They could do worse than look to a quote from one of the most successful race-car drivers in history, Mario Andretti: No race—or transformation—is risk free, of course, but having the courage to make decisions that push the limits of the organization is a necessity. For this reason, we analyzed dozens of both successful and less successful digital transformations to get at the root causes of where they go wrong.
This analysis has yielded ten important traps that businesses frequently fall into during a digital transformation. Often overlooked or misunderstood, these traps boil down to culture, discipline, and mind-set issues. Here is what CEOs can do to overcome them and de-risk their programs so that businesses can capture the full benefits of digital.
Paradoxical though it may sound, we believe companies need to take more risk, not less. Many senior executives look back on their transformation programs 1 1. Data tell the same story. Recent McKinsey research reveals that the companies that do best follow bold and disruptive strategies. They make big bets on new technologies and business models, champion a test-and-learn culture where every failure is an opportunity to improve, and launch change programs that transform their whole business.
Making reckless moves, ignoring common sense, and losing sight of where the value is can undo bold initiatives. When information is in short supply, people fall back on experience and gut feeling. The best companies start by identifying where value is created and destroyed, 3 3. This external analysis should be matched with a deep and comprehensive internal assessment. The best companies then also develop an objective picture of their digital quotient, 4 4. Dispelling the unknown extends as well to painting a compelling picture for the entire business of what the future could look like. Experimenting with hackathons and war gaming also helps not only to develop innovative new models but also to make them more tangible, so that leadership can align around them.
Leaders can address this by thoroughly defining and explaining what the digital transformation really means—for example, improving customer experience to become the number-one service in the category or radically improving productivity across the supply chain. Such an approach generates excitement and learning, but it can also be self-defeating if not carefully managed. Running too many competing initiatives dissipates management focus and starves promising ideas of the resources they need for a successful scale-up.
To avoid spreading their efforts too thin, smart digital leaders prune their portfolios regularly and ruthlessly. Subscale investment is no way to compete against venture-fund-backed companies. Focusing on the right kind of initiatives is equally important. To avoid this wasted energy, any digital transformation should start with understanding customer needs and build out solutions that not only address them but have the potential to generate the most impact.
Some digital transformations run into difficulties because costs rocket while savings or revenue growth take longer than expected. Leading companies start by targeting quick wins to unlock value so that the effort funds itself, often within the first three months. In fact, this approach can be so effective that the most successful companies generate more savings or revenues than are needed to fund a transformation. Banking these savings and revenues can often happen using the tools and data already to hand coupled with a willingness to do things differently.
Take the three-person team that carried out a microsegmentation of the customer base at a US telecom company. Similarly, an online retailer upped conversion rates by 35 percent simply by having one person optimize page-loading times again and again until they shrank from 16 seconds to six. Often these opportunities can be identified as early as a week into a project. Evaluating the customer decision journey is a good place to start.
In consumer sectors like banking and telecoms, the joining and onboarding processes for new customers often offer plenty of opportunities for significant improvement. Most companies embarking on digital transformations underestimate how long it takes to build capabilities. They know they need digital talent, but not what kind or how much. A digital transformation at a large company can require as many as full-time employees in the first year.
One obvious example of storytelling in media is the series, Once Upon A Time. This show bases its entire plot structure around the fascination in classic fairy tales, and every weekend, my family curls up on the couch to catch up on the latest episode together. The reason fiction leaves such an impact is because of what it does to our brain.
Our brain empowers us to feel the rush of the highs and the devastation of the lows—something that would be nearly impossible to achieve by looking at bullet point highlights alone. Why are millions of people publicizing the details of their life? To form a connection. Jeremy Hsu of Scientific American found:. What does this varied media consumption and all of these stories have to do with business transformation?
Today, transparency and authenticity are at the very heart of our socioeconomic backdrop and the way in which we approach brand experiences. Real-time consumption and purchases are becoming the norm. And the way we receive the products we buy has changed too, with Airbnb selling experiences, and taxi cabs getting a run for their money with the global proliferation of companies like Uber and Lyft. These new expectations and buying behavior have accelerated an undeniable necessity for companies to transform alongside the market—and not just as a one-off event but more of a sustained, contiguous business transformation strategy.
I created a monster of in an infographic on my post about the S Curve of Business, which I encourage you to look at over there. If you want to see this infographic together in all its glory, feel free to download it in the resources section at the end of this post. For the sake of business transformation, specifically, I decided to simplify the complex by looking specifically at how to manage the S Curve of Business also referred as the S Curve of Growth as it pertains to transformation. Although business transformation is complex in nature, we were able to scale back to three core stages—rising out of strategic inflection points, running a data looping mechanism to aggregate the flood of data points available, and then modeling them to draw out valuable insights that direct the next phase of your journey.
We call those plateaus and slight dips inflection points. In the past, the average company would experience one inflection point every ten years. Nowadays, with the ubiquity and ease of access to tools, resources, and talent, the S Curve of Business is becoming more and more condensed, and businesses are experiencing inflection points every two years. These dips on the S Curve of Business pose an opportunity to propel your business into its next evolution. Through emerging technology and advanced use of data, a Chinese construction company was able to build a story building in just 19 days.
