The Transformation Trio ~ framing the digital challenge

As with any strategic initiative, one of the most important considerations is where and how to start. False starts can be as disruptive as heading too far along the wrong path. I see many organisations doing agile, rather than being agile resulting in disillusionment and agile fatigue. Executives thinking that agile is the stuff of technical delivery teams and not a business imperative. Digital Transformation starts at the top. It's not about fragmented initiatives that address elements of the change in an uncoordinated way. It's about business leadership truly understanding and embracing the imperative that is being digital.

For this reason and a few others that Tony Saldana sets out succinctly in his "Checklist of the Surprising Disciplines"

As previously outlined in Disrupt your digital mandate, the scope of the digital mandate must include the following transformative capabilities; customer engagement, product innovation, organisational change and adaptability and finally platform and enabling services but for leaders to embrace "being digital" requires a mindset shift akin to changing religions. It's a fundamental belief system reset that may not come easy.

Being digital means realising that customers don't care how big your balance sheet is or how many products you have or how many product options you have. Being digital, in the first instance means you have to let go of what you think customers want and get to the heart of what customers need. What pain do they feel, how does this manifest and how can you really delight customers with a great experience given increasing expectations of instant gratification, hyper-personalisation and uber convenience.

So the first pillar in the Transformation Trio (thanks Charl), is Customer Engagement.

This includes customer-centricity and an obsession with making the customer journey frictionless and thinking and acting outside-in. It's not about the products you have and how you adapt these to better serve the customer, although in the short term this may be your best option, it's about really getting to the heart of meeting customer needs on their terms. If you're not converting (remember its a new religion) your entire leadership to obsess about the customer, you're probably on The slippery slope of success. This necessitates a lean approach to customer development and the guru here is Steve Blank.

The second pillar in the Transformation Trio is Organisational Adaptability.

This goes to the heart of being agile. It's about hearts and minds and driving "a perpetual culture of transformation" one of the disciplines Tony Saldahna promotes. His book, Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead, is the third in the Exponential series from OpenExO. The first book, Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it) by Salim Ismail, unpacks the attributes that are at the core of how digital natives think and operate.

Fundamentality Exponential Organizations start from a mindset of abundance, they practice holacracy and they manage themselves with OKR's as a tool for organisational alignment, employee engagement, and transparency. This requires every role and function in the organisation to align with what Salim Ismail calls a Massive Transformative Purpose. It's not just a vision for the organisation which tends to be self-serving and driven inside-out, its a statement of intent about a bold almost utopian future for the ecosystem you serve with the customer at the centre. Another opportunity for a "religious experience". Seriously, establishing a meaningful purpose that people and communities can relate to and find aspirational creates positive pull and momentum.

Notice I haven't mentioned agile in this chapter yet. Unfortunately, the spirit of agile has been polluted by technologists and misunderstood by business. The reality is that agile needs to be more about mindset than practices.

The third pillar in the Transformation Trio is Platform and enabling services.

Notice its not technology for technologies sake. In his "How to Use the Five Most Exponential Technologies" Tony Saldanha emphasises Use Cases. It's about what customers need and how they will be served by the technology through Use Cases that delight customers, meet their increasing expectations of instant gratification and hyper-personalisation and provide uber convenience. A real platform is a business capability to orchestrate services around real customer needs. Of course, this does require systems and shared services too, but being digital requires even the inside-out part of the organisation and especially the platform services to be hyper-aligned to your customer. Starting with technology, rather than customer often creates the digital dilemma where the promise of convenience and customer delight is broken because the backend services are not aligned to the customer value stream.

Tony's five stages of digital transformation described here provide an excellent roadmap and set of disciplines to plan and govern the journey.

His book truly is a treasure trove of advice, guidance and practical checklists to increase the success of your digital transformation journey. So why then do you need the three pillars?

In my view, it's a way to frame the digital challenge and set a baseline for, where and how to start. By framing the digital challenge in the context of the Transformation Trio you are able to set a baseline for Measuring What Matters.

For Customer Engagement, at a minimum, we should measure Cost to Acquire Customer (CAC), Customer Lifetime Value (CLV) and voice of the customer in Net Promoter Score (NPS) or similar. Further metrics that should be included in the customer experience digital risk index are:

• Customer experience digitalization potential
• Customer service friction points
• Social customer influence and customer engagement

For Organisational Adaptability, at a minimum, we should measure employee engagement and the Exponential Quotient. This looks at factors such as how externalised are business functions and how flexible and adaptable is your business and operating model. Engagement, on the other hand, can be measured by Personal Driving Dynamics. We have found the RealityCheck EcoMetric to be extremely insightful for both individual and team dynamics. The process is highly effective in exposing personal driving dynamics (PDD's) as a tool for personal and team development. This provides a powerful way to direct the motivations of individuals in a synchronised way across a team to achieve greater employee engagement and team alignment to organisational and importantly transformational goals.

For Platform Services, at a minimum, we should measure revenue from pure digital services, Innovation Velocity and time to complete key digital objectives or transformation stages.

So we need these capabilities to be measured discreetly and we need a view of how they stack up and align as a Transformation Trio so that we can track them in line with our transformational goals and objectives for being digital. But here's the rub, what about our traditional goals and objectives? If you're not a digital native, you have a legacy that is still measured against stock market performance. These traditional resource buckets are represented horizontally below.

To frame the digital challenge effectively the extent that you are being digital must be compared to the extent to which you are operating along traditional lines.

The digital investment metrics here should include levels of investment in:

• Transformational Investments in a digital workforce, services and capabilities
• Percentage of the business that is digitally based (Transformational) versus Traditional, across the Transformational Trio in terms of customer-focus, organisational adaptability and Platform Services.

How much of the digital investments are sustainable and what can we retire to free up budgets and resources.

The following survey helps you to compare your traditional capabilities and resources to the transformative capabilities and resources to set a baseline for being digital.

Take our Business Transformation Capability Assessment here...