That said, leaders should start by considering, whether the company is flexible enough to take advantage of the opportunities that are on offer. Is the company prepared to take risks? Is transformation an integral part of the organisation yet? Or is it still seen as a series of one-off departmental initiatives that exist in silos?
Culture isn’t simply created overnight. It happens as a result of behaviours exhibited by the teams and individuals in an organisation. Multi-coloured sofas, motivational posters, mission statements and a fridge full of free drinks are nice - but there’s far more to shifting culture than that. Culture is shaped and solidified over time through mindsets and behaviours. And an aligned leadership team needs to be behind that.
Transformation involves a conscious and committed departure from the current state. But while almost every company is now talking transformation, some aren't walking the talk, and they aren't prepared to make the departure from their old - and often antiquated - ways of working. So, they tinker with digital and delude themselves into thinking they're transforming, when in fact they're only creating small change, which will neither disrupt, nor protect them against disruption.
While the words digital and transformation get used in the same sentence, the disconnect between knowing about digital technologies and orchestrating a transformation, is often painfully obvious.
Digital business transformation isn’t simply the implementation of cutting-edge technologies. It’s a new way of thinking about value, business models and the organisation. It requires a mindset that adopts a new way of operating in the company by encouraging transformation.
The successful orchestrators of transformation are those that have acquired a firm grasp of culture, communication, management and leadership. They leverage the knowledge of technical, data and business process experts and they understand the 360° view of transformation.
Just like the violin and flute players in an orchestra, the IoT, Cloud and other technical experts have an important role to play in transformation, but the leader of transformation is that person who can orchestrate the entire performance, and get the best out of teams, with a solid grasp of all transformation-related disciplines - particularly culture and communication.
Although digital business transformation calls for a cultural shift, this isn't the first-time leaders have faced the cultural challenge. Company mergers have been taking place for decades, and culture has been one of the greatest challenges that leaders have had to contend with during a merger. While the goals of the cultural change required for transformation might be different from those during a merger; values, practices, attitudes and beliefs remain at the core of each.
Most established companies have thrived on cost control and operational efficiency after leaders have embedded a culture of reliability by optimising for operational excellence over variability. These leaders now need to do an about-turn and accept that transformation without innovation can't happen, and that with innovation comes risk. Risk that can strike fear into the hearts of traditional managers and leaders who thrive upon safety and “how things have always been done with certainly”.
In transformation, often an initial excitement surrounds a new initiative, but when the honeymoon period passes and the day-to-day life of execution becomes the norm, old cultural behaviours and attitudes begin to re-appear, and the old organisational culture does its best to return to “how it’s always been here around”.
Companies with high digital transformation maturity have very bold cultures. They set out to be transformational by taking risks that many wouldn’t. Their culture is one where the organisation collaborates well and makes rapid progress. But this isn't the norm among large companies that have been around for many years.
So how do you change something that's at the heart and soul of an organisation? Cultures that took years to shape, are certainly not going to change overnight, or as a result of a re-written mission statement and an hour-long speech from the CEO. Cultural evolution takes time. Lots of time.
Digital business transformation goes against the grain of traditional ways of working that a company has become accustomed to, and it’s a threat to management practices that have sometimes existed for decades. Transformation initiatives surrounded by the wrong organisational culture and DNA result in an unsatisfied workforce, chaos, confusion and political collusion.
Strategic transformation can’t happen without a shift in organisational culture and changing a culture that's been shaped by decades of reliable, stable, consistent, and repeatable ways of working isn't easy. As Gary Hamel once said; “the most profound business challenge we face today is how to build organisations that can change as fast as change itself”.
The best leaders know that the traditional bureaucratic command-and-control driven structures are not the environment for transformation to flourish. They know they need to foster a culture that exploits digital technologies in innovative ways to create new value and competitive advantage. They encourage people to unleash their passion for innovation and transformation.
With digital transformation firmly on the agenda of the best organisations, how well prepared are they to address organisational change in a business environment that looks different to how it did a decade ago? Especially when the current state of work in some traditional firms is now very broken. A situation that's demonstrated by the fact that only around one-third of employees are engaged at their jobs.
While many executives feel more comfortable dealing with costs and strategy than culture, leaders need to clearly communicate a vision or story of the future and take a practical approach to first understanding and then tackling cultural issues that could even serve to derail transformation efforts.
Why on earth should employees succumb to the digital transformation hype that's attempting to change what made the company so great? These people genuinely believe they simply need to continue with business as usual and put a stop to notions of transformation.
It's the responsibility of leaders to help these people understand the need for transformation and the inevitable shifts that will ripple through the organisation, to change the day-to-day working lives of many people.