For construction companies to compete with that level of speed and innovation, they need to adopt an agile approach and transform using the latest technological advancements. To inform positive transformation, these disparate data sets are critical to tap into. As the data pours into an organization, it must get aggregated and mined for insights.
Although it might sound simple, this is the point where most businesses get stuck. Organizations that are tapping into these data are practicing intelligent transformation, while other organizations that still rely on opinion and guesswork to drive out of inflection points are failing. Sitting on data is worthless. To gather the information needed to run an intelligent operation, you need to take that data and run it through prediction analyses to get a glimpse into what the future looks like for your customer base.
A framework serves as a guide for future initiatives. It drives decision making and keeps the organizational ship on course, which is important because McKinsey determined:. BlackBerry was one of the pioneers of the smartphone industry. In fact, at one time, they were considered disruptors. This company entered the market with force by quickly empowering professionals to keep in touch with the office regardless of their location, leading to significant increases in productivity.
Companies loved the devices and bought them in bulk to provide to their employees. In , more people were buying smartphones than personal computers. This time, they failed to hit the mark. It was at this point that BlackBerry reached a strategic inflection point, and it was at this point that they started to suffer.
BlackBerry tried to keep pace with the iPhone by adopting a new design, but their attempts at iterating on their phones were headed in the wrong direction. As a result, more professionals traded in their BlackBerry for a smartphone that could do more than email, and by , BlackBerry stopped selling smartphones altogether. It was a lack of accurate insights guided by a framework to drive them out of the strategic inflection point.
Transformation guided by data extrapolated and interpreted through a framework and then run through predictive analysis is the cornerstone of progress within any business. The need for transformation is born out of strategic inflection points, but successful business transformation is done using intelligent insights. That progression is key. We, as people, crave progression. This desire for growth is a natural holdover from our days of hiding in caves for protection from animals with sharp teeth and claws. Just as you want to become a better version of yourself, your business does too.
It was right about this time that I got sent into a transformation of my own. Throughout those 20 years, I was unintentionally building a robust business transformation framework. It started with a healthy amount of data from the responses of surveys I conducted for well over a decade—1, to be exact. Before I get into what these people taught me, let me show you how it all came to life. Have you ever experienced a moment in your life that burned so hot it was singed into your memory bank forever? I have, and I can recall every detail right down to the bite of crisp, misty, evening mountain air on my skin.
As I finally got the guts to lean in, headlights flooded my blushing face. He ran a large retail chain, which you can find in nearly every town here in Utah. It was his stores that my mom, neighbors, and friends frequented—and he drove a car that glided up the driveway like it was riding an inch off the ground.
The car was black as the night we were standing in, and I could tell from the pristine way it shined that this car signaled one thing— financial success. Instead, I aimed to do whatever it took to buy my own BMW. But that success led to more important things that went way beyond the amount of money he had in his bank account.
It afforded him freedom and inspired confidence, which led me to my next realization. The concept of success is more multifaceted than most people make it out to be. While I longed for a BMW, someone else longed for a title to put on their business card, or the security of the white picket fence and a large yard where their kids could play. The more I explored the concept of success, the more complex it became. That fascination drove me to take many courses, workshop and even audit many hours of psychology courses, just to get an understanding of how the human brain works. Bandura conducted the famous Bobo Doll experiment , which is a classic in its own right.
The gist of what he found is that children who saw adults acting aggressively toward a doll figure were more likely to mimic that aggression to the doll later when playing alone. Social imitation may hasten or short-cut the acquisition of new behaviors. Skinner, Leader of Behaviorism. We, as humans, regardless of age, observe the world around us and then try to model that same behavior. According to an online reviews survey by ReviewTrackers:. Although my meandering journey was well underway, many ideas started to crystallize when I was in my early 30s and found myself shoulder-to-shoulder with the opportunity for a conversation of a lifetime.
He was the perfect candidate to answer all my queries about success, and our conversation was nothing short of enlightening. Eric Schmidt talked my ear off while I hung onto every word about the qualities he looks for in his hires and what drivers are key to building personal and professional success. He was a treasure trove of insight and conversing with him opened my eyes to the importance of relationships when building success. I realized that I had been so laser-focused on my pursuit to discover the recipe for success that I had been neglecting relationships, and therefore drifting as far away from my goal as I was inching towards it.
Those qualifiers might not make it sound like I was too picky with who I talked to, but I intentionally sought out people who had done exceptional things in their lives. At the start of every interview, I asked each one of them one core question: I took something away from every interview, even simple observations like the fact that all of the people I was talking to were fantastic communicators.
People attributed their success to things as varied as having an excellent staff, or just having good luck. How was I supposed to reconcile these answers, let alone try to replicate luck? I continued to be met with a broad range of responses, making it impossible for me to bring them together, so I knew I needed to change my approach. In search of more consistency, I began to ask what personal traits led to your success? And I paired that question with a subset question of, who do you value the most with those traits?
