What is Digital Transformation?
What is digital transformation? Some may say a cliché.
In my opinion, transforming an enterprise is all about building or improving capabilities in order to capitalize on business opportunities.
Transformation examples include modernizing legacy IT infrastructure, democratizing corporate data to gain actionable business insights, or automating manual processes. Although transformation isn’t always digital, it typically does require new technology. More importantly than technology– transformation requires challenging the status quo and setting measurable goals for transformation success.
Ingredients for Digital Transformation Success
Having transformed numerous enterprises, I’ve built an almost recipe-like cheat sheet to keep these complex steps orchestrated. The high-level building blocks of this cheat sheet are a strategy, a tactical plan (to execute on the strategy), ongoing measurement framework, and of course adequate resources. Each of these are explained in detailed below.
Strategy is where it all begins, and this is where Center Mast consulting plays. Strategy starts by focusing on the problem space, devoid of the inhibiting lense of solutioning. This enables leaders to visualize how their world improves without the sharp constraints of a particular solution. Unfortunately, this is rarely how opportunities are first approached. More often than not, I parachute into a project in turmoil; typically a vendor-specific solution that isn’t delivering on its promises. When we unravel the problem, the original solution was based on poor assumptions or bad information from the get-go. Time and money are lost, and worse yet: trust among leaders is damaged.
The usual repertoire of consultant tools can ease the pain here. I’m of course referring to capability assessments, SWOT analysis, and so forth. Yet all these artifacts need to be tied together into something more comprehensive; something palatable and easy to remember. At Center Mast, we refer to this as the enterprise roadmap. This golden record conveys where the enterprise is today, where it’s going, and how it’ll get there. An immense amount of analysis goes into the enterprise roadmap, yet it must be simple enough for even the college intern to understand.
The Tactical Plans
Strategy is great, but it must be understood in order for leaders to take action. Therefore, execution of strategy commences in the form of one or more tactical plans. These include items such as budgets, hiring plans, application migrations, and so on.
Leaders of particular domains such as a marketing or engineering should build their own collections of plans which I refer to as “micro-roadmaps.” This enables leaders to have decision making autonomy while simultaneously communicating their strategy to peers in a collaborative fashion.
Let’s tie this all together with a simple example. Acme Automobiles Incorporated (AAI) has taken notice of the proliferation of ride sharing via apps like Uber and Lyft. They also know that millennials really prefer not to spend over $20,000 on a new vehicle, if they decide to buy vehicles at all. Yet Acme Automobiles is a traditional automaker with an assembly line pumping out new cars with price tags that start at $30k each. Let’s assume that Acme Automobiles’ strategy is to “capitalize on new markets with existing corporate investments.” This may necessitate tactical plans (departmental micro-roadmaps) such as:
- Build ride sharing capability pilot (operations team)
- Create ride sharing campaigns (marketing team)
- Build ride sharing app (engineering team)
Each tactical plan should have adequate alignment to the overall corporate strategy. Moreover, each dimension of each micro-roadmap should be able to be examined collectively across all micro-roadmaps. In other words, the CFO may ask to see budget across all teams. HR wants to see the staffing plan across all teams. Information Technology (IT) needs to see the technology needs.
Collectively, all of these strategies and plans cohesively combine to build the enterprise roadmap, which emphasizes transforming the traditional automaker into a modern competitor to Uber and Lyft.
Digital Transformation Roadblocks
Numerous obstacles may impede an enterprise transformation. From lack of alignment to shifting priorities, here are some of the key pitfalls to avoid.
Lack of Alignment
Many of us have heard the analogies related to misunderstandings. From the blind men and an elephant to the tree swing story, there are no shortage of vignettes. Still, achieving a shared vision is easier said than done; especially when sharp contrasts between leadership styles and skills exist.
Not long ago, I spent the better part of forty-five minutes getting several executives to agree on what “cloud hosting” actually meant. Not every team needs to understand every intricate detail of every project. Yet alignment with the bigger picture, at least at the team leadership level, is crucial. Each time a captain within the armada of ships ventures astray, the entire fleet weakens. Therefore it’s critical to for executive leadership to use the same language, definitions, and measurements to achieve common goals.
