About the book
Oh boy! This is the BIG book of transformation. After this there is no need to read any other books about digital transformation. Unless Wade et al. will write something new about digital transformation.
The companies that have not already been subject to serious digital competition will benefit from this book. The companies that would most benefit from learnings of the book are B2B and engineering companies or public organization.
The book is written to business leaders, executives and Chief Digital Officers. This is your book if you want to avoid “the danger of becoming a corporate irrelevance”. Do not be a “Queen of PowerPoint.” Become the master of digital transformation.
“When you’re finished changing, you’re finished.” (Ben Franklin)
What are the key learnings?
“Transformation is not an event; it’s an essential and perpetual task of leadership.”
The key learnings are
– “A second wave of disruption is upon us. This wave is focused not only on digitizing products and services, but also on business models, processes, and value chains“.
– Now it’s your turn. “Companies that were easy targets for digitalization – media, financial and telco’s, have already gone through the digital disruption.”
– The third wave is around the corner. Watch out technologies such as RPA, ML and AI.
“Orchestrating Transformation is less about what the best companies do better than anyone else. Instead, it’s largely about what everyone gets consistently wrong—and how to fix it. This book proceeds from a simple premise: most companies are not successful in digital business transformation.”
Digital business transformation involves much more than technology.
Definition of Digital Business Transformation is “organizational change through the use of digital technologies and business models to improve performance.”
– “The objective of digital business transformation is to improve business performance.
– Digital business transformation is based on a digital foundation.
– Digital business transformation requires organizational change – change that includes processes, people, and strategy.”
Orchestration
“The concept of orchestration to contend with the connected nature of change. By embracing the networked nature of organizations, and the challenge of changing what is highly connected, we reframe what the execution of a digital business transformation program means (continuous and holistic) and increase the chances that it will ultimately succeed.”
Transformation dilemma
“We call this the “transformation dilemma” of today’s incumbents. Organizational characteristics of today’s market incumbents
– scale,
– interdependence,
– dynamism.
“Why the “entanglement” of these characteristics makes it nearly impossible to achieve success in digital business transformation using traditional change methods.”
“Today’s incumbents are missing the growth hacking factor, because “the vast majority of organizational change efforts fail. Estimates vary, but failure rates range from 60 to 80 percent and don’t seem to improve over time.”
“Digital transformations fail so frequently that we’ve met many executives who are hostile to the very term “digital,” or who have made any phrases containing “transformation” verboten because of the word’s perceived connotations of hype, frustration, and fiasco.”
Why? Many company leaders don’t understand the problem they face. “Simply put – things change a lot:
– Scale. Companies are awash in huge volumes of “things that need to be managed”
– Interdependence. The things that need to be managed are interrelated, and the effects from any one action are felt throughout the organization in ways that aren’t easy to predict.
– Dynamism. The things that need to be managed, and the environments (market, regulatory, etc.) in which they operate, are constantly evolving. The need to do things differently is a constant competitive reality.”
Cult of synergy
“Often, companies respond to interdependence by separating things into different units. This approach, known as “departmentalization,” gives a certain team the authority to establish (“own”) a standard for how something is done. At first glance, the approach makes sense as an antidote for complexity. However, it also contributes to the balkanization of companies (i.e., silos), undermining the biggest value of interdependence: synergy.
“A lack of synergy is a major contributing factor in why most transformation programs fail to deliver their expected returns.”
Tales on unexpected
– Gray Wolf Effect. “One example involves the return of the gray wolf to Yellowstone National Park. 7 By 1926, all gray wolves, the natural “apex predator” in Yellowstone, had been exterminated. In the mid-1990s, gray wolves were reintroduced into the park, and scientists soon observed how their predatory habits affected the entire food chain and overall biodiversity of the region. The reintroduced gray wolves killed and ate the park’s elk population. In turn, the reduced number of grazing elk allowed for the growth of more vegetation. This increase in plant life and its root systems then increased the stability of riverbanks and, ultimately, changed the paths followed by the park’s rivers. (To ecologists, this phenomenon is known as a “trophic cascade”).”