This line of questioning took me down a fascinating rabbit hole. Being the Curious George that I am, I hunted down the person whose traits they said they valued the most and put that unsuspecting victim through the same rigor of questioning. This branching method of examination led me to some remarkable realizations. I mean, it would make sense that people who spent hours soaking up information from some of the top professors at the best schools in our nation would have the most success, right? They seek out someone who is vested. The people I talked to fit a very specific cohort—people in charge of hiring for, managing, and leading teams.
These people were recruiting the perfect person to transform their business and get to the next level. Education was more of a preliminary filter. What was equally fascinating were the people each successful person within this cohort relied on to achieve that success. If not a well-known industry influencer, I had naturally assumed that they would reference people who worked in a position above them.
This was yet another case where I learned not to put too much faith in initial assumptions because I had been pretty off base. The results of my questioning were much more diverse than I expected and included fewer C-suite positions than I would have thought. The wide demographic of people I eventually talked to all opened my world to new realizations that, as much as employees might see their managers and VPs as representations of success, those higher up the corporate ladder reciprocated that view.
In addition to asking about the individual traits of success for people, I was curious to uncover organizational traits of success. I wanted to know what successful people believed made organizations rise above the fray. So I followed up my research with a more questions: What are the key drivers to making an organization successful, both from a team and a company perspective? Success was more about why they were in existence than the products they sold or the channels they used. Not only was the major response about vision, but several of the other responses revolved around the people vested in making that vision a reality.
That last takeaway was interesting. Having contradictory expectations can be catastrophic to company culture. It was telling to me that those were at the bottom of the list. Those were the drivers that built momentum. This was far more profound than my initial ideas on success, and I knew that this was just the tip of the iceberg.
In the face of so many unexpected epiphanies, and now in possession of 1, responses to a single handful of question sets, the challenge ahead of me was to put this hard data through analytical rigor to pull out actionable insights.
Leveraging the StoryVesting Framework to Achieve Breakthrough Business Transformation
I knew there was something compelling in here just waiting for me to extract. Naturally, to begin this process I spread all 1, responses on pieces of paper over the floor of my living room. You could say, my house was covered with success confetti for a party that my wife did not appreciate. To start the analysis, I partitioned out the data. A good way to address this issue is to run a meta-analysis, which allows you to pull out consistencies from various data sets to uncover a single answer.
Even though it was a big lift, I knew there was too much here to ignore, so I started applying metrics to each answer and pulling them together piece by piece. What I learned was worth it. Every one of the responses helped me transform myself and my career. It was through that personal transformation that I developed a framework for success.
A framework that has guided me through the success of multiple businesses. Like a pocket watch, it has a very understandable surface layer but requires multiple intricate parts below the surface that overlap and coordinate in perfect unison to work. As I began building this out, I decided that it needed to be versatile enough to have every type of initiative run through it from development operations to growth marketing and customer experience initiatives.
The only question left for this framework was how on Earth was I going to build it? So, I started with the easier part—the name. The story in this term is very much non-fictional. The combination of these answers solidifies the reason the brand is relevant to the market. This car company focuses strongly on the farming community with their truck line as an example. Not only do they build trucks that are tough enough to haul hay but they invest in Super Bowl ads like this one which exemplifies their business why and make their devotion to the farming community unquestionable.
This poetic advertisement speaks to the people who wake up before the sunrise, work their fingers to the bone in the summer heat or winter snow, and then go to bed long after the sun sets to do it all again the next day. This why enriches more than just their pocketbooks. I was surprised to hear the term vested pop up in this context. If the company does well, vested employees are handsomely rewarded via stock options. Leave early, and the unvested value stays behind. Vested, in these cases, served to be a beautiful respin on this old stock term.
When someone has a vested interest in something—a company or a cause—they have a particular reason to see it through to success. Yes, vested employees want to see the benefits coming back to them from the business, but it goes deeper than that. They are willing to work for those benefits by transforming themselves personally and professionally. In fact, the common problem among transformation frameworks is that they fail to address the employee.
So I started exploring what an employee-centric framework would look like with the concept of vested employees at its core. And just like that, there I had it. StoryVesting was the name, but now, I had the heavy lift of building this out into something actionable, sustainable, and transformative. A framework I could use in my own businesses. A lot of these iterations were trashed because their approach was too linear or simplistic to encompass something as complex as a living, breathing organization.
My first crack at a framework centered entirely around how the employees interacted within the business. The goal behind this framework was to enable employees to grow by giving them a solid a plan and strategy to evolve continually. I broke the framework up into four sections—growth, education, support, and action. The idea was that:. Instead, human processes are too messy and complex to be guided by a framework this simple, especially within the complex world of business.
Another study looked at the attitudes vs. Perhaps unsurprisingly, researchers found a similar incongruity between the attitudes toward organic products, such as produce, and the purchase of these products. The mean of respondents that held a positive attitude toward buying organic was 4. Outside factors enter the mix, unexpected changes occur, and soon everything falls out of line.
