Why People Are The Key to Successful Digital Transformation
The characteristics of digital natives are clearly different from those of more mature organizations. Their ability to innovate and scale rapidly, generate new revenue streams, organize around small, self-directed teams and pivot with ease is a source of great envy. Add to this the threat of disintermediation and, it’s no surprise that digital transformation has been a hot topic in recent years.
However, with the major consulting firms citing success rates below 30%, digital transformation is not for the faint-hearted. It also comes at a cost: a recent Harvard Business Review study found that 69% of the $1.3 trillion spent on digital transformation last year was wasted.
Much of the research has focused on communication and engagement as primary, explanatory variable. But a successful digital transformation requires more than just town hall meetings, executive presence, newsletters and FAQs.
Why is digital transformation different?
The root of the problem is those mature organizations must digitize before they can become digital. Digitizing an organization goes to the very heart of how an organization creates and delivers value and then turns it on its head. But after decades of corporate evolution, delivering value today is dependent on thousands of process fragments stitched together by a tangled web of legacy systems.
This brings us to the dilemma: do you train existing staff who understand the organization but lack the new skills and experience of working in a digital native? Or, do you hire external staff with the new skills but limited organizational knowledge and hope they learn quickly?
The language associated with the new skills is so other-worldly that building in-house capability appears to be a daunting task. Hence, the more common route to transformation is to establish a Change Team based on new hires.
The next step is to re-allocate a sizeable portion of the investment pool and trim the operating budgets of the Run Team (those responsible for delivering day-to-day services) to fund the change.
It is this approach that sows the seeds of division, which will eventually undermine the transformation.
What Are the symptoms?
On the one hand, the new hires typically find the pace frustratingly slow and the mindset and culture more constraining than empowering. They struggle to understand “how things get done around here” and may conclude that the bureaucracy is designed to impede progress. They blame the Run Team.
The Run Team, on the other hand, feel overwhelmed as they are expected to do far more, with far less. They must innovate with minimal investment. Customers will not wait for the Change Team to finish. Their best people are being re-assigned to share their subject matter expertise with the Change Team. They assume the new hires are being paid far more even though they don’t deliver. New ways of working increase their workload, absorbing far more change, more frequently. And if that’s not enough, when it’s over, it’s the Run Team that will bear the brunt of the job losses. They resent the Change Team.
Squaring the circle
The key to success is to reconcile the differences and allow each team to play to its strengths. To do this, the Run Team must be brought into the transformational tent, and not just through extensive communication but by binding their role to the transformation.
The Change Team will still need a small number of external hires to anchor the new skills and mindset. Their role then is to train and coach existing staff in these “new” skills to demonstrate that they aren’t as foreign as they appear.
Finally, the Run Team must learn how to do more with less. This will get them back in control, proud to help fund the transformation and ready to lend their subject matter expertise to the Change Team. It will also create enough time for them to learn the new skills and prepare the groundwork for the transformation by unpicking the tangled web of processes through a: “Stop, Consolidate, Standardise, Simplify” agenda. Easy to say, but is it achievable?
What will it take?
There are three steps to make this possible:
- The executive team must acknowledge that the Run Team is equally critical to delivering the transformation and should enjoy the same level of executive attention, recognition and reward.
- The Run and Change teams must develop a shared understanding of each other’s roles, learn how to communicate and work effectively together and embed joint accountability for delivering the transformation.
- The Run Team must implement an operational excellence program to control their workload and enable the simplification agenda.