– Cobra Effect. ”This phenomenon is sometimes referred to as the Cobra Effect. The term originated in the British Raj in 19 th century India. The British government, concerned about the proliferation of venomous cobras in Delhi, offered a bounty to citizens who killed the snakes. Unfortunately, local residents reacted to this incentive by modifying their behavior in an unanticipated way: they began breeding cobras that could be killed for money. When the government realized that citizens were gaming the system, they shut down the bounty program. This prompted the citizens to free their now-worthless snakes, significantly increasing the cobra population.”
– Black Swan Effect of course.
Four types of change
1. Plain Old Change.
a. “This is functionally autonomous, incremental change. The goal of change is straightforward, and the resources needed are limited and well-defined within a particular functional area or group. For example, if the advertising department opts to shift investment in newspaper and television media to online ads, that’s their purview. It doesn’t significantly impact, and isn’t contingent upon, other parts of the company. This type of change represents most of the management effort focused on implementing changes. It’s pretty run-of-the-mill and doesn’t involve extensive cross-functional considerations. It also doesn’t require changes to a company’s overarching strategy or business model.”
2. Blanket Adjustments.
a. “This is highly entangled, incremental change. Here, a company makes a tweak or calibration—introducing new enterprise-wide hiring rules or a global expense management system—that affects many different stakeholders in all parts of the organization. These adjustments frequently collide with highly entangled structures and, as many of us have experienced, can be challenging to implement. Nonetheless, the extent of change isn’t large. There’s no essential change to the kinds of value the company creates for customers, how it makes money, or its overall competitive position.”
3. Smart X.
a. “This is functionally autonomous, major change. The changes are big, but they don’t have a company-wide focus. When you hear about projects like “smart supply chain” or “smart real estate,” these are examples of Smart X change. This doesn’t mean, however, that Smart X change is a breeze to achieve. Although the change may be limited to a single function, it can be ambitious in scope. A “smart factory,” for example, could involve a complete revolution in how manufacturing processes are performed. This certainly qualifies as “major change.”
4. Digital Business Transformation.
a. ”This is highly entangled, major change. This type of change is the focus of the DBT Center in general and this book in particular. Recalling our earlier definition of digital business transformation as “organizational change through the use of digital technologies and business models to improve performance,” we can see that this type of change is considerably different from the others. It combines high levels of scale, interdependence, and dynamism with the need to make fundamental changes to the entire organization in the service of a new strategic direction. It means making changes to business models and customer value creation to address disruptive competition. It may also involve value creation with third parties (i.e., through platforms).”
Guiding objectives
“What’s more, too many transformations are disconnected from:
– Customer value creation,
– Business models,
– Strategies of the company.”
“We refer to these three elements together as guiding objectives. Guiding objectives are a set of clearly-articulated aims that serve as the point of departure for effective execution of a transformation program. (However, they are not the company’s “digital strategy”; see sidebar.)”
Three common denominators in modus operandi for succeeding in transformation are:
1. Cost value. Disruptors create value for customers through lower costs or by creating some kind of economic gain.
2. Experience value. through customer experiences that are faster, more convenient, more personalized, and so forth.
3. Platform value. By creating connections that did not exist before, such as between a buyer and a seller, or between a teacher and a student.
Smash the paradigm
“In the past, as described in Michael Porter’s classic Competitive Strategy, firms focused on one of two main competitive orientations: cost leadership (what we refer to as “cost value”) and differentiation (what we call “experience value”). 2 Porter’s point is that companies pick one or the other: you can be Walmart (cost value) or you can be Burberry (experience value). But you don’t try to do both at once—doing so would be a recipe for disaster (by the way, there were not platforms as we think of them today back when Porter wrote his book). Companies like Uber, and all of the most disruptive companies, smash this paradigm with their ability to create combinatorial disruption that customers can’t get enough of.”
