The 5 Principles of Digital Transformation

With my previous blog touching on starting up digital transformation and gaining traction in developing a digital strategy, I thought it wise to this time touch on the core principles required to successfully transition into a digital organisation, enabling a positive outcome for your transformative aspirations and to be successful in delivering them.

Over the past few years, I’ve probably spent hundreds of hours reading news stories, articles and blogs, relating to all sorts of business and IT centred subjects. Each time I’ve seen success stories, or come across failures, I’ve always tried to analyse what might have happened. Where in the chain of events, was the earliest activity or occurrence that set the foundations for the things that followed? Now I’m probably guilty of overthinking and overanalysing these things, but in doing so, I’ve allowed myself the opportunity to thoroughly understand the do’s and don’ts to all types of strategy. Where people succeeded in marketing strategy, where they may have failed in delivery strategy, even where the whole business strategy maybe hadn’t captured changes in both the digital and cultural landscapes. Over the past 18 months, as I’ve started to think about and help develop our future delivery strategy for technology consulting and our portfolio, and also build out our digital transformation and business consulting capabilities, I’ve been able to establish core principles, concepts and objectives which utilise much of what I’ve picked up from both the content I’ve come across, and the organisations that I engage with at a strategic level.

So, what are the five principles to digital transformation? Well, my hand drawn diagram (or hand scribbled to be precise) was given a working over by our marketing team and identifies these below:5 principlesElaborating on the above, it’s probably best to work through them clockwise, starting with Leading with Purpose. I think this one is almost self-explanatory, put simply, it’s ensuring everything has a purpose. Ensuring everything is driven by a need or desire from within the organisation, or part of the business strategy. Whilst this sounds easy and straight forward, as per some of my previous content, there are many non-strategic reasons technology gets implemented. As Gartner put it, too many organisations work “inside-out”, leading with technology and not business purpose and requirement. Strategic, purposeful digital strategy works “outside-in”, technology last, not first. This includes analysing megatrends, the direction of the company, the direction of the sector or industry, and even casting an eye over competitors, allowing all of these to shape technology decisions, not the other way around.

Now Engaging all Levels must be fundamental to any strategy. What I love about this principle is that it’s so simple, yet so many organisations don’t do it. Remember, ideas can come from anywhere. My favourite example (and most of those who read my content will know I love my anecdotes), is that of John Lasseter. Now I’m going to attempt to summarise this anecdote in the least amount of words possible, so bear with me…

John Lasseter (working at Disney), proposed the concept of CGI technology for animation films. John was dismissed (both in terms of his idea, and from the company… they actually terminated his contract). He joined the Computer Graphics arm of Lucasfilm, who at that point were then acquired by a certain Steve Jobs, where it was rebranded into the Pixar Graphics Group (by this point those of you reading can already guess what happened). Under this banner, Lasseter lead the creation of Toy Story and various other CGI films, finally coming full circle when Disney (yep, they’re back into the story again), decided to acquire Pixar for $7.4bn, in the process, appointing Lasseter as the Chief Creative Officer of Walt Disney Animation Studios.

The refusal to engage all levels and to invest time in those lower down in the organisation, ultimately came full circle and cost Disney a tidy $7.4bn. There are hundreds more anecdotes just like this, all of which hopefully articulate the importance of not making all the decisions that affect the many, in the board room attended by the few.

My last blog probably summarised quite well the next principle, Starting from Zero. Now it is important that those developing digital strategies understand the complexity of this one, it sounds easy to do but is notoriously difficult to accomplish, with so many organisations struggling to re-imagine processes and functions, instead continuing to only tweak and ameliorate them. There is only so much you can do with something before someone catches up, or you exhaust all potential and opportunity. It is imperative that every process be challenged and both the purpose and output questioned to find it’s true value and expose the core need (if there is one left once you’ve stripped it down).

Now Investing Appropriately into the strategy should follow. This is so much more than allocating a little extra Capex to transformation or digital services. It’s not just utilising cloud service providers to shift expenditure to Opex models either. It’s looking beyond numbers. That return on investment might not be in £’s, and if it is, perhaps the ROI isn’t directly linked to the initial investment. Take Amazon and their Prime business as an exemplar. For all the services you get through Amazon Prime, do you really think there was a correlating financial return directly linked to it? Did it directly make them more than they invested in it? Nope. What it did do however, is markedly increase their market share and consumer reach. What it did even better was allow them to increase sales of Prime only delivery items (which by the way, happen to be more expensive than the non-Prime delivery items available, clever eh?). This means that whilst the ROI didn’t come directly from Prime membership fees, it was certainly gained from the knock-on effects originating from the Prime offering. Now in some cases, particularly those in the public sector, that ROI may not come from revenue at all, nor even cost savings made. It could come from increased citizen welfare, better standards of living or increased user/citizen satisfaction. Maybe even from allowing them to retain top staff and not lose them to the carrots dangled by some of the commercial sector big hitters. Again, looking beyond the numbers and investing into well thought out strategic outcomes is key.

So, the final thoughts in executing digital transformation should fall towards delivery. Is it achievable? What is the risk? How can we guarantee the output? To counter these problems, it’s important to ensure the digital strategy and its delivery mechanisms Build Agility from the Start. Now Agile delivery principles teach us to deliver solutions in a way which can “fail fast”, ensuring no major loss in budget, time or resource. Personally, I think this maybe looks a little scary and tarnishes the concept somewhat. It should probably read, “fail fast, win quick”, because as a colleague of mine pointed out (thank you Mr Cheetham), you don’t just deliver in an Agile way to minimise the impact if it goes wrong, you want some wins too!

As a result, never has the term “don’t place your eggs all in one basket” rang truer. It’s applicability to digital transformation is astonishing. Don’t scope out one big Programme that might fail. What have you gained if it does? Or what if at the end of it, the benefits anticipated weren’t quite what were expected? Instead, place multiple bets, replace those single gambles. You might “fail fast” on a number of them, but the ones that don’t could lead to fantastic opportunity, allowing the organisation to realise all the benefits a well thought out digital strategy can provide.

 

 

The 5 Principles image contained in this blog is part of risual’s Digital Transformation Approach and Advisory Services Portfolio. For more information, visit risual.com/transformation.

Feature image credit: Bedneyimages / Freepik

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