The CEO and their leadership team need to work hard to communicate a set of aligned messages about why the company needs to transform, and what’s in it for people. They need to clearly communicate how companies that were once in similar comfortable situations became victims of their own complacency.
In fact, transformation is a perfect opportunity for leaders to step back, update and re-shape current management practices and mindsets, and then educate and inspire the hearts and minds of their people. Forget “out of the box” thinking. In the modern world of transformation, there shouldn't be a box.
A strong, shared sense of purpose also removes many obstacles, and this has to be communicated from the top. Let’s face it, if an organisation’s leadership is unable to inspire its people, how can those leaders expect their workforce to bring initiative, imagination and passion to their work every day?
But how do you do that?
I don't have time to get too deep into psychology here, but I can suggest you explore the persuasion cycle from Mark Goulston. It involves taking people through five stages and shifting them from resisting to listening to considering to willing to doing, to glad they did and will continue to do.
Of course, there are techniques underneath these five stages, and plenty of people skills are needed to get this right. But through the application of these five stages, leaders with a desire to understand and nurture company culture can make real progress in the quest to shift mindsets in the interests of the longevity of the business, and the transformation that's required to ensure that longevity.
The ability to nurture company culture effectively is what really sets the best transformation leaders apart from the rest. And nothing about that is related to technology.
Transformation calls for leaders to think of new ways to re-shape the overall business model, and to focus on value drivers. They then need to bring this perspective of what transformation means for their company, workforce and customers, into the entire organisation and focus people behind a common transformation vision.
Let's consider ten of the menaces that can often get in the way of a transformation mindset.
1. Overconfidence - the company is doing well so there's no need for any major transformation. They think that what happened to Kodak and Nokia couldn't possibly happen to them.
2. Being in denial - not looking for, or wanting to see new disruptive trends.
3. Being entrenched in orthodoxy - holding onto beliefs that held true in the past.
4. Old-timers use political tactics to lock-down the best resources in activities that are less-important that transformation.
5. While leaders use the transformation word, technology implementation is often as good as it gets.
6. Staying stuck in comfort-zones with an unwillingness to make bold decisions which could compete with - or even cannibalise - the core business.
7. Putting short-term results ahead of long-term value.
8. The expectation that an operational workforce can become overnight transformation masters, without investing in re-training them.
9. Insular thinking and behaviour - not investing in and encouraging process-driven innovation which can become a permanent part of the organisation.
10. Lack of strategic clarity resulting in people being unsure about whether they should focus on speed, quality, efficiency, or innovation.
As long as these barriers exist, a business will struggle to commit to authentic transformation. Only after a mindset overhaul among leaders will companies be ready to embark on legitimate transformation and avoid the consequences of digital sugar coating that are now evident in many places.
Accepting the existence of a new competitive paradigm isn't easy for some leaders of established companies. It often requires them to acknowledge an inevitable loss of business and an acceptance that they need to develop disruptions that cannibalise their existing business.
Failing to come to terms with this is a sign that a leader might be too anchored to old orthodoxies to lead a company in the digital economy.
Digital transformation is in-vogue and a large proportion of professionals want to be part of it. The words digital transformation appear in a considerably higher number of LinkedIn profiles than it did three years ago. But the roles people play on the digital transformation stage vary dramatically.
What's important is that transformation leaders envisage a new future, ensure the organisation is equipped to build that future, and then orchestrate the entire effort holistically.
The larger the organisation, the more daunting this can feel, and managers and leaders need to be suitably experienced to cope with the size of the organisation they're working with. For example, the CIO of a company with 100 staff will have a lot to learn before they're capable of taking on the challenges of the same role in a company with 100,000 staff - and in the case of the CIO, most of that experience will have little if anything to do with technology.
While start-ups are challenged with building a new business, established firms are challenged with transforming an old business. Both will see many CEOs get it right, but a higher number getting it wrong.
What I want to touch on here are three key macro challenges that executives of established firms face. They need to all three right if they're to have any hope of successfully steering their enterprise into the new digital economy.
These three macro transformation challenges are to Envisage, Enable and Orchestrate.
Envisage involves the ability to see what the organisation needs to look like in the future, in order to survive and thrive in the new digital economy - and business models will be core to this.
Enable involves the ability to equip the organisation with what it needs to undertake the transformation that will make what was envisaged move from being a dream to becoming a living, breathing reality.
Orchestrate is the ability to make all of this happen. You can put the world's finest actors onto a movie set but if the director is not there to orchestrate them, it's unlikely that an Oscar-winning movie will be produced.
So let's consider the ability to envisage - which is about knowing what the organisation needs to look like in the future, in order to survive and thrive in the new digital economy.
