Part 1: Deciding on Digital Transformation of the Portfolio. Are we Committed? Is the Team Ready?
In this first part of our four-part series about Digital Transformation, I’ll discuss the critical beginning of a business’s digital transformation and identify how significant commitment and talent are toward the success of the business goals.
Commitment and Talent are intertwined. This is true to any endeavor, but is paramount to success when it comes to transformations of business, teams, technologies and ways of working. A lack of one directly impacts the other.
Digital Transformation has become the catch-all term that encompasses a host of technology and business initiatives. The big picture shift is towards an increased focus on the customer and their experience with the business’s portfolio of products, enhancing the existing business model, upgrading processes, and empowering the culture to rapidly and cost-effectively adjust to changing market needs.
Changes need to address not one aspect of business, but to touch upon areas of planning, methodology, technology, execution, and the business culture itself, without throwing any area out of balance. It is, in an understatement, challenging. With so many areas to concentrate on, where to start?
The digital transformation of a business starts with the identification of its current portfolio of products, the makeup of the customers interacting with them, and the effectiveness of each product to drive value. These need to be considered with the makeup of team capabilities, any processes in place, technology including third party systems used, clear understanding of issues customers may face, and potential challenges to the business if they stay the same course or if they redirect.
Though complex, shortcutting this larger contextual understanding is a recipe for increased risk to a successful start, progress, and a satisfying outcome.
“Why” we are achieving
Unfortunately, this shortcut occurs often, clouded by perception versus reality. The premature leap directly into solutions is a common occurrence, but it is important to note, can be avoided! It is pivotal to clearly identify threats to the business from competitors, customer needs, cost structures, or the possibility of short term or long term changes to business goals.
Let’s clarify the amorphous concept of changeable goals. These can get broken into success measurements per business unit, products in the portfolio, ROI timeframe expectations, and identification of top challenges, among others. These goals can also vary by business unit, functional area, product and customer segment. For further explanation, the State of Digital Transformation research paper by TEKsystems features a good breakdown of the different types of goals.
“What” we are achieving
Clear, communicated goals, with the necessary investment, start at the CEO executive level. This commitment by executive leadership is absolutely critical to success. However, this is not enough.
The commitment at all levels is key to the culture of continual change.
A quote taken from the BCG study highlights the importance to have commitment from all levels of the organization, not only held at the executive level —
“It was the persistence and results-oriented mindset from the leaders as well as employees from all parts of the company that got us through.” – Somkiat Lertritpuwadol, Senior Executive Vice President, Corporate Strategy, IRPC
Empowering the unequivocal commitment on all levels is essential. A good read on this point is provided by Stephanie Overby. This freely given buy-in enables all levels to drive toward the common goal creating additive strength to the necessary initiatives, overcoming the incumbent challenges, and providing continual positive improvements.
Commitment will be tried and taxed as challenges are encountered during the journey. Cracks will show. The communication of progress, achievements, challenges, risks, and mitigations between teams will be necessary. When roadblocks happen, changes to plan are needed, and delays to projected timelines and missed interim successes can encountered. Without the support, understanding, rapid decisioning and overt celebrations of success by all leadership, the resulting perceived lack of commitment will undermine the dedication of the teams to the strategy and goals. Commitment to change, at all levels, is fragile. This needs to be nourished by strong, empathic leaders.
This nourishment of commitment applies to larger efforts, e.g. incorporating a new ERP system, and smaller efforts, e.g. updating a web page for increased marketing reach.
Commitment and talent are symbiotic. They support each other, stronger together.
Having the commitment from the CEO on down without having the proper talent in place to execute undercuts many efforts and is a road to frustration and failure. Teams need to be empowered to determine the changes required to achieve the goals in order to promote emotional success and commitment at all levels.
Let’s be realistic. Not all teams, from executives through technology, finance, operations, sales, HR, sourcing, etc. have the skills to drive the necessary change. Momentum of the business, team makeup, traditional responsibilities, technology used, and compensation structures are significant headwinds to any change.
Changing the status quo, functional silos, and power bases is difficult.
Having the correct technology talent to be able to perform a digital upgrade to cloud or open-source services, continuous development and delivery, and realigning existing product structures appears, on the surface, to be obvious. (The digital technology teams will cringe at the simplicity of that statement.)
What is not obvious are the other areas within the business that require changes to support a digital-first business transformation. The idea that the transformation is only a technology upgrade is a fallacy. Drip-feeding a transformation showcases a failure of commitment that poisons the teams. Only focusing on one team but ignoring the others creates avoidable friction to holistic success, creating the risk of falling backward.
Business transformation is a team sport.
Let’s showcase some transformation connectivity examples —
As processes change and speed increases to provide greater capabilities to existing customers, innovations are accelerated, new markets are explored, margins change, new technology capabilities become available, budgets are continually reassessed, and customer expectations increase, multiple other teams outside of technology are directly affected. As financial planning changes and operations are modified to support more systems, traditional HR thinking must be updated to new team structures and integration of customer service into decision making. Rapid expansion of just-in-time sourcing, tighter sales integration, and product management on feature prioritization-to-revenue-expectation are a few additional business functions that need to be addressed with a digital-first mindset.
Determining the transformation leaders across all of these functions is necessary for success in these areas, commitment to the strategy, and achievement of the short- and long-term goals. Integrating them requires a strong and experienced transformation leader.
Identifying key leaders and empowering them to affect change is critical.
Identifying key individuals, their capabilities to upskill and freeing them up from existing projects can be difficult, but is absolutely necessary. Not committing to finding the key leadership talent (either internally or brought in externally,) and placing them into change leader roles, is a recipe for failure. The concerted effort to increase the skills and talent of the remainder of the team clearly showcases to the individuals the leadership’s commitment. This goes a long way to reciprocal commitment by the teams. AKA, symbiosis.
The role of Middle-Management for commitment and overall success is often overlooked.
One talent area that is often overlooked are the capabilities of the middle-management leadership to understand and pragmatically lead the transformation. Without empowering middle-managers to be active in the leadership of the transformation efforts, transformation fails.
At each level, understanding of the changes to processes, technology, data use, security, reporting, operations, and customer service (just to name a few) is required to be culturally successful. The change leaders at all levels need to be recognized, valued, and supported.
Threats to existing job activities, compensation, team size, career progression, and budget control are just a few concerns to be addressed by executives and middle-management. Failure to recognize and address these up front can freeze advancement. Accepted silos, reverence to the past, and emotional cost of change present an equal ability to passively slow advancements.
Identifying, highlighting, and confronting these valid concerns goes a long way to the ultimate commitment to the business digital transformation goals.
Changes require change.
From unemotionally identifying the shortcomings of the existing portfolio, to addressing new digital challenges, to needing talent and the necessary top-down/bottom-up commitment, to executing the holistic changes, these areas can kickstart on a successful digital transformation in any business.
In Part 2 we will explore the importance of Technology and Execution to increasing the success of a business transformation.