How Leaders Can Address the Challenges of Digital Transformation
January 16, 2015 Leave a comment
2015 marks ten years in which I’ve been working in the trenches with organizations at a leadership level to drive some form of major change that intertwines technology, networks, and people. Back in the early days it consisted mostly of the novel and heady topics of the Web 2.0 revolution. As things matured and the ideas were adapted to the corporate world, the discussion moved on to Enterprise 2.0 and finally became the social business movement.
These days it’s about the whole package: Pervasive digital transformation of everything that deeply involves our organizations’ products, services, engagement approach with employees, partners, and customers, entirely new business models, profoundly powerful new ways of managing, working, and even how to think about the purpose and methods of business itself.
It’s a very exciting time in business, almost certainly the most exciting as the proverbial curse goes. In fact, it’s pretty safe to say there is more potential and opportunity in business than there has been in history. But over those ten years I’ve also seen far too many organizations struggle deeply as they grapple with how best to adapt today’s incredible advances to the way they work and do business.
In this view I am not alone: The Harvard Business Review recently noted that transformation success rates still hover around 30% today.
For years, it’s been difficult to discern why organizations are having so much trouble doing something different. We used to say it’s about aging corporate DNA, and how hard it is to make it digital. Or there’s simply too much change, and we have to design for constant change. Or our bureaucracies and hierarchies are too inflexible and we should augment, or even replace them outright, with self-organizing networks on top of networks. Often we’ve said that our culture is wrong for the digital age, and we have to change it. There have been many other diagnoses.
I’d note here that most of these points of view are actually correct and must be addressed, but they aren’t the largest obstacle, even when dealt with. Instead, these days I’m increasingly sure the root issue is actually the way organizations apportion leadership and responsibility for digital change.
In recent years, as the imperative became obvious to even the casual observer (see Constellation Research’s latest CXO priorities survey), I’ve seen digital change land squarely into the lap of the top leaders in the C-Suite. Now, I thought, we’re going to see some changes, even though anecdotally, most of the major successes I’ve seen — and there are quite a few we can point to now — have often been unceasing struggles against entrenched powers, against nay-sayers, the skeptical, the beholden to the status quo, and holders of turf and fiefdoms who all feel impacted negatively (they believe) by the major changes that now simply must happen in most organizations.
Digital Transformation Fragmented by Top-Level Responsibilities
So what’s the real obstacle? As digital/social transformation has arrived at the C-Suite and the board level in 2015, we see the following dysfunction, as change — and who is responsible for it — has remained fragmented all the way up to the C-level. The issue in a nutshell is in fact lies within those very CXO purviews, which in most organizations — though yes, not all — usually badly distort the process of digital change. This goes well beyond the much-discussed CIO/CMO tug-of-war being debated today:
- Today’s CIO is in charge of developing the connected infrastructure for things like social business, digital workplace, digital business, etc., but not the human component.
- The CMO is in charge of connecting with customers via all available channels, but through vast digital infrastructure they largely do not create or own.
- The CHRO is in charge of employee engagement as well as approaches for recruiting, hiring, and performance management, but not the technology or non-employees.
- And the COO is in charge of getting results (efficiency, performance) from employees for the business.
This provincial focus on a certain domain or audience, even though they are now all connected, is making it very difficult to say who is in charge of digital transition in the enterprise. Even in the C-suite, no one has responsibility for the whole process, namely the technology and its connected constituents. And so digital change happens in fragments and pieces that don’t fit, which are primarily inward-only, outward-only, employee-only, tech-only, or business-only. That, as we’ve now seen for years, does not really work. Digital and social, and I keep them separate as concepts for a reason as social has always been possible without the digital, are part of a single continuum and so they must be addressed that way as an organization.
Examples of this abound: I can’t tell you how many times I’ve come into an organization and found two separate social business initiatives (one inward facing and one outward), or HR trying to deal with employee engagement in isolation from the technology, when we now know they’re deeply intertwined, or the COO focusing too much on the business activities at hand instead of the digital context and technology advancement of the company, which will dramatically improve said activities.
So, what’s the solution here? There are a number of them actually, pushing out well-beyond approaches like bi-modal IT, and we’re beginning to see evidence of what they are. But at the root of every major success story seems to be the effective working together of the C-Suite to holistically drive change in a more coordinated and integrated fashion. Rates of change across an organization will always vary, and simply must in order to manage dependencies, risk, and resource availability, so I’m not suggesting holistic change is necessarily big bang. No, it seems more agile than that and I mean that in the formal way of pods of teams coming together and using iterative approaches with fast feedback loops. Meaningful digital change in scale occurs as leadership defines the transformations that need to happen, supports them across C-suite boundaries, and empowers the organization more broadly, in an emergent architecture-style fashion which has been seen to work.
New Models Naturally Emerging to Drive Strategic Digital Change
Again, I’m not talking about management science astronautics here, I am suggesting this is what we are actually seeing happen. I believe the case studies and success stories we’re encountering now bear this view out: Digital change is a board level process that succeeds most effectively when the C-suite works together closely, pools resources, mutually reinforces each other, and drives change consistently through a well-defined (yet agile) process that also — and this is key — drives widespread empowerment on the ground across the organization.
Recently I’ve suggested the increasingly popular center of excellence (CoE) model is evolving in response to this into something we are now calling the network of excellence. I have sought to capture examples of this and I will explore it in much more detail soon, but it makes sense that organizations are finally hitting upon new network-enabled models to drive digital change and transformation.
So, while I frequently point out that the hard data says the technology change is relentless destroying companies today, I am at the same time heartened by the fact that organizations are at long last adjusting their digital priorities this year to deal with these obstacles. (For specific examples, see Schneider Electric and Houghton-Mifflin-Harcourt as partial evidence of this.)
In coming weeks I’ll post our case studies and frame-up of the new models companies are adopting to drive effective transformation in the emerging digital enterprise. Please contact me if you’d like to have yours included in this work.