Digital Transformation Inertia?
Swaminathan Nagarajan
Digital Consulting | Teaching | Career Counselling & Coaching
During my stint as digital transformation consultant to financial service customers, I had the opportunity to observe many things closely especially with respect to the way the organisations embrace. What is interesting is that many of them take a long time to complete. Even if they complete, they do not give out the intended benefit envisaged during the approval stage. What is besetting these organisations to achieve the intended benefits of innovation and transformation?
Valley of death
Typically, these organisations cover 4 critical resources as part of such transformation exercises. They are:
These resources can be envisaged like the vertices of a polygon that pull at each other. An optimization of one dimension will impact the other. But the main factor of concern is the mindset of systemic change. This mindset can be looked at from various angles, for e.g. the involvement of key decision makers in the program, alignment with organisation vision, habits and practices of innovation, business agility etc. All these create a considerable roadblock or some sort of inertia. A staggering 84% of companies fail?in their?digital transformation process, according to a?research report?by?Forbes.?Basically it boils down to two variables - culture and technology.
B K Chakravarthy of IDC (Innovation Design Centre at IIT Bombay) emphasizes that any innovation must overcome 3 valleys of eath in its journey to success. Even though he doesn't specifically address digital innovation, this applies to every type of transformation. In digital transformation, a clear hold on all the 4 resources is the only hope of overcoming the valley of death. A careful stewardship is required to guide, direct, manage, deploy and measure them in order to cross that valley. Eventually, the organisations should aim to reach a stage of "innovation action potential" threshold. This would ensure the transformation process will have accumulated enough marginal value and is ready to be adopted by the entire organisation. The biggest challenge is in helping organisations reach this potential.
In practice, this is how this behaviour should manifest:
According to?McKinsey,?70% of complex, large-scale change programs?encounter several pitfalls, including?employee engagement, inadequate management support, poor or nonexistent?cross-functional collaboration, and a lack of accountability.?But it is the attitude and culture of dynamic mindset and embracing of agility that matter more. Many of the 1st and 2nd level reportees of CIO go along the journey because someone from the top directed them so. This results in reluctant drive, choosing wrong pilot areas to showcase benefits etc.
"Do Now" Programs
During our consulting, we typically start off with a DD(due diligence) process to understand the landscape along with other objectives and constraints. We rate the organisation in terms of dimensions such as Lean Landscape portfolio, Agile execution, Customer centricity, Resource enablement and Cultural readiness. Any recommendation of transformational activities are projected on a Gantt chart that can be viewed as "Do now" or "Do next" or "Do later" to put it simply.
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?The beauty is that a vast majority of programs that fall under "Do now" target overcoming the transformational inertia. This, by itself, is not surprising as these organisations, by years of acting a particular way, have not made them adaptable to launch innovation that will readily deliver benefits. The key, here, is to prepare the ground or rather shake the ground, get it malleable to accept new practices and go out with low hanging fruits. Only seeing is believing. Selecting the right department, function and pilot initiative do matter a lot.
Embrace Change with an Open Culture
?The key to success is a company’s ability to?embrace change and for the staff at all levels to reframe the transformation as something they are an owner of and a strategic investor in, rather than it being something that is happening to them as an afterthought or a compliance process. This often?requires a major change in company?mentality and behavior. Altering the attitudes towards transformation in this manner can?help the staff to?challenge?assumptions and redefine problems in an attempt to identify alternative strategies and?solutions that are very likely not apparent to?the leadership of the transformation. Adopting the idea that everyone is leading the transformation, and has the opportunity to be an active contributor to it, is the objective.
This requires promoting open communication and psychological safety as cornerstones of company culture. Close collaboration and constant, effective communication?with all parties can ensure the success of any given initiative, most significantly, digital?transformation. This communication ensures that respect is granted to all members of the company and that they are supported throughout the transformation process.
No more "Islands of brilliance"
?For too long IT departments have fostered a culture of individual focus to the detriment of overall culture of the organisation. How many department heads have willingly loanded their best resources for the sake of organisation? How many of them have volunteered to experiment and fail in the process? That is the main problem. By highlighting too much of hero culture and not breeeding co-operation, organisations have become siloed. We can spot individual or departmental brilliance occasionally but nothing makes a drastic impact. In my opinion,?the ability of individuals to work creatively in partnership together is the core engine of innovation and successful development. Respect for people and a focus on partnership, with an openness?to different ideas and solutions, is key. This better allows for developing alternative?strategies and solutions that?might have been overlooked otherwise.
Approaching innovation in?an incremental, iterative?manner?that?encourages?the development of transformational solutions that are reliable and?cost-effective while continually refocusing them and derisking them?offers a better solution.?Transformational inertia can be seen in the slow speed and high costs associated with exploring?giant?ideas with lots of?incomplete work in progress and many, many unmitigated risks. For these companies, the acquisition of enterprise agility must be a top priority to redirect those 70% of?transformation initiatives that are destined for failure, back toward the pathway of success.
The consequences of a failed?digital transformation for a business and its?clients are quite considerable. In a climate of increasing competitiveness?and?constricting financial?conditions,?digital?transformation can better prepare companies to compete in an economic, regulatory, and competitive?environment that is?constantly evolving in response to emerging technological advancements and evolutions.?Digital?transformation requires a significant shift away from traditional thinking and toward an?approach that focuses largely on collaboration and experimentation. Unwillingness to adopt?this approach can mean missing out on increased efficiency, failing to achieve greater?business agility and unlocking new value for employees, customers, and shareholders.
Failure is ok
For companies that acquire enterprise agility, incremental?failures throughout a digital innovation journey?are not fatal. It is ok to fail. Fail Fast is the new norm. Rather, for those companies, they become early and cost-efficient mechanisms for learning and risk reduction, which inform the future efforts and prioritization of their transformation journey. When those companies?create effective and compelling engagement in the transformation with employees at every?level, they all begin to pull in the same direction and easily overcome their own transformational inertia and are?better equipped to ensure they are in the top quartile of?companies who succeed on their transformation journey.