Digital Transformation has become a prevalent topic on the boardroom agenda, however, according to BT most CEOs aren’t that confident that their company will be able to profit from it. But there is another issue left untouched: digital can’t transform a business, only people can.
According to the findings of a global survey amongst 400 CEOs in 13 countries by BT, ‘Three-quarters of global CEOs are confident about their digital strategy but inflexible technology, lack of skills and security concerns cited as biggest barriers.’
There is a high level of confidence that their specific programmes will help them achieve their strategic objectives, which include making operational efficiencies, improving customer service and innovating for the future, with security as a key differentiator. Despite this, 86 per cent of CEOs encounter challenges in delivering the ideal infrastructure on which their digital programmes rely.
They identify inflexible technology (43 per cent), lack of technology skills (40 per cent) and security concerns (39 per cent) as the main obstacles in building better digital infrastructure. CEOs highlight better integration, reliability, security and cost effectiveness as being the most critical factors needed to deliver the infrastructure which will build the digital business of the future.
There appears little to no attention for barriers caused by human behavior, behavioral adaptation, siloization, corporate culture, employee engagement, or anything related.
Gartner CIO Agenda
Research by Gartner through their CIO Agenda survey of 2018 stated that ‘It has undeniably become a reality for many in 2018 as digital is a top priority across all industries.’
Of the 11 of the 15 industries participating, CIOs ranked digital business/digital transformation among the top three business priorities for 2018. “This shows an increasing digital urgency across industries,” says Lowendahl.
In particular, CIOs from the banking and investment services (26%), telecom (25%) and government (18%) sectors are placing digital business/digital transformation as their number one business objective in 2018.
However, a recent McKinsey study revealed that 70% of Digital Transformation initiatives fail, indicating a humongous amount ─ 900 billion out of 1.3 trillion USD invested in 2017 ─ of money and time wasted, let alone the opportunity costs. McKinsey identified two core problems:
- Teamwork is forgotten in business transformations
Transformation success is completely dependent on employees working together to achieve the program’s goals. The whole company, not just a few people on the same team, must unite to drive success. Unfortunately, most organizations are siloed, with functional areas and business units struggling to communicate, coordinate and collaborate in relation to transformation initiatives.
The second one is referred to as ‘having no (centralized) system of record for work’. It goes beyond the scope of this posting, but we’ll mention it anyway:
This siloed, inefficient, late-20th-century approach of tracking work across thousands of spreadsheets, emails and point solutions is common across organizations of all sizes and industries. The problems with this approach are numerous, chief among them that centralized reporting on critical initiatives is impossible. This means course corrections cannot be applied to in-flight work in real time because there is no visibility. The result? The organization’s financial performance for the fiscal year is a lagging indicator instead of an actively managed outcome.
Again, let’s set aside the second finding, and focus on the first one which is about people and how they (should) collaborate to drive the value orchestration processes. According to McKinsey, digital transformation stands little chance of succeeding without also transforming the organization ─ the people that live in and off it.
McKinsey suggests that organizations should, therefore, ‘understand the modern assembly line’:
Today’s knowledge workers comprise the assembly line of the 21st century, but we support them with outdated 20th-century tools and techniques. We still treat employees as artisanal craft workers — siloed individuals, manual handoffs, old tools — instead of integrating them into an enterprise team with platforms that provide visibility across the entire assembly line and automate individual and cross-functional work. Leaders need to learn how their teams actually deliver and remove friction from that work experience.
This is what we’ve been advocating for the past four years now and what made us create the ROUNDMAP™ in the first place: companies do well to integrate the customer creation process, across the functional silos, engage employees, and remove collaborative friction.
Digital Sugar Coating
Added to the disenchanting McKinsey findings, Rob Llewellyn, founder of CXO Transform and author of the booklet ‘Transform 2.0 – How to shatter the illusion of fake transformation and thrive in the digital economy’, is clear about it:
- Most so-called ‘digital transformations’ are in fact ‘digital change’ initiatives ─ doing the things we do better, cheaper, faster, but not fundamentally or irreversibly different.
- Transformation requires leadership to transform the business into one that’s fit to thrive in the new digital economy.
- There is an epidemic of companies thinking they’re transforming because they’re using digital technology.
- This ‘Digital Sugar Coating’ (Anand Swaminathan) leads to creating a better version of the past ─ implementing new technology, or thinking business transformation is only about digital marketing ─ but it will not protect them from disruption nor will it empower them to disrupt others.
- Digital Business Transformation requires a vision of the future, without the constraints of the past.
As part of the ROUNDMAP framework, we recommend assessing market circumstances first to comprehend the (need for) optimization, innovation, change, or transformation initiatives. Because it makes no sense to try to improve operating revenue if the cause of lagging performance is due to disruption or a certain growth gap.
Be wise not to adapt to yet another digital tooling to try and fix what may no longer be mendable. Assess your competition. Assess your business model. Assess your value position. Assess your distribution channels. Assess your partners. Assess your products. Assess your value proposition. Assess your customers. Assess your culture. Assess your people.
And if you find that the future of your business has fallen at the mercy of disruptors, ask yourself these questions:
- If we could start all over again, what would we do differently, start, or eliminate in business?
- What is our vision of the future and how are we going to create it?
- How do we get from where we are today to where we want to be tomorrow?
The image to the right is how we perceive the four options a business has, depending on whether the business is actually under siege or not:
- Optimize by raising productivity
- Innovate by raising agility
- Change by raising robustness
- Transform by raising resilience
You’re welcome to contact us if you would like some help with the aforementioned assessments.