Perpetual Transformation: Practical Tools, Inspiration and Best Practice to Constantly Transform Your World

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Digital transformation for teams that are not digital-first, yet

RAHUL AVASTHY

Digital transformation helps you think value, not profit. Yes, it’s important to focus on creating a new digital business that increases customer willingness to pay more for a product or a service, because if you can find a way to improve a product or service, you can increase willingness to pay. This is where you start thinking of new business models, and hence there is a lot of attention toward the commercial and revenue-generating teams; however, it’s imperative to understand that support teams provide valuable moments that matter in the critical journey of the digital transformation of an enterprise.

The need for support teams to plan, understand consumer behaviors that they value, and employ creative innovation is more critical now than ever. Many support teams deliver service in a spectrum, and this spectrum ranges from full service to self-service. In between, there are varying degrees of collaborative service, where the organization and users share the responsibilities of the service. Seeing service with this perspective will allow you to think of digital as something that helps organizations share accountability along the spectrum.

A significant change is already in motion, driven by the acceleration of digitization; various functions like operations, HR, administration, accounting, credit control, legal, communication, finance, and other support functions within an enterprise, face the risk of being diminished to an efficiency-first support role. Digital transformation for support functions, if implemented without the right strategy, may (wait, may? let me not be polite — will) magnify the revenue-generating organization’s flaw within an enterprise.

The increase in volatility and complexity, accompanied by uncertainty and ambiguity, also known as VUCA, makes the decision-making process complex. Simultaneously, noncommercial/support functions must give guidance to the business based on transparent and mutually agreed criteria with clear accountability. Many support functions that may not get digital-first priority as commercial/revenue-generating organizations within an enterprise have complex processes, unearthed deep data stories and may make their outcomes slower as dependencies grow further.

So, what to do?

For support teams looking at digital transformation, having a defined vision, clarity of value contribution, and reimagined self-perception, numerous support functions can help reimagine the opportunities digitalization offers to develop into a digital enabler that shapes the entire organization’s digital ecosystem. Eventually they have to enable revenue generation or increase willingness to pay for the customers.

Leverage automation: Among other tactics, these teams should consider being partially automated, leading to more efficient processes and ultimately leaner, outcome-focused organizations within an enterprise. Digital transformation needs a range of skills, meaning there is a place for everyone involved. Generalists will be valued contributors to simplify the processes, while specialists are required to implement the new techniques. It’s a misconception that digital reduces the job roles within an industry. Look at Google translate as a service; ever since machines have started leading translations, jobs for translators as a category have increased year over year.

Invest in DDDN — data-driven decision networks: For example, HR, legal or finance functions may combine operational and financial data (big data if matured or advanced analytics, to begin with) and utilize AA (advanced analytics) and ML (machine learning) to enhance business agility while acting as a collaborative service provider to an enterprise organization within an enterprise. This will lead to more engagement and a new perception of adviser and partner to business units, and not just a controller or touchpoint enabler while guiding them in their decision-making process.

It’s critical as traditional role models face a trade-off between efficiency and value proposition to the business, as increases in output are linked directly to the rise in input (resources). Digitalization can help resolve the target conflict between pure and cost-efficient versus comprehensive and value-contributing at high costs. How do you do that? Cost-efficiency can be triggered by automation, which helps to redesign and streamline processes with RPA/ robotic process automation technologies, especially for transactional processes.

Relevance to the business can be described as data-driven insights. Today’s restriction may be neither the availability of data nor the integrated technology infrastructure to handle large data volumes. The critical requirement and challenge is to evaluate those data in a structured, efficient, and targeted method. This is where the data analytics and advanced analytics role come into action.

Summing up:

1: Scale-up planning

Set target

Formulate hypothesis

Align strategic initiatives and what not to do

Strategy — look forward and reason back: use data

Allocate resources, rethink funding model as more agile

Establish milestones

2: Translate vision

Clarify vision

Gain consensus

3: Communicate

Goals and progress

Change management

New value proposition

KPI measures

Best practices / next practices

4: Cyclic iteration

Onboarding

Agile delivery

Evidence-led decisions

Outcome vs. output

Measure and controls.

If you are in the driving seat, think about how you can empower and enable support functions that don’t get digital-first priority as commercial/revenue-generating organizations within an enterprise to tackle the real business problems. As teams become comfortable with failing fast, learning along the way is expected and should not deter further progress.

Perspectives can change a lot; reimagine an organization’s view as a connected collection of collaborative service providers to internal or external clients. The first step to build such a modular organization is to chart out the critical path, simplify processes and move out steps off the critical path. Know what not to do. Look forward and reason back.

Believe and you can fly.

About the author

Rahul Avasthy is based in Chicago and leads digital transformation and experience at Abbott Laboratories.

