A pencil and paper guide to digital transformation (part 3)

Going to digital first

When Douglas Adams wrote the trilogy called "The Hitch Hiker's Guide to the Galaxy" it ended up having 5 parts. Now that may be put down to bad planning from Douglas Adams' side, but coming from the creator of the Infinite Improbability Drive that seems - well - improbable. It rather suggests, that our solid definitions such as "A normal trilogy has 3 parts" will be challenged by emerging new knowledge and unfolding events - however improbable. A trilogy can now have 5 parts. Unfamiliar and confusing? Yes! Even not-normal! But that idea can take you anywhere.

We have reached part 3, the final (?) part, of this Pencil and Paper Guide to Digital Transformation. We have seen (in part 1) how our business is made up of real people, thousands of processes and many technologies and we have seen (in part 2) that we have a collection of tools at our disposal guided by principles of automation and intelligence powered by data.

It is time to pay a visit to the good old (normal?) business model and look at it with digital first eyes. It is in other words time to "double-click" on the management box in my drawing and ask: if these technologies can take us anywhere, where do we want to go?

Never mind the gap

Gaps occur all the time in organizations. People come and go. The company grows. Tasks change. Technology changes. People spot these gaps all the time and most of the time, they solve them with work-arounds. Nifty spreadsheets sprout everywhere to fix gaps created by technology and/or processes. They also appear because people like to do things their own way. Because people are very, very good at avoiding gaps and fixing the immediate problems with work-arounds, it may take quite a while before anyone notices that things are not working the way they were thought to be working.

It gets worse over time. It is often said, that it is hard to introduce new processes and new technologies. The flip-side of that is, that it is hard to kill old processes and technologies. Some people just liked the old tools and keep using them. Some people "didn't get the memo". Most of the time things move on and the old stuff gets forgotten. It becomes part of the company's sedimentary layers. But somewhere someone still keeps filling in forms or using an old piece of software. A friendly IT-supporter creates some simple work-arounds, because "it is no big deal". And literally no one knows.

Until you want to do digital transformation!

All these gaps, work-arounds and sedimentary layers keep your company running, but they come at a cost. They slow down processes tremendously. Data and knowledge is hidden in layers of different systems and individual work-arounds. It doesn't matter how fancy your AI technology is, if it depends on a human to find some data in an obsolete system, retrieve a pdf-file, retype the data in Excel, send the file to another person, who feeds it to the algorithm.

Never mind minding the gaps. You need to find them first.

Questions and loops

To get where you want to be you need to bring out your A-game curiosity. You will need your curiosity to work in two directions. You need to be curious about, where you could be with your business and you need to be curious about where you currently are.

One of the many frustrations on the digital transformation path comes from believing that you start from where you think you are, rather from where you really are.

Apart from the pesky detail about reality, how we think about driving the changes can make all the difference. If we think in linear processes and absolute knowledge (first we must make a full analysis of all the gaps, then we must make a perfect plan for where to go, then acquire all knowledge about new technologies...), then we will surely never get there. In fact it may look both so daunting and expensive a task, that we never get started.

Instead we may want to think in iterative loops, where we gradually test, learn and implement from small scale to large and then repeat. Why are loops more helpful? Two main reasons: 1. The technologies, we are looking to implement are moving targets and learning them once and for all is not possible. We will need to update the knowledge again and again. 2. The challenges of introducing new technologies, the sedimentary forces and the skill in creating work-arounds apply all the time and while we are introducing new technologies and processes, we need to loop back to the organization again and again to follow the implementation and any unexpected effects.

It could look something like this:

All three loops are about learning. They are connected and they run continuously. Innovation is not a destiny, it is a journey and the digital transformation is part of that journey. As mentioned before, curiosity is the driver, which means questions are key.

The Business First Loop

This loop is about your actual business. This is where you identify gaps and sedimentary layers. Remember, digital technology does not care about organizational boundaries, which in many cases constitute gaps in themselves. It is also where you identify new potential with digital technologies.

What you find will be determined by your questions. A step by step walk through the processes, while paying attention to the details can be very enlightening. If someone says "We move data from here to there" - be sure to dive into the details:

• How is the data moved and how often? (maybe there is an automation potential here)
• Which data is stored? Where and how? (maybe you are missing some data, maybe it is stored in a personal Excel-file)

Look for the work-arounds. Quite often, when people request specific functionality from software it is because they want to run their work-arounds more efficiently. It is a better idea to digitalize the real process, rather than the work-around.