Case Fujifilm. “Fujifilm recognized the digital threat to its core market in analog cameras and film. As far back as the 1980s, both companies anticipated declining sales of photographic film and paper and launched successful digital camera offerings. By 1999, Fujifilm was the world leader in digital camera sales. By 2003, however, the disruption in digital photography deepened with the introduction of smartphones with built-in multi-megapixel cameras. At Fujifilm, film sales fell off a cliff. They dropped by one-third within a year, and photo labs reported an 80 percent decline in processing jobs for consumers. After decades of growth, Fujifilm’s revenue reached a peak in 1999 at $13.6 billion. Shigetaka Komori, who became CEO in 2003 (he was also named chairman in 2012), had to respond: “At first I thought that color film wouldn’t disappear quickly, but digital stole it all away in an instant.” This is a common sentiment for executives who have the misfortune of encountering value vampires—disruptive competitors who permanently undercut the viability of a market. In 2001, film accounted for two-thirds of Fujifilm profits. By 2017, it was less than 1 percent. Komori and his team restructured the organization, reducing its distribution, research and development, and management costs. Significant job reductions, factory closings, and other cuts helped decrease the company’s cost base by more than $5 billion. Fujifilm diversified and retreated into a few niche markets where value vampires (Apple and the Android-based smartphone makers) had no intention of following: high-end digital imaging machines, enterprise document solutions, and (unexpectedly) cosmetics.
Strategic Response Playbook – Four strategic options
1. Harvest: Maximizing Returns from a Disrupted Business
2. Retreat: Strategic Withdrawal
3. Disrupt: Creating New Customer Value
4. Occupy: Winning in a Disrupted Space
Harvest
Harvest is a defensive strategy designed to maximize gains from an at-risk or declining business. Harvest strategies frequently begin with “blocking tactics,” drawing on the benefits of incumbent status with customers, partners, regulators, opinion-makers, and providers of capital. These countermeasures are intended to slow the disruption or buy time for an incumbent to come up with a more appropriate response.
Harvest shouldn’t be equated with failure. It’s the natural progression of a mature business confronting commoditization, customer attrition, margin compression, and other unpleasantness arising from digital disruption. Leaders who are clear-sighted enough to accept this are best positioned to steer their organizations through the transition. An example of a global incumbent adopting a Harvest strategy is Avon Products. 4 Founded over 130 years ago in New York, the company uses a direct, social-selling channel: 6 million “Avon Ladies” form an independent salesforce of micro-entrepreneurs who go door-to-door to offer women cosmetics, fragrances, jewelry, and health supplements.
Retreat
“There are two main components to a Retreat strategy.
– Retreat emphasizes withdrawal into a market niche that serves a small subset of existing customers with specialized needs. Usually, the niche is a market the incumbent has dominated in the past and, in most cases, is an expert at managing for profitability. The niche market often requires a level of experience value that is hard for disruptors to deliver.
– Market exit is the second component of a Retreat strategy, and choosing the right time to exit is a critical decision. Too early, and you risk leaving money on the table. Too late, and the value has disappeared. Fujifilm sold many of its core assets in film and paper production while they still had value, channeling the proceeds into new business lines.”
Disrupt
“A Disrupt strategy focuses on creating cost value, experience value, and platform value for customers using digital technologies and business models in a new way. Becoming a disruptor requires a mix of deep customer and competitor insights, innovative thinking, strategic experimentation, capability transfer and building, and careful investment. As a result, many incumbents find disruption very difficult. For example Casper and Endy’s success is the result of their rigorous focus on providing value to customers. Buying a mattress through traditional channels can be a painful experience.
Occupy
“While a disruption can be achieved through cost value or experience value or platform value, a successful Occupy strategy normally requires combinatorial disruption. Only by combining all three forms of value can an organization prevail in the disruption battle for any length of time. The main problem with Occupy is that incumbents are often on unfamiliar terrain. Sleep Country Canada…. Far from retrenching, the company is aggressively investing, improving cost controls and inventory levels. <= LeanLeap
Sleep Country Canada is also “disrupting the disruptors,” emulating the market-changing innovations that underpin the value of Casper and Endy’s offers, while continuing to wield its physical stores presence and greater bargaining strengths. It launched an easy-to-deliver mattress-in-a-box called Bloom, 36 allowing it to participate in a fast-growing segment of the market. 37 The company has always offered a 100-day satisfaction guarantee but is benefiting from the market awareness that online competitors’ marketing efforts are creating.”
Establishing Guiding Objectives of a Transformation
“What should we do first in our transformation program?” The answer is: start by establishing guiding objectives.”
“Drawing on our research into digital transformation journeys, we have built a simple tool called “20 Questions” to help organizations prioritize strategic responses.
