It would difficult to avoid the topic of digital transformation in 2020. The challenges of digital disruption and the potential opportunities with digital transformation are highly visible in the business news.
Digital seems like such a simple concept: Take your organization and apply a digital capability to it. However, only a minority of organizations are making real progress on digital.
Why are some organizations finding digital so difficult? Or perhaps, more importantly, what are leading organizations doing right that we can learn from?
Success leaves clues, so what are the clues related to digital?
Read on to learn the 10 things that successful organizations are doing differently to develop a leading digital capability that works.
1.) They Recognize that Digital Transformation is a People Game
Top digitally capable organizations know that digital is not about implementing technology. It's about taking a comprehensive approach to rolling out this large change in how the business operates.
Then it's about getting in motion, learning and continuously building a digital capability.
“Progress not perfection,” as Dan Sullivan likes to say.
“Progress not perfection” ~ Dan Sullivan
The true challenge facing organizations around digital is the pace at which their people can successfully absorb change. It’s the same in your organization: Your digital progress is enabled or limited by your people.
Moore’s Law has seen the capability of technology grow exponentially for over 50 years now. The compound effect means that the change in any two-year period is now staggering. New technologies have become available at an accelerating rate.
People do a reasonably good job of implementing new technologies in their personal lives. Smartphones and tablets are found in many homes and across all age groups. Apps provide an elegant consumer experience for shopping, travel, dining, transit, and collaboration.
However, when people go to work, the technology there has done a poorer job of keeping up with the times. Many processes are still manual, supported by spreadsheets, or running on dated legacy systems.
This gap between work and home is often a growing source of frustration within teams. And it’s not a millennial problem – survey data shows that this frustration is consistent within 10% across all age groups in the average office.
Yet the average employee doesn’t like change. According to this Forbes article by Mark Murphy, only 38% of front line workers say they like to leave their comfort zone.
Digital leaders have learned that the key to progress is to bring their teams along with them - through the changes - as they implement digital.
2.) Their Leaders Communicate Why the Change is Necessary
Simon Sinek created one of the top TED Talks of all time and it's simply called “Start with Why”. It's based on the concept that people often talk about what they will do, and how they will do it.
But they often forget to tell you why.
“Start with Why” ~ Simon Sinek
Starting with Why is critical in building alignment. It's part of human nature. We are curious and we want to understand.
When you don’t communicate “Why”: in a compelling way, a large number of employees will decide that digital is a bad idea.
Leaders of digital change understand that they need to start with Why. And that they need to reinforce that “Why” along the way.
How do they do this?
● They make an effort to communicate why the changes are necessary.
● They share the challenges the organization is facing openly.
● They talk about the disruption in the industry due to digital.
● They talk about the looming threats from new entrants and nimble competitors.
● They talk about the tremendous opportunities that exist - if their organization can harness digital earlier than the marketplace.
● They talk about the opportunities to enable their business processes with digital.
● They talk about the opportunities to create new business models based on digital.
All of these points help the team better understand the Why. It communicates that yes, the risk of change exists, but it is less risky than standing still.
3.) They Help Employees Manage Their Fear of Loss
I recently had the privilege of attending a talk by Robert Cialdini, the author of Influence. In the talk, he reminded the audience how strong the fear of loss is in humans.
People resist change when they think they have something to lose.
“People seem to be more motivated by the thought of losing something than by the thought of gaining something of equal value." ~ Robert Cialdini
Note that it’s not when they do have something to lose, it’s when they think they have something to lose.
When it comes to digital, people can often feel threatened by the proposed changes.
think they have a lot to lose.
think that it’s a good initiative for the company - but a bad initiative for them.
fear their job will be replaced.believe they lack the competency to change.
think that the rewards for the change don't exist for them, or they aren't worth it.
might anticipate a loss of status or quality of life.
may decide that their notion of themselves is threatened if their role is changing.
Leaders in digital know this. They intentionally approach digital as a way to enable their employees to do higher-value work. They talk about how that opportunity will be made available, and they give concrete options for retraining when required.
Top digitally capable organizations work with employees in an open and honest way to move through the change and find an appropriate path forward.
This way, employees have a higher trust in decision-makers and are less likely to fear hidden agendas.
4.) They Include a Strong Voice of the Customer
Silicon Valley has learned the power of the customer’s voice.