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Beyond digital transformation: What’s next?

DIDIER C. L. BONNET

How often have you heard senior executives stating that digital transformation is not a project but a never-ending journey? At one level, it makes sense. After all, there will always be another wave of technological innovation that will have the potential to improve an organization’s performance even further. But, strictly speaking, when you look up the definition of journey in the Oxford dictionary, it describes it as The act of traveling from one place to another, strongly implying that there is indeed a destination at the end of the journey. ¹

So, who’s right and who’s wrong? Are you destined to endlessly move your organizations through perpetual cycles of digital transformation? Or is there indeed a destination, an end-game, to your digital transformation efforts?

Our research shows that the end game of digital transformation might be a bit more nuanced than those diverging questions would imply.²

It’s clear that the relentless pace of technology innovation will not slow anytime soon. Innovators and engineers will continue to do a great job of bringing us ever more sophisticated technologies. That’s great news. Moreover, we believe that the pace of technological innovation will probably accelerate, providing us with endless opportunities to improve the way we operate and manage every corner of our organizations. Technological heaven, then?

Yes — but for some, it can also be a rather scary thought. Many executives know how hard it is to succeed at digital transformation, and many others have already failed. We’ve seen many large firms struggle through the first two phases of digital transformation. First, digitizing their existing operations and second struggling even more to use digital technologies to transform the way they relate to customers, improve operational performance and equip employees to work more effectively. After a decade of digitally transforming our organizations, you would have thought this would have become mere table stakes. But the game has moved on. Today, we’re at the cusp of a third stage in digital transformation. A stage that requires firms to shift to new business models, fully connect and automate their operations and augment employees’ capabilities through human-machine collaborations.

Yet again, we are hitting a traditional brick wall when it comes to the relationship between technology and organizations. That is, the progress and performance of digital technology might improve exponentially, but the speed of transformation of our organizations and institutions is anything but. So, what can be done to close that gap? Do we assume this is just the way the world is? For the sake of a bright digital future for our organizations, we shouldn’t.

Changing our mindset for what’s next

There’s no question that digital technology has provided a seismic shift in the performance of our organizations, in individuals and entire societies. But is digital transformation a perpetual phenomenon in today’s corporate management? At some point, everything should become digital, right? Hence, one of the most common questions I hear from executives about digital transformation is what’s next?

Many executives, academics and consultants are looking for the holy grail of the post-digital world or for a third shift from the industrial age to a digital age to some other age. The common answer to the what’s next question is all too often expressed through another wave of technological prowess. Quantum computing, cognitive computing, distributed ledgers or ever more intelligent artificial intelligence algorithms. Problem is, most analysts, or self-proclaimed futurists, revert back to technology as the central framing mechanism for the future of digital transformation. And, as much as technology progress is critical, we believe this is wrong.

When we look at economic history, we find that every technological revolution has been followed by organizational transformation. With steam power, work shifted from home to factories, with significant scale economies. With the electric motor, energy sources could be decentralized enabling autonomous and more efficient ways to manufacture goods. Frederick Taylor then laid the principles for scientific management by optimizing and standardizing work. So, why are our organizations today still structured and continue to work and operate roughly in the same way as they did in the 1960s?

The coming years will witness digitally-driven changes in the business world that make everything we’ve experienced in the early days of digital transformation look like the opening act. And, beyond the prowess of technological development, it is organizational and work adaptation that will represent the biggest change for our businesses and our people. We’re not there yet by any stretch of the imagination. But what’s clear is that it is organizational and managerial innovation that is today the missing link to extracting the maximum productivity from the digital revolution. It won’t happen overnight, but it is the key to transitioning to what’s next.

The digital organization destination

The holy grail will indeed be the process of graduating from digital transformation to a digital business. More specifically, the ability for corporations to make the act of digital transformation second nature.

What we’ve learned in the last decade is that both the main accelerators and the main hurdles of digital transformation are not about technology but about leadership, people, organization structures, incentives, culture or internal politics. It’s the softer (but the harder, i.e. more difficult) side of the equation that will propel organizations to the ultimate stage of digital transformation, that of becoming a digital organization.

When digital transformation becomes business-as-usual for your organization, for your people and your customers, you’ll be there. In other words, it will become transparent in the way you run your organization, manage your people or leverage new waves of technological innovation. It does not mean that you will cease to work with physical assets or people, it means that your business and operating models will be built on a foundation layer of digital processes and data. A digital bank may still have branches, but behind the scenes you will find a set of digitally-enabled operating procedures that ensure the customer experience will be consistent across all channels.

It’s about a new organizational DNA anchored around digital mindsets, practices, capabilities and behaviours. We have not yet found the exact organizational and work structures that will allow companies to fully leverage and profit from the digital revolution. There are, unfortunately, no silver bullets to becoming a digital organization. It’s hard work, and will be a long-cycle transformation. But luckily, we have a few pointers toward the destination.