“Certain strategies in the Strategic Response Playbook are employed more than others:
– Retreat strategies are less frequent, in part because, as we observed in our earlier book, leaders are reluctant to pursue them (out of fear they will be perceived as signposts of deficient leadership) and because, even though market entry and exit rates are accelerating in the Digital Vortex, “wrapping up” a business is not a daily occurrence for firms.
– Disrupt strategies are not something companies embark on frequently or lightly. They tend to be radical departures from what the company has done in the past and require a different model for market formation, incubation, and scaling. Most incumbents are not good at Disrupt strategies because they imply being first to market, often with a small subset of early-adopter customers.
– Harvest. More commonly, big, traditional, prosperous companies concentrate their efforts on Harvest and Occupy. The former means playing defense, and usually involves a lot of cost optimization, streamlining, and specialization. #Lean
– Occupy. The latter means playing offense, but after a value vacancy and a market disruption have already materialized, allowing the incumbent to be a “fast follower” and compete based on its unique strengths. #Leap”
“Experience value and platform value are the most common value-creation focuses for big companies pursuing a Disrupt strategy. However, any one of the three forms of value can be the basis of Disrupt.”
“In Occupy, incumbents need to deliver all three forms of value to keep customers from migrating to competitors who are similarly targeting the value vacancy—and to secure the continued status of market leader.”
“The three components of guiding objectives—customer value creation, business models, and strategy—cannot be developed sequentially. To frame execution, they must be considered as an integrated whole.”
Case Intuit. “In doing so, Intuit adopted an Occupy strategy: the launch of an advantageously priced TurboTax cloud offer quickly displaced the desktop version of its tax software. 5 Intuit was willing to cannibalize its own product to build a large market share with a cloud-based product that ensured much more loyalty from customers. This prevented a competitor, Microsoft, from capturing a significant portion of the market with its Microsoft Money software. In fact, Microsoft interrupted that offer and stopped supporting it altogether after 2011.
In late 2017, the company began its next strategy refresh cycle. Seeing data analytics, AI, and machine learning as the new disruptive capabilities likely to impact customer experiences, Intuit mobilized over 100 teams to review research on trends and customer feedback. Based on this, Ko and the management team identified eight major macro trends driving massive societal and economic shifts. In response, the company is reallocating $1 billion—roughly one-fourth of its operating expenses—to address these opportunities. Under the leadership of Al Ko, Intuit’s recurring strategy refresh is becoming a repeatable process. Using knowledge and best practices from the past two iterations in 2012 and 2017, his team is codifying them in the company’s operating rhythm. The process of revisiting the strategy and assessing its progress is now fully represented in the company’s one-and three-year planning cycles, and in operating reviews. But Ko insists that regardless of how repeatable the refresh has become, there’s no substitute for revisiting a massive list of trends and opportunities regularly and stress-testing ways to create more value for customers. Intuit provides a compelling example of how transformation is an essential and perpetual task of leadership. Investors seem to like the results of Ko’s “maniacal focus” on strategy refresh, and the execution that has followed. Intuit’s market capitalization has increased by roughly 600 percent since 2010, compared with some 250 percent for the Nasdaq overall.”
The company’s transformation ambition
“Another important concept that is related to, but distinct from, guiding objectives: the company’s transformation ambition. This is simply a statement that outlines the company’s overall change goal. The transformation ambition aggregates the strategic intent of all the guiding objectives that span the company’s divisions or businesses.”
PRISM
“Good transformation ambitions have a few consistent characteristics. They act as a “prism” that focuses and directs the organization’s energies.
Precise – no room for interpretation.
Realistic – all can credibly see the company actually pulling off.
Inclusive – It needs to be relevant to everyone in the company, from top to bottom.
Succinct – It must be something the average employee can easily remember, almost a rallying cry.
Measurable – everyone can define progress in his or her own way.
Case Cisco. “The transformation ambition of 40/40/2020 was not a commitment to Wall Street, but rather a kind of unofficial, universally understood “north star” for the company. was a shorthand leaders used to describe a future standing in which the company would garner 40 percent of its revenue from recurring (subscription-based) sources and 40 percent from software by the year 2020 (the company’s 2021 fiscal year).”
“A powerful faction among the executive team, which must include the CEO and the board, is needed to overcome resistance to change. A CEO and board, backed by cooperative leaders, must establish an unambiguous stance supporting the transformation ambition.”
