Improving the Odds of Success with Digital Programs (it’s not about the technology)
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In a recent LinkedIn post, David Rogers rightly described digital transformation as a combination of both digital strategy as well as organizational transformation. His simple formula reveals why so many companies struggle with their digital programs. It is:
DX = D strategy + organizational X
It’s not enough to craft a business strategy enabled by digital. Organizational transformation is also needed. There’s the rub.
The track record with major organizational change has been consistently dismal since the 1990’s when John Kotter estimate that up to 70% of major change efforts fail. More recently, McKinsey has studied the root causes of failure with major change and the track record has not improved much since then.
Researchers at the MIT Center for Digital Business have concluded that focusing on three key areas of their enterprises: customer experience, operational processes, and business models is needed for success with digital transformation. Yes, persistent management attention to operational processes and customer experience are two of the cornerstones of success with digital programs. Yet, that appears elusive. Most management teams spend more time obsessing on organizational structure and the competition than on their customer and their operational processes in spite of the academic literature on the merits of doing the latter.
Shifting management attention from a vertical view of the organization to an “outside-in” horizontal view is very much needed for success with digital. It requires, at a minimum, two artifacts – a customer journey map and a set of enterprise level process maps – and candid discussion of these at the senior leadership team level. While many companies are doing something around customer experience and process management, in most cases not enough is being done to shift management attention from a vertical view of departmental activities to the flow of work that crosses organizational boundaries in creating value for customers. However, that is precisely what’s needed for success with digital programs.
Let’s first consider what companies are doing with respect to customer experience (CX). It has been known for some time now that customer experience does not improve until it becomes a top priority and a company’s work processes, systems, and structure are changed to optimize it. Further, it’s not enough to just look at touch points or moments of truth, instead it’s important to understand the entire end-to-end customer journey in order to optimize customer experience. A customer journey map must be developed from the customers’ perspective, not that of the organization. It should be a living document that needs to be actionable and should not just be used by a small team, instead it should be used by cross functional teams, shared with the senior leadership team and known by the entire organization. Despite the available research on best practices, many companies continue to examine just the touchpoints. It gets worse. CX efforts are often done department by department and as middle managers tend to hoard data, little or no attention is paid to connecting process improvement action to resolving customer pain points. Moreover, only a small percent of those organizations who take the time and effort to develop a customer journey map go to the next step of socializing it with the senior leadership team. In the absence of an end-to-end customer journey map that is actively discussed at the senior leadership level it is difficult to use customer experience as one of the driving forces in developing a digitally enabled business strategy.
Viewing operational processes at the enterprise level – from both the customer’s and the company’s point of view – is also needed for success with digital. That requires the senior leadership team to have pictures of how the organization develops, makes, and delivers its products and services. In other words, enterprise level process maps. In the absence of such documents, it is difficult for the senior leadership team to progress to a shared understanding of how value is created for both the company and its customers. It’s especially problematic when process improvement efforts focus on small processes inside of departmental boundaries. When that happens, process models reflect small workflows and the appetite for change tends to be incremental. While incremental improvement is important in many respects, a more ambitious, innovative mindset is needed to drive a digital enabled business strategy.
To succeed with both a digitally enabled business strategy and organizational change a focus is needed on the dozen or so value creating, end-to-end processes that truly matter. The table below outlines the set of large cross-functional processes according to the American Productivity & Quality Center (APQC) and SAP. If your organization is not working on some of these then you may be tinkering at the margin.
Collaboration is needed for success with these large cross functional processes. One might think that a close collaboration between process professionals, customer experience professionals and the digital team would be commonplace. Yet, that’s rarely the case.
How to shift management attention? The table below summarizes the tactics which can help companies succeed with both a digitally enabled business strategy and organizational change.
The empowering actions above are at the foundation of success with digital transformation. How is your organization doing?
Andrew Spanyi is President of Spanyi International. He is a member of the Board of Advisors at the Association of Business Process Professionals and has been an instructor at the BPM Institute. He is also a member of the Cognitive World Think Tank on enterprise AI.