Eric Ries has built upon the work of Steve Blank and others to create the Lean Startup, which is used by a significant number of tech startups seeking rapid learning, fast growth, and usually venture funding.
Lean Startup has 3 components.
Business Model Design
Customer Development is the key component here. It is based upon an assumption that you have a business model in mind, a target market, and later on product concepts – however, none of that is proven. It further assumes that no learning takes place inside your own building, and it drives proactive customer engagement at the start of the idea.
Mature businesses already have customers and strong relationships. However, that can lead to an assumption that they already know what their customers want.
It is very discouraging to build something your customers do not want.
If you assume you already know what your customer wants, there is a tendency to stay in your own building. You may go behind the curtain and work for months to invent your concept of the next great customer experience. But, if you do, you run the risk of having this experience fall flat with your customer when you unveil it.
Digital leaders have discovered that Silicon Valley is on to something with Customer Development. They assume that while they know their customers, they can always learn from them.
They understand their customer’s visions, and they know the role they play in enabling it. They understand the opportunities they can create for their customers, and they understand where they have become an obstacle to the progress the customer seeks.
They approach their customers as they consider new initiatives to confirm that there is a “problem-market” fit - that they have identified a problem the customer would pay to have solved.
Then they return to their customers with their concept to confirm that there is a “product-market” fit – that their product concept is one that a customer would buy to solve their problem.
Then they consult with a group of customers along the way. They hear the customer’s voice all through the journey.
This leads to much better concepts and a more cost-effective creation of products. It also gives an early alert when an idea is a dud – before investing in expensive design and build activities.
An open line of conversation leads to better customer relationships and allows you to work with them when creating an increasing joint capability enabled by digital.
5.) They Focus on Continuous Digital Capability Building, Not a 1-Time Digital Transformation
If you want your team to arrive at the top of the digital mountain, it will be much more likely if you take the trail and staircases rather than scale the face of a cliff.
Think about it: You’re on a hike with your team. The goal is to get everyone to the top, together. Everyone has varying fitness levels, equipment, and thoughts about this hike you suggested.
Your team starts discussing the best ways to get to the top.
Some team members suggest scaling the mountain using ropes and harnesses. Others suggest the gradual switchbacks and staircases with occasional breaks to rest, recharge, and take it all in.
Which idea is best for getting the entire team to the top? Both can be achieved by certain team members, but which one do you think will succeed most often for everyone?
The answer is the incremental path and staying in motion. When using that path, everyone stays together and makes it to the top.
Don't ask your team to scale a cliff when you could have built them a staircase.
The transformation approach can work, too - but it’s harder and you’re likely to lose people along the way. If it doesn’t work, it can cause frustration, exhaustion, and lead to a long period of inaction before trying again.
Digital leaders know that this analogy applies in business as well.
They have learned that it's preferable to continuously build digital capability than to launch a monolithic transformation. Each year, the team learns, gains confidence, gains capacity, and becomes better at generating game plans for digital.
From that vantage point, it becomes much easier to see opportunities for new business models enabled by digital, built from the learnings of adding digital to existing business processes.
6.) They Over-Communicate On New and Existing Channels
Adding digital can be a significant change to an organization. And we know that people respond to change in different ways. Some love it - and some will cling to the current way of doing things.
When there is change afoot in an organization, there will be lots of conversations taking place. Much of it will happen informally, between two people or in small groups.
It is important to have ample communication available about the change in order to make it more likely that those conversations are linked to facts.
If the glass of information is half-full, your employees will fill the rest up with their own notions. The trick is to fill the glass up with facts about the opportunities in moving forward.
It is virtually impossible to over-communicate internally about change.
Leaders in digital know that it is almost impossible to over-communicate about the changes taking place.
To communicate they…
...use all of their existing communication channels.
...leverage newsletters, town halls, email updates, and intranet.
...educate team leaders and have team leaders update their team frequently.
...look at new digital channels for communication, like Slack.
...collect employee feedback in a comprehensive way and baseline the employee perspective when they begin.
...collect feedback early and at a regular frequency along the journey.
...listen for change concerns and help their team understand and adapt.
...promote successes prominently and regularly reinforce the Why.
...remind their employees how an agile approach to digital works.
7.) They Don't Outsource Their Digital Transformation to Consultants
Digital is inherently about your business and bringing your people along on the journey.