This is a good place to start, because you will identify processes, which can be automatized and you will probably find various shortcomings in data. You may also find issues, which can be fixed without any new technology (for instance killing obsolete technologies and processes for good).

Other kinds of questions can be initiated by exploring the customer journey or your interactions with other companies, such as suppliers. Can the process be smoother, more valuable, more efficient for everyone? Questions like...

• What if my customers could find Technical Product Data sheets easily 24/7?
• What if I could predict my demand more accurately and involve my suppliers earlier?

...can spark new ideas for improving your business and make you pay attention to different aspects of your business processes. Since new technologies give you more and more power to address such questions it becomes critical to drive your curiosity in that direction. The more you know about the digital technologies, their capabilities and limitations, the better you will be able to identify potential in all your current activities. You may even start to see new ideas for services and products coming out of the digital flow of data. Maybe you can create more value for your customers through data and digitally enhanced services. These questions can lead you to see new business models adding new revenue streams and some resilience to your business.

Which brings us to the next loop.

The Digital First loop

The Digital First loop is both about learning and applying. It is virtually impossible to be an expert in all the new technologies, few people are experts in even one. Fortunately, you do not need to be an expert. You can acquire a lot of high level knowledge from talking with technology providers or consultants. You can attend seminars and learn from cases from other companies. This helps broaden the awareness of which technologies exist and of some of their possible use cases.

Accelerated and true learning comes from applying the knowledge and learning from the results. This is why the Digital First loop intersects with the Innovation loop at the point concerned with pilot projects, prototypes or refinement of earlier implementations.

Identifying a business process as a candidate for a digital process, selecting an appropriate technology to build a solution and then setting up a pilot project is the ideal way to get going and to maximize learning. Testing and adjusting is required, but when the process runs in a satisfactory way it can be implemented as part of normal business processes in which case it returns to the Business First loop as it is now subject to follow up on its business performance for identification of any potential improvements (and to avoid implementation problems, works-arounds etc.).

The learnings from the piloting, testing and implementation are part of the Digital First knowledge and will help ask even better questions from technology providers and consultants.

The Innovation loop

The Innovation loop bridges Business First and Digital First and is really at the centre of it all. Ultimately you want to keep innovating your business and the continuous interaction between digital and business fuel the innovation.

The loops really reflect a mindset, which favors curiosity, experimentation, application and learning.

None of the loops represent departments or any specific functions in the organization. Everybody knows something. Some know quite a lot. But no one knows everything. It is essential to bring this knowledge into circulation in the 3 loops. The loops really reflect a mindset, which favors curiosity, experimentation, application and learning. They are open to the outside world, because learning and innovation is a collaboration and all the best knowledge is probably not inside your company.

We opened the session by asking the question "Where do you want to go?" It is an important question and the answer will keep changing as you learn more. Start with the first step and loop back to update your knowledge with your new learnings.

Business first? Digital first? In the end it is innovation first and last - and always.

Conclusion

So there we have it. With pencil and paper and loads of questions to your colleagues you can get started on training your digital transformation mindset. Use your thinking to ask loads of questions to technology providers and consultants to grow your insights into the technologies. And then start experimenting. This is really the crucial point for accelerated learning and while you are learning, you are moving the company forward.

I wrote this short guide, because many company executives and owners either don't see the need for digital transformation, are discouraged by too much tech consultancy speak or simply don't know where to start. I have tried to keep things simple, but of course there will be complex challenges ahead. But if you start moving and start learning you will also be better equipped to handle the complexity when it appears. The digital first mindset will prepare you for the next challenges ahead.

I hope you found some inspiration in this guide. In Acumex we pack negotiation technologies and processes into services for trading and procurement, so that companies can benefit from them wherever they may be on their digital transformation journey. This is our expertise, but like all other companies, we do not know everything and we also seek inspiration and learning from others. These sources for our inspiration my also benefit you, so check them out:

Dan Rose writes great and insightful articles on AI and how to keep things simple. Read his blog here and follow him on linkedin here.

Anja Hoffmann writes extensively on innovation and technology in real life. Follow her insights on linkedin here.

For the art and technology of questions check out Qvest. You may not know the right answers, but you can definitely get closer to finding the right questions. Follow founders Marie Mathiesen and Pia Lauritzen on linkedin for more questions.

If you enjoyed the guide (fully or in part) then please like, share and comment, so that more people may benefit from it and please share your own insights, so that we all may become wiser.

For those still struggling with the desire to know and understand everything I leave you with these wise words from Douglas Adams' "The Hitch Hiker's Guide to the Galaxy":

There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable.

There is another theory, which states that this has already happened.

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