Raise your hand if you’ve ever had to put down a high priority project, only to pick up another project of even higher priority.
Although constantly shifting priorities is often a sign of poor planning, it’s not uncommon for one opportunity of higher value to trump another. Nonetheless, such context switching can put your digital transformation in jeopardy.
Defining a transformation project’s business value upfront can establish longevity as the flavor-of-the-month projects come and go. And if a transformation project does make its way to the chopping block, a solid change management process will ensure the program is examined fairly using only legitimate, agreed-upon prioritization criteria.
An Overly Risk Averse Culture
If we agree that digital transformation is essentially an opportunity, we know that opportunities require resources to be realized. As with any business venture: no risk means no reward.
Yet highly conservative leaders– the ones who bet only on “sure thing” opportunities– often approach digital transformations with apprehension. These are the leaders who require up-front revenue projections (which are often fuzzy at best), air-tight cost estimates, and afford very little room for error in what are otherwise highly ambiguous ventures. But only so many ROI and TCO studies may be conducted before opportunities start to die on the vine. Due diligence is important, but over-analysis leads to paralysis and missed opportunities.
Have a process for opportunity assessment, use it, then make a final decision. Do not obsessively revisit decisions or force your leaders through round-after-round of excessive justification. While you are busy crunching numbers in a spreadsheet, your competitors may already be shipping products to customers.
Honing in on Hiring
As a technical business consultant, I help companies build the capabilities they need to be successful. From building a new data analytics practice to hiring the first CTO, transformations almost always involve hiring.
Although from the perspective of internal recruiting, such transformations equate to a sudden explosion of hiring; an abrupt increase in demand most HR teams aren’t readily equipped to handle. The response I often observe from HR leaders is to try and “stagger” these new hires or fill “key requisitions” using quarter-by-quarter headcount limitations.
To be fair to HR, they are stuck between a rock and a hard place. HR will not hire several new full-time recruiters for a temporary burst in hiring demand. Yet HR is often reluctant to push the demand into external recruiting firms due to their exorbitant finders fees. Unfortunately, throttling key hires through one or two in-house recruiters simply won’t scale, and the entire transformation roadmap falls into jeopardy. Even when one or two new roles are filled, they often sit relatively idle; forced to wait while other leaders and/or teams are built out before they can continue hiring hiring people of their own.
There is no one-size-fits-all solution to this dilemma, but there are many tools at one’s disposal. First, external recruiting firms can and should be used when demand suddenly bursts for short periods of time. External recruiting may be more expensive, but those additional fees should be subsidized by the transformation budget itself. Second, consultants and contractors should be leveraged for temporal heavy lifting; a tactic that can bypass recruiting entirely. Third, recruiters should train hiring managers how to leverage their own networks for organic referrals. Examples include syndicating jobs to LinkedIn or actually getting hiring managers into recruiting tools so they can proactively reach out to qualified candidates themselves. Finally, a simple yet creative option is to move in-house recruiters to where they’re needed most. HRBPs and recruiters are often “permanently assigned” to specific departments in order to provide familiar faces and consistent service. Yet if engineering’s recruiters are overwhelmed while sales and marketing recruiters have additional bandwidth, what to do next should be fairly obvious.
Transformation efforts are business endeavors with some degree of risk and reward. They need to be thoroughly evaluated, and if embarked upon, measured and managed accordingly. Digital transformations can be risky, and challenges are common. Yet understanding some of the more common pitfalls can help you manage risks more effectively.
Start by building a strategy, and get all leaders aligned around it. Double-click into the strategy one level deeper by creating tactical plans or “departmental micro-roadmaps” which align to the transformative strategy.
Resist the urge to constantly shift priorities. Conduct your due diligence, make decisions, and hold leaders accountable without excessive questioning.
Finally, never underestimate how important talent is to your transformation. Strategize the hiring plan across all departments with HR in order to paint a holistic picture, then agree on how to handle uptick in hiring demand.