another critical juncture beyond the realm of technology – members of the transformation team that have contributed and have owned a concept from the whiteboard to reality are the most likely candidates to see their ideas succeed. Having gone through that transformational thinking phase, these team members are great candidates for infusing that mindset further in the organization. It is imperative that the team members are put in authoritative (if not management) roles to infuse the new culture, vision and processes into the rest of the organization.

Educate. Evaluate. Enforce. But not necessarily linearly, and certainly not in isolation. In some cases, the short-term results could be so obvious that getting right to enforcement would be a no-brainer. But this is more likely to happen if the organization has really been lagging in its digitization efforts (digitization, not ‘digitalization’).

A pertinent question is the lifespan of a transformation team. When can you consider that your organization has transformed? The answer is no different than any other project: by setting and then evaluating against measurable goals. That, in itself, is a moving target, which is likely to evolve in a few iterations. But clearly, the role of the transformation team or its head (a Chief Digital Officer, for example) cannot be a permanent one. For a project of this scale, one that is set to shake the foundations of a company, the horizon cannot be six to eight months. I’d say that we’re talking about a horizon of 3 to 5 years. Anything less than 2 years is likely to be too ambitious (considering a lot of nascent technologies might not even reach mass adoption), and anything more than 5 might suggest that the transformation project has already failed!

Transformation journeys require nerves of steel, from the Board Members to the ground staff. Expect a lot of scrutiny, especially if the organization in question is publicly traded. Pouring money into a programme that has vague quantitative and qualitative outcomes is bound to catch eyeballs. Where possible, the board may decide to take the company private to avoid public scrutiny. In most cases though, the good old corporate machinery will need to be used to its maximum capacity to keep the investors interested, the employees patient, and the customers involved. What are you waiting for then…let the transformation begin!

*the link is for a digital 'operating' model for financial industry, but I've shared the link because the principles are the same.

DISCLAIMER: All the cool views presented in this post are my own, and do not necessarily reflect the views of my past or present employers.

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