On becoming a digital organization³

Powerful digital technologies, ubiquitous data and advanced algorithms offer new strategic choices for products, services and business models. But at the same time, these technologies also present new organizational choices for designing, coordinating and managing people and work. The narrative on digital transformation, to date, has placed relatively little attention on the organizational challenge of executing our chosen digital strategies.

Business leaders get bombarded with advice such as act like a start-up, be agile and adaptive or Uberize yourself. But how useful is this advice when you run a large complex organization? Although we have a better understanding of the characteristics of a truly digital business, leadership is about developing the version that works for your organization. Your culture, leadership style, organizational structure, complexity and globality matter in how you craft your path to a digital organization. Most large firms are not known for being nimble and agile. So how can these organizations develop the corporate agility required to become a digital organization and compete effectively and sustainably?

Previous research shows that becoming a digital organization is about reaching a sustained organizational ability to rapidly adapt and self-organize to deliver value through emerging technologies.⁴ It requires rethinking how you organize as well as how you operate in new and productive ways. It also requires an adaptive workforce. This isn’t easy. Becoming a digital organization remains an aspiration for most firms. Our research shows that most organizations are in a state of transition. Even among traditional firms that are mature in the execution of their digital transformation, only seven percent are close to becoming a true digital business.⁵ There’s no off-the-shelf answer, but there is a blueprint.

The cadre of companies that have reached the status of digital organization exhibit a number of common characteristics — a new digital DNA: A digital mindset; a digitally-savvy and technologically augmented workforce; data-driven decision making; and an ability to self-organize and orchestrate work at scale. A tall order indeed. (Figure 1).

Figure 1: Becoming a Digital Business

This destination is more a marathon than a sprint and, at times, can be uncomfortable. It requires tenacity and resilience. Foremost, it requires strong leadership to steer the course and keep the organization focused on the end goal. But it’s worth the effort. Digital organizations are able to adapt to narrow windows of opportunity or respond to significant external events quickly. In other words, digital transformation, as an orchestrated process, will no longer be required.

A Developed Digital Mindset: Digital transformation has made business transformation and technology intrinsically linked. A positive and proactive attitude toward digital possibilities is particularly important. In digital organizations, an instinctive "Digital Mindset" is evident in how people throughout the firm explore digital solutions before traditional process-based ones, systematically using digital tools and data analytics. It’s about challenging the status-quo and constantly looking at technology as a way to remove traditional operational and competitive constraints. It favors using technology and a zero-based approach to problem solving, automating tasks to the extent possible, and encouraging digital experimentation and innovation. Challenging existing industry norms, excelling at open innovation, being hyperaware of the external environment, and becoming more agile as an organization are some of the ways to get to a digital mindset.

Richard Fairbank, Capital One CEO, noted: Digital is who we are and how we do business. We need to make digital how we do business not only with our customers, but also how we operate the company.⁶ As employees experience and publicize successes with a Digital Mindset approach, positive attitudes cascade and spread through the larger organization.

Digitally Savvy and Augmented Workforces: Raising the digital IQ and developing key skills in an organization have been key challenges in digital transformation. They become a must-have when operating as a digital organization. And it’s not a one-off. The need for continuous learning becomes greater, not smaller. Reinventing how we enable continuous learning, at scale, for our employees is paramount — and a major transformation for our existing HR and learning functions. Digital organizations also demonstrate an elevated organizational capability to use tools and data to dynamically deploy and reconfigure both human work and capital resources at speed.

Then there is automation. As a rule, digital organizations default to automating core processes, especially repetitive and unproductive tasks. But the bulk of existing jobs are not displaced, they are augmented. Automation takes away much of the tasks that used to bog down workflows, leaving humans to focus on more fulfilling and relevant tasks. Human-machine collaboration becomes greater than the sum of the parts. Robin Bordoli, CEO of machine learning company, Figure Eight, described the potential as follows: It’s not about machines replacing humans, but machines augmenting humans. Humans and machines have different relative strengths and weaknesses, and it’s about the combination of these that will allow human intents and business process to scale 10X, 100X, and beyond that in the coming years.⁷ For instance, in radiology, computer-based algorithms have increased the productivity of diagnosing simple cases but, more importantly, are assisting medical professionals to concentrate on the most complex diagnoses. A better outcome.

Data-Driven Decision Making: Oftentimes in digital transformations, people are enthusiastic about big data and the power of analytics to support strategic decisions. Truth is, most of us believe strongly in our own powers of intuition. And this is not a bad thing — human judgment still matters in digital organizations. Jeff Bezos, founder and CEO of Amazon, commented that there are two types of decisions: "There are decisions that can be made by analysis. These are the best kind of