What is your digital transformation project actually transforming?
It seems that almost every week someone, somewhere in the world, is declaring that they're digitally transforming. Indeed the latest Harvey Nash/KPMG CIO Survey states that 44% of organisations are not just transforming, they're planning radical transformation. Yet all too often - like British politicians and Brexit - they seem to have no idea what it actually means.
'We're implementing a new ERP!'
'We're moving to the cloud!'
'We're going agile!'
'We're redesigning our enterprise architecture!'
And so on and so forth…
I was recently speaking to a CIO in Australia who asked for my advice on how to get engagement for a big digital transformation program. Here are the questions that I asked and the answers I received:
ME: What are you transforming?
CIO: Our technology
ME: Yeah, but what are you transforming?
CIO: We're implementing a new ERP and using new ways of working
ME: OK, but what are you actually transforming?
CIO: Ways of working
ME: From what to what?
CIO: From waterfall to agile
ME: OK, so no waterfall projects anymore, everything will be agile?
CIO: Well…yeah…there will be some waterfall projects
ME: So… what are you actually transforming?
Of course, the very simple answer to my question is 'culture'. So when I asked the CIO what they'd done to redefine the culture in order to realise the value from their new ERP system, the answer was 'We're sending everyone on a Scrum course'.
Of course, sending people on a course is not wrong, it's just a very old-fashioned 'command and control' approach which fails to recognise that behaviour change is the foundation for meaningful evolution. In that sense, tooling people up with the latest technical approach to delivery is only one small part of a larger piece of culture work. That said, transforming the behaviours of individuals feels like hard work so most organisations will avoid it and use lower headcount numbers as a measure of transformation, rather than the willingness of their people to embrace a different way of being. Kristine Dery, Research Scientist of MIT CISR talks eloquently about this here.
Let's face it, if organisations had provided their staff with the time to define what the new (vibrant) cultural state requires and then they'd held themselves to account to it, then there'd be no need for a transformation project in the first place. Incremental improvements would have been made and the vibrant culture maintained.
How many of the world's great cultures do you know that are embarking on a digital transformation project? I'll just wait here while you go and count them. Or else you can take my word for the fact that it's zero.
This lack of appreciation for helping humans to move from one cultural state to another is all the more surprising as the large consultancies have been pumping out research for the last four years (well, that's how long I've been reading it), to draw attention to it.
Here are some recent examples:
'Digital transformation involves change at every level of the organization' - Orchestrating a Successful Digital Transformation, Bain 2017
'[For successful digital transformation] CEOs need to look well beyond achieving technological excellence, to building a highly agile culture and organisation.' - Laurent-Pierre Baculard, Harvard Business Review, 2017
'87% of respondents agreed that culture created a bigger barrier to [digital] transformation than technology' - Cultural Transformation in the Digital World, Singapore Management University 2018
'CEOs must reflect upon, and be willing to change, their own leadership behaviors and let go of legacy aspects of culture that are barriers to progress' - Cultural Transformation in the Digital World, Singapore Management University 2018
'If people lack the right mindset to change and the current organizational practices are flawed, digital transformation will simply magnify those flaws.' - Harvard Business Review 2019
'We assessed roughly 40 digital transformations and found that the proportion of companies reporting breakthrough or strong financial performance was five times greater (90% percent) among those that focused on culture than it was among those that neglected culture (17 percent)' - Can't do Digital Transformation Without Digital Culture, Boston Consulting Group 2018
So why does it continue to be neglected?
Put simply, it's because organisations see the culture piece as too hard, so they settle for what they feel will be the second best 'fast and cheap' solutions to roll-out or implement. Most find out the hard way that these approaches almost always become slow and expensive. And whilst they may achieve headcount or operating cost savings, they do nothing for cultural evolution. One SAP study in 2018 found that of the organisations they surveyed, 84% had started digital transformations but only 3% had actually finished one successfully.
Providing the strategy for doing them is clear in the first place, digital transformation programs need to start with the staff (not the executive) defining the new cultural state and the expectations of everyone within it. If the people who you're expecting to transform aren't involved in this activity then prepare for a laborious and painful process hamstrung by a lack of engagement or a willingness to evolve. Change managers and agile coaches can help with this transformation, but only if they are used in the right way.
Cultural transformations are driven by humans with growth mindsets who role model the behaviours and principles required to embrace everything that is new. They’ll create a willingness to ensure that you'll never need a transformation project ever again. There is nothing digital about that.