“Metrics also play an important role in the ongoing management of a transformation program, quantifying and tracking progress (or the lack thereof) against guiding objectives and the transformation ambition. One CDO told us, “We invest heavily in measurement to drive accountability. Data means there is nowhere to hide. If you’re not on side, there won’t be a sliver of daylight.”
The Transformation Orchestra
Silos are the enemy of transformation. Especially with digital transformation where the ownership is not clear. The Transformation Orchestra is:
Go-to-Market Section
1) Offerings: The products and services your company sells.
2) Channels: How products and services reach customers (i.e., route to market).
Engagement Section
3) Customer Engagement: How your company engages with its customers.
4) Partner Engagement: How your company engages with its partner ecosystem.
5) Workforce Engagement: How your company engages with its employees and contract staff.
Organization Section
6) Org Structure: The structure of business units, teams, reporting lines, and profit and loss centers (P&Ls).
7) Incentives: How workers are compensated and rewarded for their performance and behavior.
8) Culture: The values, attitudes, beliefs, and habits of the company.
Demonstrating that the focus should be on eight elements (not three, not 40) is liberating.
Orchestration Competencies
What do you need to bridge guiding objectives and execution?
1. Customer journey mapping is a needed competency.
800!!!!!! “Customer journey mapping means achieving a detailed understanding of customers’ experiences from the beginning to the end of their interactions with an organization. The proliferation of digital channels is changing how companies approach this mapping. Consider today’s typical multichannel retailer. Shopper interactions once comprised a small handful of possible journeys. But taking into account new channels, including mobile, online, wearables, and in-home devices (e.g., Amazon Echo), we’ve calculated that today’s shoppers have more than 800 unique variations of possible shopping journeys.”
Case Nespresso journey. “Lamblard suggested that e-commerce and user experience (UX) will increasingly focus on removing friction points across the customer journey. “The future of UX is no UX,” he said, and “e-commerce checkouts will vanish.” To accomplish this omnichannel reality, Nespresso aims to eliminate all unnecessary steps from the customer journey by leveraging data and personalization at scale. (For example, when future customers shop in a boutique, they will simply choose their coffee and then leave.) Examples of digital capabilities that may facilitate this seamless journey include subscription ordering models, AI, automation, and peer-to-peer commerce. Nespresso has motivated its channels to work together by harmonizing cross-channel employee incentives. (This makes the company not only a prime example of customer journey mapping, but of orchestration that combines multiple “instruments”.)”
2. Business model design is a complementary competency.
“Key to business model reinvention is a keen understanding of customers’ expectations and what they’ll pay for. Management consulting skills in strategy and business modeling (e.g., the Business Model Canvas) are important here, as is an understanding of customer value creation. How are other firms—especially disruptive competitors—creating cost value, experience value, and/or platform value for customers?”
“Competitive intelligence also plays a big role in understanding how the market is evolving.”
“The creation of a center of excellence around design thinking and user experience has definitely been a critical construct for us to evolve and develop.”
“Understand THE state of the ORGANIZATION.”
3. Business architecture is a competency that helps orchestrators to mobilize organizational resources and assemble transformation networks.
4. Capability assessment, including the availability and readiness of resources.
Build Synergy
Companies undergoing large-scale digital transformation are often places of confusion. A lack of both a clear vision and a shared narrative to describe the company’s transformation efforts frequently prevents people from taking decisive action. For these reasons,
5. Communications and training is a key orchestration competency.
6. Incubation
Orchestrators should also provide (6) incubation and scaling platforms . Platforms are great for creating market change, and they are critical in driving organizational change as well. They are particularly useful in generating synergies and as scaling engines.
7. Internal venture funding focused on innovation and transformation.
“No one listens to a cost center.”
“You’ve got to have financial means to be an attractive business partner.” For a midsized company, this funding might run to a few million dollars. For a large global incumbent, it could be in the tens or even hundreds of millions of dollars. These funds should be ring-fenced for efforts that promote cross-functional outcomes.”
8. Agile
Finally, when it comes to accelerating a transformation program, practitioners must be adept at (8) Agile ways of working. Agile plays a core role in how transformation programs in general—and transformation networks in particular—run.