A robust modern experience framework needs to honor that complexity. One way to do that is by understanding the mindset of people within the organization. That buy-in starts with approaching the vision with the right mindset. According to my research:. Zappos sure knew during a recent transformative time in their business.
They made this drastic choice to assure that moving forward every single person in the organization had a growth mindset. One of my favorite psychologists who frequently speaks on the subject of mindsets is Carol Dweck. She literally wrote the book on mindsets which is aptly titled Mindset: The New Psychology of Success. In it, Dweck talks about the difference between a growth mindset and a fixed mindset. People with a fixed mindset are set in the idea that they only have so much potential and ability to learn.
An organization that operates with a fixed approach amplifies these limitations.
This, Dweck says, leads to a host of problems, such as lack of collaboration out of fear of looking stupid, and an increased risk of people going to great lengths to steal the spotlight from their colleagues. You can see how growth mindset individuals and organizations are different in several key ways. As Dweck puts it, people with a growth mindset spend more time learning than they do trying to look smart. They believe that they have a limitless potential to learn and by working hard, they can grow as a person.
Organizations that adopt a growth approach encourage people to develop their talents, empowering their team and making them more vested as a result. Instead of looking at them in black and white terms, she encourages us to approach this as a broad spectrum. The trick is being able to identify, and turn around our mindsets toward growth. In developing the StoryVesting framework, I decided that it was important to have it encourage empowerment and collaboration. I wanted organizations to be able to empathize with a person to better make them feel like they can succeed, giving them the logical tools to achieve transformation and deliver an exceptional customer experience.
This time, I looked past internal mindset alone and looked at the other critical person in the success equation—the customer.
A CEO guide for avoiding the ten traps that derail digital transformations
I wanted the second iteration to represent these stories better, so I broke the framework up into two parts. Why did the company exist? How did the company serve the market? What caused the organization to grow? I wanted to know their pain points, needs, and what they wanted from the solution they found. I figured that in determining these factors, the business would have a robust structure to make strategic decisions and propel growth out of strategic inflection points. This iteration vastly improved on the last since it was customer-centric, but also took into account the complexity of the people working inside the company.
Although it was an improvement, it was far from perfect. This iteration still failed to take into account the depth of human physiology and psychology. I knew that even though the alignment of the business and customer were crucial, I needed to give more consideration to what the customer experienced in their journey.
To correctly build out the customer side of StoryVesting, I took a deep dive into behavioral economics, starting with how the brain functioned. Perhaps the most fascinating part of the human body is the brain. Whenever I get the chance to visit her, I love picking her brain about the brain. In addition to neurons firing off, hormones are continually released in that small, three-pound part of our body.
Those hormones influence how we behave throughout the day. These insights into how our brain functions are truly compelling. Understanding the role these two systems play in decision making fuels our customer journey mapping and leads to a better understanding of how to develop compelling and impactful brand experiences. This is the inner part of the brain that acts as a storage center for all of your emotional responses to the outside world.
Check out this video on it for a great description of what it is and why it matters. Smells, sounds, and sights can all instantly transport our brains back to a time and place. It pulls and synapses with the neocortex. In very simple terms, the Neocortex is the outer part of your brain that houses a good chunk of decision making and logical processing. This is the part of the brain that sets us apart from other animals. By understanding how the emotional and logical parts of our brain work together, we can get a deeper understanding of why people behave the way they do at work and when making purchase decisions.
One of the ways researchers have started to uncover insights into this process is by looking specifically at stroke victims. The researchers found that there was decreased gray matter GM volume in patients in both the neocortex specifically, the prefrontal cortex and motor cortex and the limbic system. However, upon further research, the study found that there was significantly decreased functional connectivity with the neocortex, but increased functional connectivity with parts of the limbic system.
These findings make sense because PSD is directly related to mood and emotional response. In a study the neuroscience professor, Antonio Damasio, studied how emotions related to logical thought. In looking at damaged brains, Damasio found that people who could not process feelings also had a harder time making decisions. I never wished to set emotional against reason, but rather to see emotion as at least assisting reason… nor did I ever oppose emotion to cognition since I view emotion as delivering cognitive information.
This basic understanding of the brain gives a better glimpse into the two core parts of how a person thinks and operates—with logic and with emotion. To answer that, I harken back to the situation that kick-started this whole framework—the black BMW catching me off guard pulling up the driveway. It still gives me goosebumps when I imagine seeing that sleek car pull up the driveway. Those goosebumps come from the memories that are imprinted deeply in my limbic system, but the curiosity about success that stemmed from that memory was logical, centered in my cortex system.
Everyone has memories so powerful that they transport you back in time. Whether those memories hit like a strike or hover at the edge of everyday actions, they undeniably affect our behavior in ways that are very much tied to these sections of our brain. To dig in deeper to those, I shifted to look at psychology and the role it played in success. Just like the human brain has always fascinated me, so has the human psyche.
