Digital Transformation Strategy Framework

Ask a consultant to describe “digital transformation” and you will get as many answers as there are consultants. This is mine: "digital transformation involves the profound recasting of business and organisational activities, business strategy, technical strategy, models, operations, processes, products, services, marketing approach, objectives, skills and competencies fully to exploit the changes and opportunities of a mix of digital technologies and their accelerating impact on society". We usually talk about digital transformation in a business context; however, it also impacts local and central government, public sector agencies and third sector organisations, such as charities and other not-for-profit bodies involved with societal challenges.

In this, and some following blogs, I aim to share some ideas for maximising the business benefits of data assets and technology-focused initiatives, starting with a framework for realising a digital portfolio. As represented below it looks like a straightforward linear process. Perhaps the mind map gives a better idea of a process, any stage of which (or several stages together) might be run through several iterations.  

01       STRATEGY & BUSINESS CASE

You start by defining what you need to do and deciding how to persuade the purse-string-holders that they can afford to do it.

01.01    Define the digital vision. This is the tricky part, formulating a vision to be achieved by exploiting the opportunities afforded by digital technologies. If you are lucky, an attention-grabbing digital development will spark interest and give you at least a general direction. This is a good time to host external voice of the customer (eVoC) workshops.   

01.02    Define the digital strategy. Having formulated the vision you need a strategy to fulfil it, analysing the elements of the vision and putting some flesh on them. This is a good time to host your internal voice of the customer (iVoC) workshops to design an ideal company digital ecosystem.

01.03    Justify the investment. Every strategy has cost implications so you are going to have to assemble a business case to justify the costs of delivering the strategy. In a future blog I will look at some “digital business cases”.

01.04    Approve business case. As always, there will be people to persuade that the investment is justified. Unless they are already steeped in “digital” you may need to advance innovative arguments. I will list a few in a future blog. 

02       AS-IS STATE

Now down to the nitty-gritty. Business Analysis skills are the basis of this stage, but those skills need to take on a digital slant and be carried out by analysts with a digital mindset.

02.01    Map the AS-IS operating model. This will give you your baseline for the transformation portfolio.

02.02    Assess the organisation's AS-IS level of digital maturity. Based on this analysis discover whether the organisation is straining at the leash to go digital or huddling in a corner hoping that it will go away. It is most likely to be somewhere in between. 

02.03    Assess the AS-IS digital maturity of similar organisations and the competition. Your organisation does not operate in a vacuum so you need a clear view of how it stacks up, digitally, against similar organisations and, most importantly, against its competition.

03       TO-BE STATE

This is where the digital innovation shows through.

03.01    Map the TO-BE operating model. This is going to need a lot of redesign and should not be too rigid. One of the key aspects of “digital” is the fast pace at which developments transpire, peak and pass away so your TO-BE state needs to be optimised to be able to catch passing trends, exploit the Hell out of them and pass on to the next.

03.02    Determine the organisation's TO-BE level of digital maturity. You achieve this by building your organisation’s digital maturity model (the topic of a future blog).

03.03    Carry out a GAP and SWOT analysis. Define the space between the organisation’s AS-IS model and the required TO-BE state, the future digital “battlefield”.

04       BLUEPRINT

Now that you have got the model for your organisation you need to analyse it into programmes, projects and key activities (or work packages) so that you have something to deliver. 

04.01    Analyse the TO-BE operating model into component programmes. This is likely to involve more business cases and more reports to the board. I will be looking at tried and tested toolkits that help with this challenge in a future blog.

04.02    Analyse each programme into component projects. Similar to the previous step but more granular and involving more input from the “coal face” of the organisation.

04.03    Analyse each project into its key activities. If you look around you can find any number of tools and techniques to help with this task. The old-fashioned “wall of PostIt notes” is still a good choice. However, I like to develop mind maps on a big screen in a workshop.

05       ROLLOUT

Now we are on more familiar ground with rollout or delivery of the projects and programmes that make up the digital transformation portfolio. I should say that alongside “digital” you will usually find “agile” and the rollout phases are likely to change on the fly as the organisation gains a deeper understanding of the implications of digital transformation, has shafts of insight and new developments come along.  

05.01    Rollout business process change. In stage 03 of your project you will have identified and documented the business processes that will need to be changed to transform successfully to digital. If this is done professionally, an organisation can adapt quickly by changing company strategies and business processes, almost as quickly as its customers’  behaviour changes. Using your digital transformation strategies in your business process change will provide opportunities to improve alignment across the organisation, to eliminate operational barriers, and will dissolve silos of data. You can do this by arranging processes across unified applications and data.

05.02    Rollout business structure change. This involves identifying those design elements that will not change and those dynamic elements that will change in response to changing circumstances, new technologies and new strategic directions. In other words, identifying the backbone of the organisation and setting up those areas that are targets for change. We call this “rebuilding the future” and I will be blogging about the “RBF” rules.

05.03    Rollout technology change. Future technology and trend monitoring is vital if you are going to make the most of your digital opportunities. Choose solutions that have a measure of future proofing and be ready to embrace disruptive technologies.  Long implementation cycles undermine digital transformation so opt for technology that can be implemented quickly using out-of-the-box functions and features. Artificial Intelligence can improve adoption of any new technologies and digital work by reducing manual effort so be ready to exploit AI.

05.04    Cultural and people change. All of that sounds a little daunting, so I am sorry to tell you that it is not the vital element of digital transformation; that is changing people and the organisational culture. “Digital” is a state of mind, an approach, a mindset or a worldview. Instilling that into an organisation is a continuous task from the first inkling of an idea that “we need to be digital” right through to, and beyond, the closure of the portfolio. People will make or break the transformation so warm them up at the outset, engage with them, keep them on side by selling them the advantages of digital and CONSULT them. Never forget that you will always have the “Cants” and “Wonts”. Digital transformation is something your staff do, not something that is done to them. 

06       TRACK

Track adoption of the changes. If you cannot track it you do not know whether it is achieving its objectives so when you roll out an organisation’s digital redesign you need new, and tailored, performance metrics. Some of your existing KPIs might still be relevant, but usually you need a new set. New metrics will focus on how the digital transformation is contributing to performance over the short- and long-term. You need to develop simple, clear, KPIs.

06.01    Continuous performance monitoring. “Digital” transformation involves trend-spotting, short timescales, digital opportunism. If you are going to assess the results of your transformation in ponderous monthly reports you are going to be late for some opportunities and may miss others altogether. The key word here is “dashboards”, configured to give you instant access to the performance of your KPIs. 

06.02    Initiate continuous improvement. Practitioners of Lean and Kaizen know all about continuous improvement, a continuing effort to improve products, services and processes either incrementally or in a series of breakthroughs. Continuous improvement sits on the back of continuous performance monitoring but the important thing to remember is that people are the key to continuous improvement. I mean empowered, motivated, aware people who are clear about their organisation’s vision and objectives and who will power an improvement-driven organisation.

There are three other elements that will be your companions right through the transformation portfolio. They are: (1) change management; (2) communication; and, (3) programme/project management. Of which, more later …