Pop quiz: What’s the first thing you should do after you’ve completed your digital transformation?
If you’ve followed our work, you know this was a trick question.
Digital transformation is a process, not a destination. It’s a fundamental reshaping of an organization’s culture that reorients it around the customer experience, business value and constant change.
It’s not about executing a ‘digital transformation project’ and finding a new normal. The essence of digital transformation is the destruction of the static state.
This essence is a challenging concept to grasp, ironically, because while we talk about digital transformation, we do it through an industrial era filter. It’s difficult to imagine a change of state this fundamental, so it’s easier to put in a box we understand.
A recent Ovum study shows the difficulty in grasping this essence of digital transformation. In the study of 7,000 IT decision makers, one-third of respondents said their organizations were “unprepared for…digital transformation.” That was the headline — but the more troubling statistic was that 7% said their digital transformation was complete!
These results should scare you. First, a third of organizations are not prepared to do anything? After hearing an unending drumbeat about the changing landscape and having to step over the carcasses of companies who failed to respond to digital disruption, they’ve done nothing?
And then there are the 7% who claim to be done. They are sitting back, sipping their glass of Scotch and chuckling at the poor souls who are so far behind. They have no idea that not only are they not finished, but there’s a good chance they haven’t even started.
But even the study itself speaks to how badly organizations, their leaders, and even industry pundits misunderstand the true essence of digital transformation — why was that question even in the study?
All of these questions speak to the same problem: we hate ambiguity and open-ended quests. We want a starting line, a finish line and a way to know whether we’ve won or lost. But that’s not how digital transformation works.
But who wants to take the first step on a journey they know will never end?
How to Win a Race You Can’t Finish
By putting digital transformation into an industrial era box with a neat starting point, ending point, and finite measure of success, organizations are all but ensuring that they will ultimately fail to transform anything. They will find themselves struggling to understand how everything went wrong when they thought they did everything right.
To actually transform your organization, you need to change the way you look at the process — and by doing so, you’ll be taking your first real step toward digital transformation.
The starting point is redefining success. Most organizations simply define digital transformation in terms of completing some specific set of activities. More adventurous organizations might have a set of business outcome metrics and define success as achieving some measure of them.
But these definitions of success will not ensure that your organization will actually achieve the real goal of digital transformation because they measure finite states. The goal of digital transformation is to create an organization that is infinite, unbounded, and in a constant state of reinvention.
Admittedly, that goal is much harder to measure.
It’s a little like the difference between a monorail that takes people from a single location to another versus building a personal flying and submersible vehicle. One is static and serves a single purpose, so you measure its output and those things that will predict its output.
The other can take you anywhere you want to go, so the only measures that matter are those that ensure it can continue to take you there — wherever that may be.
Re-imaging Roles in a ‘Transformed’ Organization
If you carry this analogy further, you realize that you must measure transformation success not by outputs, but by capabilities that deliver competitive advantage. Are your wheels running optimally so you can drive on roads faster than your competitors? Are your ducted fan engines operating effectively so that you can take off more quickly and fly faster? Are your navigational instruments operational so that you can plot your course more efficiently – on land, in the air or underwater?
From an organizational perspective, these capabilities translate to functional and individual roles. You can, therefore, measure digital transformation success across two dimensions:
- Do you have the necessary capabilities/roles to take your organization anywhere you may need to go?
- Are those capabilities/roles operating optimally and delivering competitive advantage?
However, one question remains: how do you know if you have the right roles and if they’re operating optimally? This is where it gets tough. Because digital transformation demands a state of constant change, there is no ‘best practice’ or standard by which you can measure success. The capabilities necessary at any given point will be different for every organization.
Nevertheless, one thing you can be sure of is that if the functional structures, roles and capability models you are using seem a lot like the ones you’ve always used, just with cooler names and titles, it’s a pretty good bet you’re not there yet. It’s when things start feeling foreign that you’re probably on the right track.
Recent conversations I’ve had with two organizations are good examples of what it looks like to be on the transformational journey.
The first company is beginning to apply the agile software development methodology as a business management model. Unrelated to software development, the organization is forming scrum teams, holding stand-ups and conducting sprints within its business operations and marketing teams.
The backlog contains business activities instead of software features, but the process is largely the same — and, of course, it has embedded technology demand into the process.
The second organization’s approach is more radical. It has created a self-organizing management model that sits on top of its hierarchical management structure. Moreover, it has extended this self-organizing management model to its client engagements.
This company has created a structured mechanism that defines how this self-organizational model works. It includes a formal process for establishing the objective of each team, for managing the relationships between teams and specific roles that must exist within each team. It even uses this approach at the top-most level of the organization to drive all strategic decisions.
In both cases, the common thread is a re-imagining of roles and the reshaping of the operating paradigm around these new roles, where technology is a fundamental enabler. They both also measure performance based on the delivery capability of their respective teams, explicitly assessing the teams’ on-going improvement and ability to adapt — ensuring that they maintain their transformative capability.
To paraphrase John F. Kennedy, organizations must choose to pursue genuine digital transformation not because it is easy, but because it is hard. You must accept this challenge if you are to lead your organizations into the future.
If you think you are well on your way with digital transformation, or, heaven forbid, that you’re done, stop and check yourself.
The digital transformation journey is a marathon that you’ve only just begun. The very best you can hope for now is to have started your journey with honorable intention and with the determination to see it through.
Founder & Institute Fellow
Charles Araujo is a technology analyst and internationally recognized authority on the Digital Enterprise and Leadership in the Digital Era who advises technology companies and enterprise leaders on how to navigate the transition from the Industrial Age to the Digital Era. Having spent over thirty years in the technology industry, he has been researching Digital Transformation long before it became the uber-buzzword of today, and is now focused on helping Digital Era Leaders prepare themselves and their organizations as the macro trends of the primacy of the customer and the primacy of the algorithm collide, ushering us into what he calls The New Human Age.
Principal Analyst with Intellyx, founder of The Institute for Digital Transformation, author of three books, and most recently the co-founder (with his wife) of The MAPS Institute, he is a sought-after keynote speaker and has been quoted or published in CIO, Time, InformationWeek, CIO Insight, NetworkWorld, Computerworld, USA Today, and Forbes.