I love figuring out how people think, why people feel the way they do and react the way they do, and the things that drive people to act. When it came to building out a customer-centric business framework for success, I knew psychology had to play a prominent role. Specifically, I knew I had to address how the consumer felt and reacted to a brand. I started by looking at the role cognitive associations and dissonance played in the path-to-purchase.
Before I dig in here, I have a challenge for you. Do you know the cognitive association of your brand? Do you know it with certainty? What is the cognitive association of your brand? Many of the businesses we work with cannot say, with confidence, that they know what consumers cognitively associate when they think of their brand. Or, they think they know but are wrong. These memories are where your limbic system enters the equation. Consumers have the same juxtaposition and knee-jerk reaction to a brand name and an attribute in their mind.
Take GoPro as an example. Implementing digital solutions without innovation is not highly transformational. At best, such endeavours often serve to cut costs and introduce efficiencies for existing ways of working. While many innovation methods exist, the illustration above suggests considering four fundamental innovation approaches.
Customer Co-Creation enables new products and services to be enhanced through an active, creative and social collaboration process between companies and customers — superseding the Schumpeterian model where the lone entrepreneur would bring innovations to markets. Innovation Scouting sees specialists tasked with identifying new opportunities for partnership, co-development, licensing, or acquisition. Commercially relevant technologies are more likely to be found if the scouting team comprises a combination of marketing and technical functions.. Read how scouting can be part of open innovation.
Many companies have grown on the trusty old business models that are rooted in history and bound by process and culture. But to avoid becoming irrelevant in an increasingly changing world, they need to dust off antiquated models and make them fit for purpose in todays digitised environment. While innovation helps us leverage new digital solutions, the planned outcomes cannot be achieved without effective business transformation management. This post serves as an introduction to an intensely documented approach to holistic business transformation management, which addresses the transformation journey from strategy through to business benefit realisation and everything in between.
It is often said that strategy is three times more difficult to deploy than develop, which explains why so many strategies result in a painful execution journey for everyone involved. Budgets and timelines are frequently exceeded and stakeholders get tired of the noise excreted from the project, programme or portfolio due to inadequate transformation orchestration.
The colourful benefits on display in the business case begin to fade as it becomes clear that the planned return on investment is diminishing as more time and resources are sucked into the initiative. This is not to mention the fact that the people and business areas that will inherit the new world, are ill prepared. This is a reality in many companies, because they lack the right transformation tools and transformation management capabilities.
The failed BBC Digital Transformation is one example, and thousands of others are swept under the carpets of companies who thrive on operational excellence, but discover to their cost that, transformation excellence requires a very different set of capabilities. It is a generic framework, which can be applied to different business transformation use cases, and is not specific to one business function, technology or industry.
It is described in this page reference book which refers to countless external resources. So this article can serve only as a short introduction to the mission critical subject that many organisations still struggle to get right. The next level down is shown in the chart below and a detailed body of knowledge resides within each of the 65 components shown below. In the context of business transformation, Meta Management provides the overarching frame for a business transformation and provides the linkages amongst the disciplines and also the management structure, which will allow the transformation process to be effective.
It addresses individual disciplines which include guidelines, leadership, culture, values, and communication. In the context of business transformation, Strategy Management primarily addresses the Envision phase of the transformation life-cycle, during which a strategy is developed. Strategy Development involves the selection of appropriate team members, collection of data, analysis of transformation needs and readiness, design of a business vision, and a business model and the definition of an integrated transformation plan.
In the context of business transformation, Value Management involves defining the business benefits and changes needed to realise them, evaluating the feasibility of making the changes successfully, and producing an evidence-based, rigorous business case and supporting benefits realisation plan. Value Management relies heavily upon the engagement of stakeholders in the preparation of the business case and benefits plan to create the knowledge and commitment required to realise the benefits described in the business case.
Risk management provides fundamental guidance to the planning, development and effective execution of a business transformation. It is vital that business transformation managers to manage the risks that relate to the process of transforming their organisation towards a desired future state and those risks that relate more to the possibility that this desired state becomes either obsolete or sub-optimal.
Business Process Management defines the scope of process changes needed for the expected improvements in performance. To make the transformation effort a continuous success, business processes have to be considered from a strategic perspective. The identification of end-to-end business processes and the assignment of responsible process owners is a major task.
It is important to understand that process management does not equal process modelling, but rather the relationship between IT, Business and People related tasks. IT Transformation Management evaluates the impact of current IT processes, competencies and systems on business transformation, and vice versa. It assesses and enables solution readiness of the business, defines and assesses the gap between the as-is and to-be of IT, deploys IT operations and services, and implements IT governance. It also improves IT operations and services, and manages the IT lifecycle.
It deals with the people who have to change their ways of working and involves setting up a foundation for effective OCM with respect to governance and assessing organisational change readiness. Establishing and implementing stakeholder communication and performance management strategies, and continuously receiving feedback to make improvements is key. Competence and Training Management identifies and analyses training needs and objectives, develops training measures for the identified gaps, foster the learning transfer and analyses the success of the measures.