With business models will be core to this, executives need to be know how their company will deliver better value and experiences to customers and make money from it. While this might sound simple, the last thing any company wants to do is make a big bet on a new future, invest heavily in creating that, only to discover that what they built can't compete with what other companies can offer the customer.
That's a bad place to be and many companies that get it wrong are unlikely to survive such a poor business decision. So it's really important the right people are involved in re-thinking the future, and it's possible that an existing executive team isn't equipped with the right digital economy foresight to do this.
Every leader needs to recognise the fact that business models are far less durable than they used to be. And that the basic rules of the game for creating and capturing economic value have started to change and will continue to change.
We'll see the best digital economy leaders anticipate and build new business models, while their less successful peers will squeeze harder on their old business models and unintentionally lead their organisations into obsolescence. And others will boldly attempt to build new business models but they will lack the ability to successfully envisage, enable and orchestrate a new future.
Business models of the future will navigate the complexity of tomorrow’s world to help people unlock their potential, satisfy their needs and live well. And the business models that take full advantage of innovation and new technologies will outperform those that don't.
Companies need to avoid being so attached to their trusty old products and services that they inhibit the organisation's ability to reinvent itself.
No matter how wonderful a product or service appears, there comes a time when leaders need to accept the harsh reality that the glory days are numbered. And just like the once hugely popular ice delivery services, VHS videotapes, and Walkman, the day will come when the best that many of today's popular products and services provide their creators and customers with, are feelings of nostalgia.
Because what once was so useful to customers and profitable to companies was just a temporary solution in a business model with a limited shelf-life.
Innovative companies have people who can envisage the future basic needs of customers and build their businesses around it. They're not held back by old beliefs about how things should be. They have the same contempt for that old fashioned thinking as start-ups do. While many use terms like “let's think out of the box”, the real innovators see no box. For them, there are no limits, and they couldn't care less about the rules of the past and how things used to be - or even still are.
Tomorrow's digital economy winners are identifying their customer’s needs and creating innovative ways to satisfy those needs in completely new ways. Meanwhile, their competitors are busy doing their best to preserve their old products, services and business model - which is all their operating model is set up for.
While many companies are focused on preservation, the companies of tomorrow are focused on innovation. Digital economy winners are identifying customer needs, creating the products that satisfy those needs in amazing new ways. They're building the business model around that, then re-engineering their operating model to make it all possible.
Next, are the enablers of transformation. This is the organisation's ability to undertake the transformation required to turn an academic business model into a reality.
It's often said that strategy is three times more difficult to deploy than develop, which explains why the best that many strategies will ever be, is a pretty set of PowerPoint slides and an enticing business case.
No matter how well leaders envisage a new future, it can only become a reality if they invest in their transformation enablers. Five key capabilities that are the enablers of transformation are people, innovation, data and analytics, technology, and an operating model.
People make transformation happen, data and analytics enable better decision making, technology is used to get things done, and the operating model puts it all together in a way that enables the envisaged business model to work. Which ultimately enables the company to thrive in the new economy.
The challenge most companies face right now is that their people, innovation, operating model, data and analytics, and technology, aren't where they need to be, and unless these enablers are upgraded, the envisaged business model will struggle to become a reality. In the meantime, the CEO and other executives will become increasingly frustrated.
But often the reality is that while some leaders are prepared to invest well in strategy, they under-estimate the investment and shifts required in their transformation enablers. Meanwhile, the best companies have a laser-like focus on each of these enablers and they're treating them as an integral part of transformation.
It's not enough to have disengaged people with old skillsets. People need to feel inspired to work with a sense of urgency, learn new skills, and adopt new ways of working, thinking, and behaving. From business processes and change management through to project and programme management, leaders need to be acutely aware of the broad range of transformation skills they will need in their workforce.
It's not enough to simply collect and manage data. Leaders need to ensure data is enabling informed decision-making right across the enterprise, with predictive, prescriptive and Cognitive analysis that reveals new opportunities.
It's not enough for technology to be just a back-office function. It now needs to support every aspect of the organisation and enable new ways of working and innovative business models.
It's not enough to consider good ideas. Innovation needs to become a permanent part of the organisation. Without it, any notions of transforming both the organisation and business model are likely to be quite underwhelming and insufficient.
It's not enough to rely on an old operating model to enable a new business model. Leaders need to commit to a next-generation operating model. This operating model is a new way of running the organisation that combines digital technologies and operations capabilities in an integrated, well-sequenced way to achieve improvements in revenue, cost, and customer experience.
Orchestration is the ability to make all things required in transformation to happen. While you can fill a music hall with the world's best musicians, it's the conductor who orchestrates who brings them all together to create that incredible performance.
