Every company wants to be digital, agile – how to get there (finally)?
Customer first, employee first. Be transparent, lead like loving parent. Share, take care. Be on a mission, have passion. Fail fast, let the trust last. You’ve heard it all but still feel like it’s 2004?
Building and having a right culture is commonly pinpointed to be the Holy Grail of successful digital transformations. But you can’t change the culture by magically force-feeding digitalization Kool-Aid through management-sponsored newsletters, seminars filled with great one-liners or small-scale internal startup experiments – any larger impact will die off soon unless your company’s 4 basic pillars are also transformed:
- Operating model – decentralized authority and accountability, structuring organization based on value streams instead of functional siloes, flat organization, autonomy, cross-functional teams, agile practices, continuous ‘product’ (in a broader sense) development instead of one-off projects, in-house & onshored resourcing for strategic areas…
- Business – agility to react to market changes, digital channels, omni-channel, repurposed sales/care reps & outlets, just-in-time marketing, portfolio simplification/modernization, XaaS business models, ecosystem participation, ‘lean startup’ approach for new business dev, digitized operations, analytics-driven everything…
- Technology – legacy transformation, CX, UX, non-monolithic architecture, microservices, API management, DevOps, cloud, open source, security, data privacy…
- People – digital business and technology competencies (everything aforementioned), preparedness for constant change and self-development, leadership skills for digital era…
From management’s perspective it is comforting – but also mandating – that these are something you can start acting on quite quickly, whereas re-building the culture will take years – and is more like a consequence. But transforming the 4 pillars is obviously extremely difficult. What makes it more complex is that they are very interrelated, and progressing them concurrently is simply a necessity. Why? Let me give few examples.
If you want to clean your portfolio to modernize it and improve profitability:
- Evaluate strategic fit and end-to-end maintenance cost of current portfolio and allocate those to business unit’s targets – unless also IT & operational costs (systems, effort, competency upkeep, etc.) are clearly linked to generated revenues this discussion will never converge.
- Jointly (business, IT) plan and commit to a portfolio and system (and related processes) migration and decommissioning; execute promptly.
If you want to participate ‘API economy':
- Establish a cross-functional business unit that’s able to serve 3rd parties end-to-end – from envisioning to operations – according to their expected response time: days or weeks instead of months that’s typically required for setting up the project, building and approving business case, etc.
- Decentralize authority to ‘business unit owner’, by assigning continuous funding and resourcing, letting the owner to drive business and development with autonomy, and reactively measuring the progress against set targets.
- Define and roadmap API products, by understanding market needs and your existing assets. Transform valuable parts of your IT stack to serve external parties – typically far from a trivial task, as the stack has been typically built with the assumption of on-premises, only internally consumed software, resulting as ambiguous APIs and non-vetted security.
If you want to continually move towards ‘digital channels’-driven omni-channel experience, you likely need to:
- Change your overall governance structure to ensure all channels are governed holistically and measured against joint targets. Evaluate profitability as a whole (all channels, IT), possibly even formally merging organizations, enforcing the difficult prioritization decisions: favoring digital channels in terms of personnel and capabilities.
- Secure technology-minded channels owner(s) capable to truly drive digital development, strengthen the cross-functional team with the latest digital competences (lean service design, DevOps, etc.), and importantly – have the teams in-house and onshore, as this is a strategic asset you truly want to control and focus.
- Mandate the team to iteratively develop digital channels to next level, and re-use many of the tools for telemarketing, outlet stores, 3rd party retail, etc.. Re-define the role of sales/care reps & outlets, i.e. how they complement and enhance the digital user experience.
If you want to scale decentralized authority, agile ways of working across whole organization, from customer-facing channels to processes and systems that are in the background (product lifecycle mgmt, billing, etc.) and have typically many dependencies to surrounding processes and systems, you have a tough job to do:
- Define autonomous, cross-functional clusters (here’s the famous Spotify video related to this), that are feasible both from business and technical point of: each has clear business objectives, and is also technically autonomous, i.e. can be implemented as set of microservices, without heavy dependency on other clusters.
- Implement a mechanism to align and coordinate across clusters – for example Scaled Agile Framework proposes practices to this.
- This will likely result as large operating model (team structure, their mandates, governance, etc.) and technology transformation: monolithic legacy architecture needs to be torn down, operating model completely revised. Microservices architecture and organization structure may actually end up reminding each other – ‘services contracts’ for microservices are very close to ‘team mandates’.
With these examples, I tried to highlight the main point: in case of digit(al)ization there’s not much you can achieve in isolation, within current organizational borders, but you need to simultaneous work with all 4 pillars. The days of having an artificial line between business and IT and designing your operating model according to ‘business demands, IT supplies’ are over – it’s all business now. It all connects together, and neglecting any part will significantly slow down your transformation efforts or cause complete gridlock. In brief: if you want all this and much more you must redesign your whole company.
But if it’s such a spider web, who should lead the change and how to get started?
It would be fitting that such change could be driven bottom-up but the ‘corporate realities’ will hit soon. Sure, if you have time (but who has?) you can try the bottom-up, not centrally coordinated approach, but isn’t the lack of that capability exactly what you’re trying to fix? Quite a paradox.
You will need very cross-functional program team and buy-in of all CxOs to kick-start the movement, and someone must be in charge and be the face of change. The best person to lead it is CEO, but as this likely isn’t a realistic option you need someone who has CEO’s mandate and is considered to equally represent all stakeholders – the trait that CMO-, CTO-, CIO- or COO-driven change can easily lack. CSO can be an option – digital transformation anyway is the strategy, or at least major share of it. Problem can be that strategists are more known for their ability to define the big picture whereas with such cross-functional transformation execution is the key. Then there’s CDO, a role that in my vocabulary is less rosy than how it’s often positioned nowadays – it’s primarily an interim, hands-on program management role that takes care of digital transformation puzzle, while challenging other CxOs make use of all aspects of digitalization. No matter who takes the role, the sought person (and team) must be truly a multi-talent, possessing both visionary and hands-on operational execution characteristics, and capability to address and align plethora of stakeholders. And have strong CEO’s mandate.
Once you have the team in place, there’s only the program design and execution left.
Start by defining the big picture and vision for the 4 pillars. You may think that you have it already, but do you really? Have you truly broken down to pieces what being a digital, agile company means from all those perspectives for your company, connected that together, and made sure every CxO understands and stands behind it? Is the vision communicated to all employees in a jargon-free language and refined based on the feedback?
Once there’s a vision, all that matters is doing – not analyzing, planning, visiting yet-another digitalization conference or reading articles like this. Define backlog of cross-functional initiatives to get towards vision, make the backlog visible for everyone, start executing, scale up what works, scale down what doesn’t, and revise the vision along the path. Does this sound familiar, did someone whisper lean or agile? How ironic it would be if you spent years analyzing digital transformation, then plan in detail a multi-year waterfall program to implement that? Sure, some planning of initiatives is obviously required, as there can be plenty of dependencies and complexities as highlighted above, but more detailed planning is simply a wasted effort due to number of ‘what ifs’ – the change is constant and you must adapt.
So, as a summary:
- Understand big picture, define vision.
- Ensure cross-organizational buy-in, establish program, find strong CxO lead, who has CEO’s mandate.
- Plan & execute in agile, lean manner – clear plan for next 3 months, blurrier for 12 months, moving towards vision step by step, initiative by initiative.
- And finally, remember that doing eats strategizing for breakfast while culture is still sleeping.
Joonas is a Manager at Northstream