Programme management aims to support the implementation of the transformation strategy in order to achieve the business benefits described in the business case. The Business of Digital Transformation. If digital business transformation efforts are to be successful, all of the above nine transformation management disciplines need to be adequately addressed, and it is worth noting that technology is just one of nine disciplines in the list.
This highlights the fact that transformation is less about technology and more about people and business. Organisations need to ensure that their digital business transformation leaders do not fall into the pitfall of placing an unbalanced emphasis on technology, process and some project management, while paying lip-service or light touches to the other transformation management disciplines.
Research has shown that this common error is the basis for countless failed and struggling transformation programmes throughout the world. A handful like Rob Llewellyn operate as independent consultants. An assessment of transformation programmes in your organisation can be conducted using this business transformation health check template. The Trouble With Digital Transformation. While digital transformation is crucial to the growth and success of businesses, IDC predicts that by , seventy percent of siloed digital transformation initiatives will ultimately fail.
They have also suggested that by , sixty percent of digital transformation initiatives will not be able to scale because of a lack of strategic architecture. These predicted percentages align closely to the commonly touted failure rates of IT initiatives and change programmes that have been taking place for decades. It was a complex business transformation programme aimed at transforming the way in which the BBC makes content for its audiences. It was cancelled with an asset write-down of a hundred million pounds, and PwC was engaged to review the failed transformation. Many of the pitfalls that companies fall foul of are well-known, but uninitiated transformation leaders and managers still fall victim to them.
The programme governance structure implemented for DMI was not effective in dealing with the complexity of the initiative. The structure lacked an executive steering board which could effectively challenge the progress of DMI against the agreed quality, time and cost metrics. DMI failed to provide transparent and clear reporting on progress against plan, cost to complete, or delivery of benefits, to enable effective decision-making within the corporate governance structure.
CXO Transform | What is Digital Transformation?
DMI sought to change and standardise working practices across all of the BBC based on implementing leading edge technology that the BBC needed to research and develop with third parties. Delivery of a single set of processes and the required change in business operations were a pre-requisite of successful delivery of the benefits recognised in the Business Case. This meant the DMI would have had to monitor for changes in the benefits and the cost against the Business Case.
Reviewing cost and benefits together would determine whether trigger points in the BBC Investment Policy and Guidelines were met which would have required a re-submission of the Business Case.
- El Regreso del Sol (Spanish Edition)?
- I sussurri del cuore (Gli emersi poesia) (Italian Edition);
- Les Proverbes de Fenis - Score!
- The Many Uses of the StoryVesting Framework.
- The Authors XI: A Season of English Cricket from Hackney to Hambledon (Wisden).
- The Handbook of Speech Perception (Blackwell Handbooks in Linguistics);
At the time, the guidelines in place required the Business Case to be resubmitted should there be variation in costs or benefits over the whole life of a project by ten percent. In June the DMI steering board reported that almost eleven and a half million pounds of the benefits forecast were at risk, and as this represented an eleven point six percent drop in benefits, a benefits review was undertaken the following month. However the BBC believed at the time that the full functionality outlined in the Business Case, and the benefits, would be delivered over the full life of DMI - which was to be up to March Unfortunately, no review was undertaken into the cost of delivering DMI.
Had DMI provided an accurate forecast against plan, it would have been clear from delays in delivery, and changes to the risk profile, that the conditions requiring re-approval of the Business Case had been reached. There was also a lack of an integrated assurance plan, which reduced the effectiveness of governance in managing risk. The key lessons to be learned from this failed transformation were broken down into six areas of transformation management:. Programme and Corporate Governance. Which included agreeing on a common approach, Programme planning and plan management.
Financial Management, addressing Business Case definition and approval and Project financial management. This is one of many examples that serve as valuable lessons learned for transformation leaders who prefer to side-step the pitfalls that many others have fallen into before them. THRIVE is not related to any one technology or industry - it's a way of thinking of, and approaching transformation from a business perspective. It helps leaders approach business transformation from all angles, and not be blinkered by digital marketing hype or specific technologies.
Leaders first need to recognise the fundamental difference between change and transformation, before they can lead their companies on a journey of legitimate business transformation. Too many companies are being lulled into a false sense of transformation security through siloed digital projects and change initiatives that are not transformational. To take advantage of the opportunities and protect against threats that new digital business models present, leaders need to commit to being bold and transformational, ahead of those that remain safely within their comfort zones and traditional ways of working.
Leaders need to communicate this fundamental difference across their organisations to avoid their best resources being tied up making small changes instead of driving transformation. Legitimate transformation also requires a fundamental shift in other aspects of an organisation.
Appropriate governance, mindsets, business models, capabilities and culture are just some some of the transformation fundamentals that THRIVE addresses. Unlike business process re-engineering, which focuses on business processes, or app development which focuses on technology, or projects, which focus on producing outputs, digital business transformation requires more integrated and holistic approach.