Case ING. “Employees were asked to reapply for positions structured according to an Agile approach. ING divided the workforce into 350 “squads,” each with a maximum of nine employees. Each squad owned a specific customer-focused business objective, and included workers from multiple disciplines, such as IT development, product management, marketing, and distribution. The squads functioned as “self-organizing” units, each setting its own direction, tasks, prioritization, and strategy for accomplishing its goals. The squads were coordinated using a formal approach, including “chapters” to connect members of the same discipline across different squads, and “tribes,” which were groups of squads working on related missions. Agile coaches were embedded in the squads and tribes to facilitate the process and drive the cultural change needed to succeed in this new way of working.”
Organizing for Orchestration
“Although organizations are fairly evenly divided about whether “digital” should be a centralized or a distributed responsibility, our research shows that when it comes to managing digital transformation, 84 percent of organizations have established a dedicated or specialized group. For almost half of companies, digital is integral to every manager’s job. However, this is not true for transformation, where more than eight in 10 companies recognize that transformation can’t be added to managers’ day-to-day activities, but instead must be aggressively driven in a targeted way.”
“Leaders would do well to bear in mind this important distinction, which we’ve stressed throughout: digital and transformation are not the same thing.”
A centralized transformation group can quickly become its own silo.
“By the same token, a diffused model can also slow down execution. Things can get lost in translation. Wheels can get reinvented.”
“In many large and midsized organizations, coordinati grow like mushrooms as teams (separately) invest in program management roles that get tied up ensuring that other groups have visibility into their work, and that they, in turn, understand how the work of other groups pertains to their own. Former Google CEO Eric Schmidt referred to these workers as “glue people”—employees “who sit between functions and help either side but don’t themselves add a lot of value.” Glue is helpful in binding things together, but unhelpful when it makes things immovable.”
“Multiple executives are “responsible for overseeing digital transformation” in the company, even though a dedicated transformation group exists. In fact, an average of 3.3 different leaders.”
To CDO or to not CDO?
The chief digital officer role has emerged as one of several key leadership roles in digital business transformation. Three main types of CDOs and their share are:
1) The Customer Experience Maven (25 %)
2) The Artist Formerly Known as the CIO (66 %)
3) The Agitator (10 %)
The Customer Experience Maven.
The first type of CDO is focused predominantly in the areas of marketing, communications, e-commerce, customer engagement, and product development. Many of these CDOs come from a chief marketing officer role or from the advertising and creative industries. This CDO frequently views digital primarily as a way to position and strengthen the company’s brand and to interact with customers. A key focus may be adding digital capabilities to existing products (e.g., placing a sensor on a refrigerator, putting a computer screen in a car).
The Artist Formerly Known as the CIO.
The second type of CDO drives digital primarily from an IT perspective, much as the chief information officer has done in years past. Often, there is little change in the charter of the role, meaning the executive has oversight of the company’s IT but gets a new business card. Sometimes, this is very superficial. The “D” is viewed as trendier than the “I,” which, fairly or unfairly, carries certain baggage in terms of perceived value and skills. Indeed, CIOs as a profession have experienced a “crisis of relevance” in recent years, as business executives consistently cite lack of strategic alignment and innovation as challenges they see in IT leadership. In some circles, there is a belief that if the company hires a CDO, it’s because the CIO has not done his or her job. CDOs are basically CIOs with a title change or a modest enlargement of their responsibilities.
The Agitator.
The third type of CDO is hired not just as a “digital” leader, but to be a gadfly—to challenge received wisdoms and entrenched approaches—and in some cases, as one executive put it, to “blow up the business model” of the company. Many of these CDOs come from startup or management consulting backgrounds. Here, the focus is on major changes to firm strategy and helping the company make money in new ways, usually in response to disruptive competition and/or changing customer demands. This often happens when executive leadership wants to pursue offensive strategies like Disrupt or Occupy.
The New CTO: Chief Transformation Officer
“This position should be invested with an orchestration charter and responsibility for how the transformation program is executed. The CTO should be responsible for mobilizing organizational resources and enabling their connections. He or she should act as the company’s synergy creator. In the words of one practitioner, “Every action I take can’t just knock over the next domino. It has to knock over 10 or 12 dominoes.” Ideally, the CTO will report to the CEO.”
“Every manager should understand digital and seek to apply it to his or her area of responsibility. But transformation should be driven by a single leader—the chief transformation officer.”