It is about building a digital capability to enhance the unique knowledge you already have about your customers, your industry, your geographies, your team, and your products.
No one understands your business as you do, and you need to leverage that knowledge deeply.
And it is critical that you build a capability to continue on with digital long after the initial activities have been completed.
Leading digital organizations often do this by bringing in help to facilitate the process of digital strategy and planning.
The key word here is “facilitate”. Why? Because you want a lot of the ideas coming from your team, not someone outside of it.
You want your plan to be created by your team so that they feel the sense of ownership for the plan.
There are certainly valuable ways to leverage outside help to support your team when strategizing and planning a digital undertaking. You may want to bring in industry experts or another point of view on how to handle people and culture. You may need an expert to share what’s possible for digital with advanced and exponential technologies, and you may need help to implement.
These are all great ways to support your team in landing on a solid plan for your company. When it’s a team-created plan - not a plan someone else built - it cements buy-in and commitment to the journey.
8.) When You Say Organizational Change Management, They Say, “Yes, And…”
As discussed already, most people do not look forward to change. Stretching outside of established routines and comfort areas make them feel overwhelmed or stressed - and many struggle to see the benefit beyond the initial pain.
They may even look to the perceived source of their pain - the leaders of the change - with suspicion.
For this reason, it's important to have a focused, intentional, and structured way to define what the changes are and who they impact, and a plan to manage each of the changes for each impacted group.
This is the core of Organizational Change Management.
Many organizations have learned that this is a key work stream on any medium to large-sized project.
Digital leaders take the concept of managing change one step further. They approach it the same way that you approach improv: By saying “Yes, And”.
Be excellent at Organizational Change Management. Then make it less required in your culture.
Yes, we will leverage the established discipline of Organizational Change Management,
and, we are aware that as many as 70% of OCM programs fail to reach their goals - often because the culture is so stubbornly change-resistant that OCM initiatives are no match, even if structured and executed reasonably well.
To solve for this, digital leaders bake the ability to change continuously right into the culture. They help manage each significant change but build the capability for change in their people.
This means OCM will be more successful. And eventually, perhaps not even required!
9.) They Bring Their IT Organization to the Digital Era
At first blush, digital appears to be about technology.
Following that logic, numerous organizations that have started “going digital” have established their digital programs within the IT function.
Undoubtedly, that is where technology capability is strongest within most organizations.
However, digital is a big change for the IT organization as well - and you can’t assume they are even equipped to lead.
The IT organization needs to learn how to adopt digital technologies while still operating their current suite of legacy applications, and learn to deal with the changing talent demands.
Don't expect IT to conduct a digital transformation for your company on their own. Also don't underestimate the change that IT will need to undergo.
There will be less need for server, database and hardware administrators – and eventually no need in some companies.
Leading digital organizations take a multi-pronged approach to IT.
...find ways (often with cloud migration) to lower their fixed operational costs so they can direct more funding to digital innovation from within IT.
...partner with the business on digital, while still ensuring that digital is a business initiative.
...build the skills required around cloud, data science, cognitive and other exponential technologies.
...build skills in Agile, Dev Ops, Design Thinking and Innovation.
...focus on retraining, recruitment and retention improvements to build the talent base they need.
With this approach, leading digital organizations ensure their digital capabilities and growth happen effectively and wholly - with every department, including IT.
10.) They Establish a Culture That Supports Digital
Culture is a pivotal factor in how your digital initiatives will generate results.
Oftentimes, when digital initiatives stall, culture is in the way.
Oftentimes, when digital initiatives stall, culture is in the way.
Culture-building as a whole can be a fuzzy concept, however, digital leaders have learned how to manage and even modify their culture as required to become digital.
Culture with respect to digital is a large and interesting topic. More on that hefty topic in upcoming posts.
Ready to Get In Motion?
If you want tools and approaches to help structure the planning of digital in your company, and you’d like to validate insights, clarify focus areas, and solidify alignment with your overall business strategy, Second Spring can help.
We offer The Digital Advantage Gameplan™ Fast-Track System - a 3-week, hands-on, collaborative and consultative approach to laying the foundation and successfully transforming your company’s digital landscape.
If you aren’t sure your company is ready for modernizing with digital, try our free Digital Capability Snapshot™ as an easy first step to find out.