Similarly, for the finest IoT, data and project management experts to contribute effectively to the transformation journey, their efforts need to be orchestrated and integrated, instead of being left to work in silos.
Companies have always had to get things done, but aside from the occasional projects and programmes, most of the workforce and many leaders have simply ticked over in operational mode, which is doing the same thing over and over.
It takes a great leader to be prepared to not only shift their own mindset but also upgrade their own capabilities, to be suitably equipped to orchestrate transformation.
While the CEO serves as the overall orchestrator of transformation, often they don't have the bandwidth to do this on a day-to-day basis. Which means that other orchestrators of transformation come from their leadership team.
Who does what will be different in every organisation, but the leaders responsible for orchestrating transformation on a day-to-day basis need to ensure that all the enablers of transformation I mentioned earlier are performing sufficiently well.
If innovation isn't happening, they need to address it. If technology is letting people down, they need to address it. If people aren't performing, they need to address it. And they need to work closely with managers and leaders from business units across the enterprise to ensure they have the enablers required to orchestrate a successful transformation.
They'll adopt a set of transformation guiding principles such as THRIVE, that will help them steer transformation in the right direction, while simultaneously embedding flexibility into their plans so they can change direction when necessary.
The ability to do all of this - and exhibit world-class leadership, encourage the right culture and the adoption of shared values, and communicate this across the enterprise - is what separates the best transformation leaders from the rest.
That was a brief introduction to three macro challenges of Envisaging, Enabling and Orchestrating transformation, that every organisation needs to be mindful of - at least if they are striving to create a new future for themselves.
With this being my first post on projectmanagement.com let me introduce myself.
For over two decades, I've helped organisations throughout the world generate commercial value from technology. In that period, my career has moved from project management to transformation management, and in more recent years I've had the pleasure of providing transformation advice and guidance to C-level executives at some of the world's largest organisations.
As demand for my time out-weighed my ability to supply it, my availability to physically help on client sites was maxed-out. My situation was even more challenging because, over those years, much of my work had been spread over many countries.
I continued to struggle with this until one day I found myself stranded at Unilever in Poland when I was due to be delivering a transformation training class to 15 executives in Saudi Arabia the next day. The visa being issued into my second passport had been held-up at the Saudi consulate in London and I let down all those Saudi executives. Letting down those people was simply unacceptable, and something needed to change for me. I knew I needed to change the way I worked, but I didn't want to go down the route of building a consultancy practice.
My light bulb moment came when one day I thought to myself, "with technology so accessible and affordable, why don't I do what I help my clients with and transform the way I worked using digital? I could create a digital version of what I help companies with, which they could buy online. While they wouldn't get to work with me in person, they could at least get access to my knowledge - very affordably, conveniently, and from anywhere in the world."
Within a year my new digital business model was fully operational and profitable. Three years on, that business has helped thousands of professionals throughout the world, which I wouldn't have achieved using my traditional consultancy model. I had disrupted myself using digital. Something that many organisations find incredibly challenging because of their size, complexity and traditional ways of working.
The course that launched my digital education platform is based on THRIVE - a Digital Business Transformation framework consisting of six guiding principles for transformation leaders and managers, and an extensive body of knowledge.
In recent years we have witnessed tens of thousands of executives and managers in established companies wanting to piece together innovation, digital use cases, the digitisation of operations and new business models, transformation best practices, prioritised transformation portfolios, cultural change, business value creation, intangible return on investment, and many other components of transformation. But often they don’t know how. They know they need to innovate, digitise and transform the business, and they know that business value is core to this, but they don’t know what to transform and how to do it right.
THRIVE and its six guiding principles of Transformation, Holistic, Response, Innovation, Value and Enterprise - helps them tackle the new digital economy opportunities and challenges, and no executive can afford to approach transformation without embracing these principles.
Digital business transformation calls for a combination of strategy and execution, and a fine blend of the ingredients they each consist of, but when a Harvard survey reveals that only 8% of leaders are very effective at both strategy and execution, that's a worry. Similarly, Gartner forecasted that while 75% of businesses will have digital business transformations underway, only 30% of those efforts will be successful.
From this and other research, it’s clear that many operational leaders under-estimate what successful digital business transformation requires. This means that thousands of well-intentioned teams around the world are embarking on their transformation journeys unprepared, and unknowingly steering their transformations into trouble.
So by sharing transformation knowledge online, my goal is to help as many people as possible be among the minority who will learn to orchestrate a high-performance transformation, which in turn will delight their stakeholders and customers, and enhance their reputation as orchestrators of transformation.
If you're interested in following along - starting today - I intend to publish one post on this blog every Wednesday.