“One key lesson we’ve learned is: let leaders lead. Allow the people who’ve made your company successful to do what they do. Of course, if they’re not performing or are actively trying to undermine the leadership consensus (constantly revisiting and challenging the transformation ambition, for example), they should be replaced. But leaders also have influence and expertise. The company needs their buy-in and engagement for major changes to work.”
“Most organizations and their leadership structures are geared to operate the business, not transform it. Most leadership teams are not there to be change agents, but to deliver results. These results tend to be framed in the here and now—meeting shareholder expectations or addressing the urgent demands of today’s customer.”
“Don’t expect everyone to be orchestrators of cross-functional outcomes. Make that someone’s full-time job—someone who can transcend silos, unstick log jams, and focus outside the immensely difficult task facing all other leaders in the company: operating the mainstream business efficiently and effectively.”
“If someone’s not complaining about you, you’re not being innovative enough.” (CDO Rob Roy / Sprint)
How should we change according to the book?
“Action: Make the chief transformation officer responsible for orchestrating the company’s digital business transformation, mobilizing organizational resources and enabling connections among them, but create shared accountabilities and joint KPIs with the business for results. The rest of the business should focus on implementing digital capabilities and driving change in their respective areas.”
“Action: Ensure that the executive team consistently reinforces the direction of the transformation, along with their explicit expectation that managers and individual employees plan, invest, and execute in ways that support this direction.
“Action: Create an appropriately sized internal venture fund that can accelerate cross-functional efforts and business outcomes.”
“Action: Document major digital initiatives occurring across the business to create visibility and potential synergies. The orchestrator, however, shouldn’t try to “own” these projects.”
“Action: Make the customer the centerpiece of your company’s digital business transformation. Work backward from how you intend to create new or improved value for the end customer.”
“Action: Create transformation networks consisting of multiple instruments to address transformation challenges. Keep each transformation network small, agile, and focused on a highly specific transformation challenge. This makes measuring the progress and impacts of the change easier.”
“Action: Encourage the CTO to build a strong rapport with division and functional leaders; rather than competing with the business, the transformation office should be seen as a source of innovation, agility, and speed.”
“Action: Keep the transformation office focused on incubating new processes and better capabilities. Transition ongoing management of these processes and capabilities when they reach maturity to the business. The transformation office should remain engaged to adjust the outputs over time.”
“Action: Ensure that the CTO works with other key leaders, particularly the CIO and the assigned transformation leads, to increase the overall level of digital business agility in the company—its foundational capacity to change. This involves creating weak connections among organizational resources that provide new or relevant information, as well as strong connections that create the trust and cohesion needed for a connected approach to change.”
What should I personally do?
Study these….. “Digital technologies including AI and automation, IoT, 5G, and blockchain will profoundly impact companies in the years ahead.”
AI & automation: “It’s not inconceivable that we reach a point in the not-too-distant future where AI is used to orchestrate transformation networks of robots and other intelligent systems to deliver on the organization’s guiding objectives. Already we are seeing signs of orchestration and “resource programmability” coming to the world of IT, where analytics, telemetry, cloud, and virtualization technology allow organizations to shift bandwidth or compute resources, or to establish new policies or access rules, on the fly across a vast footprint of technologies.”
IoT & 5G: “The growth of IoT and the launch of 5G are setting the stage for the level of connectivity within organizations to skyrocket. IoT and 5G will enable organizations to obtain a real-time high-definition view of their people, data, and infrastructure, allowing organizations an unprecedented and detailed understanding of their resources and how they are working together (or not). These technologies will drive tremendous growth in data, which will allow companies to uncover hidden patterns of poor resource utilization that beget inefficiencies or hinder value creation. Better data heralds the possibility of better decision-making.”
Blockchain: “Blockchain and smart contract technology have the power to transform both intra-company and inter-company operating processes, including supply chain, legal, finance, human resources, and sales. For example, blockchain technology could be used in HR to verify employment history and training credentials, while it could transform payment processing and contract management in finance and improve traceability in a company’s supply chain. An orchestrator could simply program a smart contract to execute an organizational change, transmitting money or information automatically when triggered.”
Summary
The book in six words – “Silos are the enemy of transformation.”