THRIVE helps leaders take a holistic and integrated perspective of their enterprise and its complexity. It does not reinvent individual management disciplines but it provides a framework that integrates individual disciplines, which should be sufficiently mature to undertake successful transformation. From digital business models, capabilities and roadmap design, through to culture, portfolio governance and transformation execution, leaders need to consider the big picture and not limit their focus to only some of the key enablers of transformation.
Most transformation strategies are not successfully executed upon, and only a holistic approach to transformation will produce the outcomes a company aspires to achieve. Through holistic transformation, leaders will dramatically increase the odds of success, and be among the minority that actually achieve their transformation objectives successfully, and live up to stakeholder expectations.
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Organisations must respond strategically to the opportunities and threats they are presented with - both inside their organisation, and externally in the market. Externally it could involve defensive and offensive responses to the changing dynamics of the market caused by disruption, or seizing the opportunities that digital technologies and new business models can be used to take advantage of. These and other responses form part of the transformation strategy that needs to be shaped, then planned as part of a short, medium and long-term roadmap, which is then governed and executed upon.
Cloud, mobile, the Internet of Things and Robotics, etc. Only through the innovative convergence of digital technologies can companies to truly transform through new business models and ways of working. Plugging in individual digital solutions in non-innovative ways lulls companies into thinking they are transforming, when in fact they are merely updating their technology and changing nothing fundamental about their business.
This only achieves change, while business transformation should be the goal. Innovation empowers companies to consider many new possibilities that can be part of its strategic response, and this requires effective approaches to innovation, which transcend technology upgrades and simply doing the same things faster, better or cheaper.
Companies need the ability to envisage how new technologies can be converged into a scalable architecture that is prepared for near, mid and long term digital adoption. While the Internet of Everything will take years for most companies to derive value from, the foundations can be laid now, with capacity for the future in mind. External value represents the benefits transformation creates for its customers, while internal value represents the benefits delivered into the business as a result of transformation investment.
External value is generated through digital business models shaped by strategic responses to what is happening in the market. This enables companies to tap into the known and unknown needs of its current and potential customers, in ways that create competitive advantages, then seize market share. As markets are disrupted, the opportunities to satisfy the need for value have changed. In , millions of customers were not expecting 24 hour delivery of products purchased via a smartphone, but today they do.
The world has changed, but too many companies still rely on antiquated business models. Internal value is generated through initiatives that provide stakeholders with tangible or intangible return on investment. This could involve higher revenues in a particular line of business, increased workforce capabilities, better operational excellence or more effective marketing. All of this in turn enables the company to serve customers better and increase market share. Transformation must encourage, embrace and educate people from across the enterprise and build a collaborative culture of new capabilities and mindsets.
CEOs needs to foster a transformation mindset among their executive teams, which is aligned with the strategic aims of the company. Opportunities to upgrade workforce capabilities need to be identified and people made to feel safe and comfortable about innovation, success and failure. The right support and training is vital in helping to achieve this, without unrealistically expecting an operational workforce to become overnight transformation masters.
This can be a major undertaking, particularly for organisations that have been shaped over many years by operational goals, roles, processes, values, and attitudes. The lessons that precede this module provide you with the THRIVE digital business transformation body of knowledge, and this needs to be understood before it can be applied in practice. A Roadmap is intended to help not only you, but everyone in the organisation, to understand each step of your transformation journey.
While this module does help you create your own transformation roadmap, keep in mind that THRIVE is about much more than implementation and so there are a number of fundamental activities that need to happen in addition to implementation, such as mindset and culture shifts, portfolio creation and governance, etc. Some people watching this course are from global conglomerates, some are from smaller companies and others operate inside government and non-profit organisations. The cultures, structures, dynamics and objectives of each will be unique.
The people watching these videos range from are C-Level executives to Directors, Transformation, Programme and Project Managers, Strategists, Innovation experts and others. How you personally get to put THRIVE principles and lessons to work will depend on your role within your organisation. So using the THRIVE principles and lessons, you need to consider how the THRIVE roadmap needs to be custom tuned to work effectively within your environment, and in the context of the role you play within the organisation.
What I describe in the following lessons are essentially a set of sign posts and directions on how to get from one sign post to the next. Knowing these is one thing, but implementing each of them effectively will in many cases be a challenge. And the larger the organisation, the greater the challenge.
As for anyone, you will probably be more comfortable and familiar with some aspects of transformation than others. So as you address each step in the roadmap, refer back to specific lessons to help you plan and undertake the various activities. Most organisations will be able to chart the next twelve to eighteen months reasonably well, but beyond that, with the pace of change and disruption, things become a bit hazy.
Remember that building your transformation strategy and plan is an ongoing process, not a one-time event. Just agree with everyone that you will periodically revisit your roadmap, and later we will look at establishing governance to help ensure this happens. Not only will your strategy and portfolio need to be adjusted over time, but there will be lessons learned that will help you improve areas such as governance, transformation organisation and change management, etc.
