Effective Digital Transformation Requires Shifting Management Attention
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There’s so much at stake, yet companies continue to struggle with digital transformation. A recent BCG study found that most digital transformations fail, and only 30% of transformations met or exceeded their target value and resulted in sustainable change.
This should not come as a total surprise. Back in 1995, Dr. John Kotter wrote that 70% of transformations fail. Then, having conducted several broad based surveys, McKinsey consistently found that only 30% of transformations succeed, and they recently concluded that transformations are hard and digital ones are even harder.
When it comes to technology projects, the success rate of IT projects is even more dismal than other types of major change. One study, conducted by the Standish Group estimated that over 80% of IT projects partially or completely fail – and those results might be even more pessimistic if only large IT projects were to be considered.
Academics, consulting firms and advisory firms alike agree that success with digital is complex and multi-faceted. For example, in Designed for Digital: How to Architect Your Business for Sustained Success, the authors proposed “Five Building Blocks of Digital Business Success” which are Shared Customer Insights, Operational Backbone, Digital Platform, Accountability Framework and External Developer Platform. Forrester, the technology advisory firm, promoted four building blocks of digital maturity as Culture, Organization, Insights, and Technology. In both cases, that’s a lot to undertake.
Is it possible that there’s one thing at the heart of success with digital transformation that has little to do with technology? Might it have much to do with shifting management attention from a traditional static view of business to a customer centered, agile, business process based view of performance?
How might companies implement such a fundamental shift of management attention?
Well, it will involve the following.
First, instead of just thinking about what is good for the company, leaders need to shift attention to what is good for customers. Successful digital transformations invariably start with the customer. A high level one page customer journey map is needed to help managers shift attention. This map cannot just be based on what people inside the company think of the customer journey.
Instead, it should be based upon direct input from customers. It can’t just be a document that’s kept within a small group; instead it needs to be discussed openly at both senior management and middle management levels.
When executives view the business from the customer’s point of view – then traditional old school thinkers suddenly find there’s nowhere to hide. This is when departmental silos crumble, and cross-functional collaboration improves. It’s well known that both departmental and data silos are obstacles to digital business success. Perhaps that’s why leaders such as Steve Jobs and Elon Musk stressed the “no silo” rule to increase collaboration and drive agility.
Second, instead of thinking about what is good for their individual departments, leaders need to shift attention to what is good for the company. The best way to accomplish that is to model, discuss and improve the performance of the company’s large enterprise business processes such as “idea to launch” and “order to delivery.”
This is dramatically different than delegating Six Sigma or Lean to individual departments. For decades, we have observed that dedication to Six Sigma or Lean – especially when structured along departmental lines – does not automatically result in excellent processes. Instead of advocating simply incremental improvement, the candid review of end to end processes typically leads to embarking on more radical change.
The scoping of enterprise processes is also noteworthy in this respect.
When a company chooses to examine processes such as “order to cash” and “hire to retire” it indicates that the IT organization is in the driver’s seat. Customers don’t care about “order to cash” – they are more interested in “order to delivery” – on time, complete and error free.
Employees and hiring managers, on the other hand, are more interested in ”requisition to onboard” – on time, complete and easy to do business with – than in “hire to retire.”
This shift in management attention stimulates a focus on value creation. It directly addresses the two major reasons for the failure of digital programs: lack of alignment and inability to scale.
It lays the groundwork for deploying a set of digital tools in an integrated manner. Instead of thinking about deploying a given individual technology tool for the benefit of just an individual department, leaders begin to focus on the big picture.
Implementing process mining alone is not likely to result in transformational change. Nor is it possible to scale robotic process automation (RPA) without an end to end process view. Once leaders are aligned in terms of what matters to customers and the company and they begin to pay attention to deploying multiple digital tools in an integrated, agile manner the chances of successful digital transformation increase.
There’s already some progress with the integration of process mining and AI – but it’s just the tip of the iceberg. Full blown integration will only occur when multiple digital tools are deployed along with practices such as design thinking.
Digital transformation needs to be measured by looking at the tangible benefits delivered to customers and the business – and not solely in the context of the technology deployed.
Instead of looking at how many “bots” a company deploys, management attention needs to shift to the improvement in the timeliness and quality of services delivered to customers and the business value created via end to end processes.
In the movie “City Slickers,” Curly (played by Jack Palance.), a weathered, tough old cowboy, laughs at Mitch’s (played by Billy Crystal) a city slicker’s confusion about life. Then he offers sage wisdom: “It all comes down to one thing. You focus on that, and everything else don’t mean s#@t.” This may well be the case for “digital transformation” too – when organizations focus on shifting management attention from a traditional, siloed view of business to a customer centered, process based view.
Andrew Spanyi is the founder and Managing Director of Spanyi International Inc. He has written 3 books on process management and operational leadership. His thought leadership in these areas is based on nearly three decades of practical experience assisting organizations with large scale change. He is also on the board of advisors for the Association of BPM Professionals.