And this will be ongoing, because no one ever gets it perfect. But you need to encourage continuous improvement throughout your transformation journey. You might run into resistance from stakeholders when it comes to certain aspects of transformation. Or there might be some who dismiss the need for a flexible innovation process in favour of old ways of working.
This is where you need to draw upon the various lessons in the course to educate those less informed the you. Pull out your best interpersonal skills and put the persuasion Cycle to work to convert your adversaries and opposers into Alies. As a reminder, this means taking them from resisting to listening to considering to willing to do, to glad they did and will continue to do. Transformation Related Posts Inspiration to help you innovate, digitise and transform the business you manage and lead.
What is Digital Transformation? The Digital Business Transformation Journey Digital business transformation is a journey to adopt and deploy digital technologies and business models to quantifiably improve business performance. It's All About The Business Although digital is about technology, digital business transformation is about how we can best leverage that technology to achieve strategic business goals.
Digital Myopia Leaders of firms that have done well over the last decade or more are often susceptible to Digital Myopia. Transformation Versus Change Transformation is about creating a new future, without the constraints of the past. Questions such as How do you transform culture? How do you decide what to transform? How do you manage transformation? How do you establish a roadmap? How do you know what capabilities need maturing? Digital Transformation Opportunity Mobile, big data and social media, etcetera. Let me briefly introduce you to each of the six Ds.
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Strategic Transformation Responses Many companies are responding to the digital economy in an ad-hoc and non-strategic manner. THRIVE embodies all that a company should consider when embarking on digital business transformation, but some key strategic response questions executives need to consider include: What is the need for transformation being driven by? How is that need going to impact the existing business model, or marketing channels, operations and workforce?
How will we consider the threats posed by existing potential disrupters? How can we ensure digitisation plays a key role in defining our business model changes? What value and competitive advantages will be derived from transformation? What 3rd parties should we engage with to ensure our transformation enjoys the right capabilities? What is our appetite for risk? And how can we evolve our culture to support and facilitate our aspirations of transformation? Digital Transformation Leadership There are subtle differences between operational leadership and transformation leadership, and much of this is to do with mindset.
Digital Transformation Readiness THRIVE highlights the principles that leaders need to be mindful of when embarking on digital business transformation. But just very briefly. In short, there are hundreds of digital use cases for social media. Platforms A platform, by definition, is a business model that creates value by facilitating an exchange between two or more inter-dependent groups.
Cisco has suggested that Internet of Everything value is distributed across five key business functions, which are: Digital Business Models C Before Engaging Tech Firms It might seem logical to first turn to a technology solution provider for digital business transformation guidance, particularly as they are all offering advice on digital transformation. Digital Transformation Tools Digital business transformation tools are the digital-age equivalent of the traditional tools that have served technology leaders well over the last two decades.
Core Capabilities and Digital Use Cases The Digital Capability Framework describes the core capabilities and digital use cases that companies need to consider if they are to approach their digital transformation holistically. The Digital Capability Framework is made up of four building blocks, which are: Read How to Engage Customers in Co-Creation Innovation Scouting sees specialists tasked with identifying new opportunities for partnership, co-development, licensing, or acquisition.
Discover more about the Business Model Navigator Business Transformation Management While innovation helps us leverage new digital solutions, the planned outcomes cannot be achieved without effective business transformation management. VIDEO Strategy More Difficult to Deploy Than Develop It is often said that strategy is three times more difficult to deploy than develop, which explains why so many strategies result in a painful execution journey for everyone involved.
Strategy Management In the context of business transformation, Strategy Management primarily addresses the Envision phase of the transformation life-cycle, during which a strategy is developed. Value Management In the context of business transformation, Value Management involves defining the business benefits and changes needed to realise them, evaluating the feasibility of making the changes successfully, and producing an evidence-based, rigorous business case and supporting benefits realisation plan.
Risk Management Risk management provides fundamental guidance to the planning, development and effective execution of a business transformation. Business Process Management Business Process Management defines the scope of process changes needed for the expected improvements in performance. IT Transformation Management IT Transformation Management evaluates the impact of current IT processes, competencies and systems on business transformation, and vice versa. Project and Programme Management Programme management aims to support the implementation of the transformation strategy in order to achieve the business benefits described in the business case.
The Business of Digital Transformation If digital business transformation efforts are to be successful, all of the above nine transformation management disciplines need to be adequately addressed, and it is worth noting that technology is just one of nine disciplines in the list. Business Transformation Health Check An assessment of transformation programmes in your organisation can be conducted using this business transformation health check template.
The key lessons to be learned from this failed transformation were broken down into six areas of transformation management: Which included agreeing on a common approach, Programme planning and plan management Risk and Issue Management Programme Assurance Planning Financial Management, addressing Business Case definition and approval and Project financial management And last but by no means least, Benefits Management and Tracking. Enterprise Transformation Leaders first need to recognise the fundamental difference between change and transformation, before they can lead their companies on a journey of legitimate business transformation.